North American Title Co., Inc. v. Gugasyan

Filed 1/24/22
CERTIFIED FOR PARTIAL PUBLICATION *
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION TWO
NORTH AMERICAN TITLE B303753
COMPANY, INC.,
(Los Angeles County
Plaintiff and Appellant, Super. Ct. No. BC660525)
v. ORDER MODIFYING
OPINION AND DENYING
EGYA NUBAR GUGASYAN et REHEARING
al.,
NO CHANGE IN THE
Defendants and JUDGMENT
Respondents.
THE COURT:
* This opinion is published as to all but parts I.B.3., II., and
III. of the Discussion.
It is ordered that the opinion filed on December 29,
2021, be modified as follows:
1. At the end of the first paragraph on page 12
(which ends with a citation of New Albertsons, Inc.
v. Superior Court (2008) 168 Cal.App.4th 1403),
insert footnote 7, and renumber all subsequent
footnotes. Footnote 7 should read:
7 In a petition for rehearing, North
American argues that it was denied its right
under Government Code section 68081 to brief
this precedent. This argument lacks merit.
That section grants the right to brief new
issues, and the issue of section 1185’s meaning
was extensively argued in the parties’ briefs. It
is well settled that “Government Code section
68081 does not give the parties a right to
submit supplemental briefs when an appellate
court relies upon authority that was not briefed
by the parties . . . .” (Gee v. Greyhound Lines,
Inc. (2016) 6 Cal.App.5th 477, 487, fn. 6; People
v. Alice (2007) 41 Cal.4th 668, 679.)
2. At the end of page 12 and continuing onto page 13,
in the sentence that begins, “If the resulting
license is similarly genuine looking,” insert the
words “ability to invoke the safe harbor (and
consequently, his probable” before the phrase
“liability for damages,” and then insert a closing
parenthesis after the word “damages,” so that
2
the sentence reads:
If the resulting license is similarly genuine
looking—and hence the notary’s conduct in
being reasonably duped is the same—in these
two scenarios, why should his ability to invoke
the safe harbor (and consequently, his probable
liability for damages) turn on such distinctions?
3. On page 18, in the third sentence and paragraph
beneath subheading B.3., insert footnote 8 after
the first semicolon (ending the first of four
numbered items). Footnote 8 should read:
8 For the first time in its petition for
rehearing, North American argues that
notaries should never be able to invoke the safe
harbor on the basis of a declaration regarding
their “usual custom and practice”; allowing
them to do so, North American continues,
would erode the safe harbor and incentivize
notaries to forget the transactions they
notarize. Aside from being raised too late, this
argument lacks merit. The underlying
supposition of this argument is that a notary’s
lack of memory is inauthentic, yet the evidence
in this case suggests notaries handle a large
number of transactions that are similar and
routine in nature; that notaries do not have
eidetic memories is neither surprising nor
3
cause for alarm. More broadly, the Evidence
Code specifically contemplates admission of
habit evidence in precisely these situations.
(Evid. Code, § 1105.) We are without power to
excise this statute from the Evidence Code.
There is no change in the judgment.
Appellant’s petition for rehearing is denied.
—————————————————————————————
ASHMANN-GERST, Acting P.J. CHAVEZ, J. HOFFSTADT, J.
4
Filed 12/29/21
CERTIFIED FOR PARTIAL PUBLICATION *
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION TWO
NORTH AMERICAN TITLE B303753
COMPANY, INC.,
(Los Angeles County
Plaintiff and Appellant, Super. Ct. No. BC660525)
v.
EGYA NUBAR GUGASYAN et
al.,
Defendants and
Respondents.
APPEAL from a judgment of the Superior Court of Los
Angeles County, Michael L. Stern, Judge. Affirmed in part,
reversed in part and remanded for further proceedings.
* This opinion is published as to all but parts I.B.3., II., and
III. of the Discussion.
Steyer Lowenthal Boodrookas Alvarez & Smith, Jeffrey H.
Lowenthal, Carlos A. Alvarez, and Jill K. Cohoe for Plaintiff and
Appellant.
Freeman Mathis & Gary, Frances M. O’Meara, Stephen M.
Caine, and Holly M. Teel for Defendants and Respondents Egya
Nubar Gugasyan and Jack Aintablian.
Law Offices of John L. Fallat, John L. Fallat, and Timothy
J. Tomlin for Defendant and Respondent Western Surety
Company.
******
The job of a notary is to verify that the person executing a
document is, in fact, the person who is supposed to be executing
that document. If the notary is “neglect[ful]” in this job, the
notary is civilly liable for damages. (Gov. Code, § 8214.)
However, California law nevertheless sets up a presumptive “safe
harbor” for notaries (1) if, as pertinent here, the notary is
presented with “[a] driver’s license issued by the Department of
Motor Vehicles” (the DMV) that is current or issued within the
preceding five years, and (2) if there is an “absence of
information, evidence, or other circumstances that would lead a
reasonable person to believe that the person [appearing before
the notary] is not the individual he or she claims to be.” (Civ.
Code, § 1185, subds. (b), (b)(3)(A), (c), italics added.) 1 This appeal
requires us to define the scope of this statutory safe harbor. We
ultimately conclude that the safe harbor (1) applies when a
notary relies upon a driver’s license that looks like one the DMV
1 All further statutory references are to the Civil Code unless
otherwise indicated.
2
would issue (and thus does not require a notary to verify with the
DMV that the driver’s license is, in fact, a legitimately issued
license), (2) applies even if an expert opines that industry custom
requires a notary to do more than the statutory safe harbor
requires, and (3) is not overcome by the simple fact that the
person who appeared before the notary was an imposter.
Accordingly, we affirm the grant of summary judgment on
negligence-based claims against the two notaries in this case as
well as the surety that insured them. In the unpublished portion
of the opinion, we affirm the dismissal of two other claims
without leave to amend, but reverse the trial court’s dismissal of
a party whose liability is not tied to the notaries’ acts.
FACTS AND PROCEDURAL BACKGROUND
I. Facts
Noble Investments LLC owns property on North Elm Street
in Beverly Hills, California. The company’s president is Mark
Gabay (Gabay).
In January 2017 and again in February 2017, someone
pretending to be Gabay applied for two loans totaling nearly $4
million, each loan to be secured by deeds of trust against the Elm
Street property. For each loan, the person lined up Finance for
Americans Corp. (Finance) as the broker, Lone Oak Fund, LLC
as the lender, and North American Title Company, Inc. (North
American) as the escrow holder.
From its list of preapproved notaries, North American
called Jack Aintablian (Aintablian), doing business as “Jack the
Notary,” to notarize the two deeds of trust.
On January 16, 2017, and then on February 17, 2017,
Aintablian tasked one of his contractors, Egya Nubar Gugasyan
(Gugasyan), with acting as notary for the two deeds of trust.
3
Gugasyan’s surety, whose job it was to insure against any errors
by the notary, was Western Surety Company (Western). During
each appointment, a person purporting to be Gabay appeared and
provided Gugasyan a California driver’s license (No. B8141711)
as proof of his identity. Gugasyan’s “custom and practice” “[a]t
all relevant times herein” was to (1) compare the photograph of
the person on the license with the person before him, (2) compare
the signatures on the license, on the deed of trust signed in his
presence, and in the notary journal Gugasyan had the person
sign, (3) compare the names on the license and on the deed of
trust, (4) review the texture and color of the license to make sure
it was authentic, and (5) decline to notarize the deed of trust if
any of the prior four steps revealed something unsatisfactory.
After undertaking these steps and seeing nothing untoward,
Gugasyan recorded in his notary journal the person’s driver’s
license information as well as an impression of the person’s
thumbprint. The person then signed each deed of trust as Mark
Gabay on behalf of Noble Investments LLC. Gugasyan then
executed, under penalty of perjury, an “acknowledgement”
attesting that:
Gabay had “personally appeared” in front of him and
“proved to [him] on the basis of satisfactory evidence
to be the person[] whose name[] is[] subscribed to the
within instrument and acknowledged that he[]
executed the same in his[] authorized capacity[], and
that by his[] signature[] on the instrument the
person[], or the entity upon behalf of which the
person[] acted, executed the instrument.”
Once the two deeds of trust were executed, North American
disbursed $3,891,935.35 into a bank account held at JPMorgan
4
Chase Bank (Chase) and a $40,000 broker’s fee to a bank account
for Finance at Wells Fargo Bank, N.A. (Wells Fargo).
As it turns out, the person executing the two deeds of trust
was not Gabay and the California driver’s license presented to
Gugasyan was fake (because the DMV had assigned that license
number to someone else).
II. Procedural Background
A. Initial pleadings
On May 9, 2017, North American sued Wells Fargo, Chase,
and Finance. The same day, North American sought and
obtained a temporary restraining order prohibiting Wells Fargo
and Chase from transferring the funds in the disbursement
accounts. Unfortunately, by this time, only the $40,000 broker’s
fee remained in the Wells Fargo account; the $3,891,935.35 in the
Chase account had been transferred to other bank accounts in
Dubai.
In June 2017, North American filed a first amended
complaint that added Aintablian, Gugasyan, and Western as
additional defendants. Against Aintablian and Gugasyan
(collectively, the notaries), and as pertinent here, North
American alleged claims for (1) declaratory relief, based on “[a]n
actual controversy . . . between North American and [the person
who impersonated Gabay] . . . that North American is entitled to
the return of the Stolen Funds,” (2) negligent misrepresentation,
based on the representations in Gugasyan’s acknowledgment that
the person appearing before him was, in fact, Gabay, (3)
negligence, based on Gugasyan’s negligence in verifying the
identity of the person purporting to be Gabay, and (4) negligence
5
per se, based on the same negligent act. 2 Against Western, North
American sought to collect on the notary bond due to Gugasyan’s
negligence. As for damages, North American sought to recover
against the notaries the stolen loan funds plus interest, attorney
fees under the “tort of another” doctrine, and punitive damages.
B. Demurrer and second amended complaint
The notaries demurred, and also moved to strike the
allegations seeking recovery of attorney fees and punitive
damages. Following briefing and a hearing, the trial court
overruled the demurrer with respect to the negligence and
negligence per se claims, but sustained the demurrer without
leave to amend with respect to the declaratory relief and
negligent misrepresentation claims. The court also struck the
attorney fees and punitive damages allegations. The court ruled
that “no new parties and no new causes of action [are] to be pled
without a court order.”
In October 2017, North American filed a second amended
complaint realleging the same claims for negligence and
negligence per se against the notaries.
C. Motion for summary judgment
The notaries moved for summary judgment on North
American’s claims for negligence and negligence per se on the
ground that (1) they were not negligent as a matter of law
because they complied with the safe harbor requirements of
section 1185, and (2) North American’s damages were not
proximately caused by their actions. Following briefing and a
2 North American alleged three further claims against the
notaries that it subsequently abandoned—namely, claims for (1)
breach of implied contract, (2) fraud and conversion, and (3)
money had and received.
6
hearing, the trial court granted the motion. Specifically, the
court ruled the notaries had met “their burden to show there was
‘satisfactory evidence’ provided” to verify Gabay’s identity; that
this burden triggered section 1185’s presumption that the
notaries “acted in accordance with the applicable provisions of
law”; and that North American had not rebutted that
presumption.
D. Dismissal order and appeal
Although the summary judgment motion only formally
dealt with the notaries, the trial court’s minute order “dismissed”
the “entire case” “[w]ith [p]rejudice.” Although by this time
North American had dismissed Wells Fargo and Chase from the
case, North American still had claims pending against Western,
and against Finance, against whom a default had been entered. 3
North American filed a motion to set aside the dismissal of
the entire action, but while that motion was pending filed a
notice of appeal specifically challenging the scope of the dismissal
as well as the summary judgment ruling. Seeing that the
pending appeal covered the scope of the dismissal, the trial court
took North American’s motion off calendar for lack of jurisdiction.
DISCUSSION
North American argues that the trial court erred in (1)
granting summary judgment for the notaries on its negligence
and negligence per se claims, (2) sustaining the demurrer to its
declaratory relief and negligent misrepresentation claims against
3 North American also had claims pending against a private
banker who had arranged for Chase to open up the account into
which the funds were disbursed, but does not challenge the
dismissal of those claims in this appeal.
7
the notaries without leave to amend, and (3) dismissing Western
and Finance from the lawsuit. 4
I. Summary Judgment Ruling
A. Pertinent law
1. Summary judgment, generally
Summary judgment is appropriately granted “where ‘all the
papers submitted show that there is no triable issue as to any
material fact and that the moving party is entitled to a judgment
as a matter of law.’” (Hartford Casualty Ins. Co. v. Swift
Distribution, Inc. (2014) 59 Cal.4th 277, 286 (Hartford Casualty),
quoting Code Civ. Proc. § 437c, subd. (c).) In other words,
summary judgment is warranted where “the plaintiff has not
established, and reasonably cannot be expected to establish, one
or more elements of the cause of action in question.” (Patterson v.
Domino’s Pizza, LLC (2014) 60 Cal.4th 474, 500.) “‘“‘We review
the trial court’s decision [granting summary judgment] de novo,
considering all the evidence set forth in the moving and opposing
4 While North American appealed from the order granting
the notaries’ summary judgment motion and this court has
jurisdiction only over an appeal from the subsequent judgment
that follows the order (Thompson v. Ioane (2017) 11 Cal.App.5th
1180, 1189; Mukthar v. Latin American Security Service (2006)
139 Cal.App.4th 284, 288 (Mukthar)), we nevertheless exercise
our discretion to entertain North American’s appeal. (Taylor v.
Trimble (2017) 13 Cal.App.5th 934, 939.) That is because the
trial court docket in this matter indicates that the case was
indeed dismissed (Mukthar, at p. 288 [where order is followed by
judgment, appellate court may deem premature notice of appeal
to have been filed after entry of judgment]), and because the
notaries will not be prejudiced since they do not raise any
appealability arguments and instead fully respond to the merits
of the appeal.
8
papers except that to which objections were made and
sustained.’” [Citation.] We liberally construe the evidence in
support of the party opposing summary judgment and resolve
doubts concerning the evidence in favor of that party.’” (Hartford
Casualty, at p. 286.)
2. Law governing notaries public
By statute, a notary public may be civilly liable for
damages for his “neglect.” (Gov. Code, § 8214.) Thus, like other
persons, notaries may be held liable for negligence or negligence
per se if they violate their duties. (Issakhani v. Shadow Glen
Homeowners Assn., Inc. (2021) 63 Cal.App.5th 917, 924, 935;
Lockheed Martin Corp. v. Superior Court (2003) 29 Cal.4th 1096,
1106 & fn. 6.) However, “because of the important function
notaries serve in our society, their duties are prescribed by law.”
(McComber v. Wells (1999) 72 Cal.App.4th 512, 519.)
Section 1185 prescribes the duties of a notary public when
verifying the identity of the person who appears before him or her
to execute documents. 5 Subdivision (a) of section 1185 provides
that the notary may not “acknowledge[] . . . an instrument”
“unless the [notary] has satisfactory evidence that the person
making the acknowledgment is the individual who is described in
and who executed the instrument.” (§ 1185, subd. (a), italics
added.) Subdivision (b) explains that a notary has “satisfactory
evidence” of a person’s true identity if (1) there is no
“information, evidence, or other circumstances that would lead a
reasonable person to believe that the person making the
5 Notaries are also subject to the provisions of Government
Code sections 8200 et seq., including the requirement that they
maintain specified information regarding each transaction in a
sequential journal (§ 8206).
9
acknowledgment is not the individual he or she claims to be” and,
as pertinent here, and (2) the notary is “present[ed]” with and
“[r]easonabl[y] reli[es]” upon a “driver’s license issued by the
[California] Department of Motor Vehicles” that is “current or has
been issued within five years.” (Id., subds. (b) & (b)(3)(A).) If the
notary follows these steps, the notary “shall be presumed to have
operated in accordance with the provisions of law” and thus
presumed to have acted in a nonnegligent fashion. (Id., subd.
(c).) In other words, compliance with the procedures of section
1185 places a notary into a “safe harbor.” (Joost v. Craig (1901)
131 Cal. 504, 519 (Joost) [if “[a] notary . . . take[s] all due
precautions and fully compl[ies] with [section 1185],” “he would
not be held liable”]; Anderson v. Aronsohn (1919) 181 Cal. 294,
299 (Anderson); Transamerica Title Ins. Co. v. Green (1970) 11
Cal.App.3d 693, 703 (Transamerica) [“When the notary does not
obey the statute, he is liable”].) However, just because a notary
fails to satisfy the requirements of the “safe harbor” does not
mean the notary is automatically liable; the plaintiff must still
establish that the notary was “negligen[t]” or otherwise engaged
in “misconduct.” (§ 1185, subd. (d).) 6
B. Analysis
North American argues that the trial court erred in
granting summary judgment for two broad reasons: (1) the court
made several errors in interpreting the meaning and effect of
section 1185’s “safe harbor,” and (2) even if the court properly
6 Although language in Transamerica could be read to
suggest that noncompliance with the safe harbor establishes
negligence per se (Transamerica, at p. 703), Transamerica
predates the enactment of subdivision (d), which clearly places
the burden upon the plaintiff to prove the notary’s “negligence or
misconduct.” (Stats. 1982 , ch. 197, § 1.)
10
interpreted the “safe harbor,” there are numerous other reasons
that preclude the entry of summary judgment.
1. Interpreting section 1185’s “safe harbor”
North American urges that the trial court erred in
construing what is required to fit into section 1185’s “safe
harbor.” Specifically, North American argues that the “safe
harbor” is (1) satisfied only if the driver’s license presented to the
notary was a genuine license actually issued by the California
DMV (rather than a genuine-looking but fake license), (2)
satisfied only if the notary complies with all other industry
customs, which may be defined by expert testimony in a specific
case, and (3) is automatically negated if the person appearing
before the notary turns out to be an imposter. These arguments
require us to engage in our own independent analysis of section
1185 (Union Medical Marijuana Patients, Inc. v. City of San
Diego (2019) 7 Cal.5th 1171, 1183 [“Statutory interpretation is
‘an issue of law, which we review de novo’”]), and we reject each
of these arguments.
a. Does section 1185 require that the driver’s
license presented be issued by the DMV?
A notary’s acknowledgement of a document falls within
section 1185’s safe harbor if the person appearing before him
provides a driver’s license that reasonably appears to have been
issued by the DMV, even if it was not actually issued by the
DMV. We so conclude for two reasons.
First, this is how similar language has been interpreted in
other contexts. Akin to section 1185, Business and Professions
Code section 25660 erects a statutory safe harbor for persons
selling alcohol to minors if they verify the buyer’s age by looking
at a “valid motor vehicle operator’s license” “issued by a . . . state
11
. . . government[] or . . . agency.” (Bus. & Prof. Code, § 25660,
subd. (a)(1).) Courts have concluded that the safe harbor applies
to “fake ID[s] purporting to be issued by a government agency”
because “[t]he [alcohol seller] should not be penalized for
accepting a credible fake that has been reasonably examined for
authenticity and compared with the person depicted.”
(Department of Alcohol Beverage Control v. Alcoholic Beverage
Control Appeals Bd. (2004) 118 Cal.App.4th 1429, 1444-1445
(Department of Alcohol).) Because Business and Professions Code
section 25660 uses a driver’s license to verify a person’s identity
and because its language requiring a license “issued by a . . .
state government or agency” has been construed to reach
“credibl[y]” “fake ID[s],” we conclude that section 1185—which
serves an identical purpose and uses nearly identical language—
should been given the same construction. (E.g., New Albertsons,
Inc. v. Superior Court (2008) 168 Cal.App.4th 1403, 1419 [“The
use of identical terms in two different statutes serving similar
purposes suggests that the Legislature intended those terms to
have the same meaning in both statutes”].)
Second, the construction urged by North American would
lead to absurd results, which we are to avoid in interpreting
statutes. (Lucent Technologies, Inc. v. Board of Equalization
(2015) 241 Cal.App.4th 19, 34; John v. Superior Court (2016) 63
Cal.4th 91, 96.) If, as North American suggests, section 1185’s
safe harbor only applies if the notary verifies that the driver’s
license presented to him was genuinely issued by the DMV, then
a notary would fall outside the safe harbor if the imposter
presents a wholly fake driver’s license but would fall inside the
safe harbor if the imposter duped the DMV into issuing a license.
If the resulting license is similarly genuine looking—and hence
12
the notary’s conduct in being reasonably duped is the same—in
these two scenarios, why should his liability for damages turn on
such distinctions? (Department of Alcohol, supra, 118
Cal.App.4th at pp. 1444-1445 [making similar observations].)
Further, North American’s construction of the safe harbor would
necessarily obligate notaries to contact the DMV to verify the
authenticity of every driver’s license presented to them. Yet this
is either impossible or, at a minimum, wholly impractical. It may
be impossible because the DMV’s power to disclose the
information it collects is heavily regulated by statute. (E.g., Veh.
Code, § 1808.21 et seq.; Veh. Code, §§ 12800.5, subd. (a)(2)
[limiting disclosure of photographs and other identifying
information], 12800.7, subd. (b) [limiting disclosure of personal
information].) It is in any event wholly impractical because
verification by the DMV, even if possible, may take days or
weeks, yet the execution of documents important enough to
necessitate notarization is usually an activity for which time is of
the essence.
North American responds with two further arguments.
First, it contends that its construction is dictated by the plain
text of section 1185, which calls for a “driver’s license issued by
the [California] Department of Motor Vehicles.” To be sure, the
text of a statute is often the best indicator of its meaning. (Dyna-
Med, Inc. v. Fair Employment & Housing Com. (1987) 43 Cal.3d
1379, 1386-1387.) But it is not the exclusive indicator, and is not
to be construed in a manner that leads to absurd results, as
North American’s proffered construction does. Second, North
American points to a panoply of pre-1982 cases interpreting
section 1185’s requirements, including Joost, Anderson, and
Transamerica. Although these cases remain relevant to establish
13
that compliance with section 1185’s requirements erects a safe
harbor, they are no longer relevant in defining those
requirements because our Legislature greatly relaxed those
requirements in 1982: Prior to 1982, the safe harbor only applied
if the notary “kn[e]w that the [person] making the
acknowledgment is the person described in the instrument”
either based on personal knowledge or upon the sworn affidavit of
a credible witness (Anderson, supra, 181 Cal. at p. 299); in 1982,
the safe harbor was expanded to apply in a variety of additional
situations, including when a notary reasonably relies on an
authentic-looking driver’s license. (Stats. 1982, ch. 197, § 1.)
b. Can section 1185’s safe harbor be altered
by expert testimony regarding industry custom?
In opposing summary judgment, North American
submitted a declaration from an expert opining that Gugasyan
was negligent in verifying the identity of the person purporting to
be Gabay because (1) industry custom requires a notary to get
“clear thumbprints,” but the thumbprints Gugasyan obtained
appeared to be smudged in the copies of Gugasyan’s notary
journal, (2) industry custom requires a notary to have “a separate
line item entry in the notary journal,” but Gugasyan used a
single line for “two documents,” and (3) industry custom requires
a notary to follow whatever special procedures the escrow holder
requests, but Gugasyan did not obtain a copy of Gabay’s driver’s
license despite North American’s purported request that he do so.
To begin, glaringly absent from the declaration of North
American’s expert is any opinion that the license or other
circumstances regarding the notarization of the deeds of trust
should have rung any alarm bells for Gugasyan; therefore, the
14
industry customs the expert raises are not relevant to the
requirements triggering section 1185’s safe harbor.
What is more, we reject the notion that a party can, by
expert testimony, redefine a statutory safe harbor fashioned by
our Legislature. In section 1185, the Legislature specified that a
notary is presumed to have acknowledged a document in
accordance with the law if he follows certain protocols in
confirming the identity of the person executing the document. If
parties could, through expert testimony, effectively change the
protocols a notary has to follow before the safe harbor applies,
section 1185 would become less of a safe harbor and more of a
moving target. For instance, North American’s expert goes so far
as to suggest that a notary should be denied the safe harbor for
failing to acquiesce to an escrow holder’s case-specific requests.
Under this approach, if a party were to request that the notary
verify with the DMV that the driver’s license presented was
legitimately issued, a notary would be liable for his failure to do
so, and individual parties would be able to entirely rewrite the
safe harbor in a manner contrary to the very construction we give
to it today. We decline to construe section 1185 in a manner that
would so drastically undercut its efficacy. North American
resists this conclusion. Citing Lipscomb v. Krause (1978) 87
Cal.App.3d 970, 975, Scott v. Rayhrer (2010) 185 Cal.App.4th
1535, 1542, and other cases, North American asserts that experts
regularly opine on whether a professional has satisfied the
pertinent standard of care. This assertion is true, but irrelevant.
Experts may opine on what is necessary for a professional to act
reasonably in discharging her professional responsibilities. As
noted above, however, section 1185 does not merely require that
a notary act “reasonably”; instead, it specifically prescribes what
15
must be done for a notary to qualify for its safe harbor. For the
reasons noted above, expert testimony cannot add to those
statutory prerequisites without destroying section 1185’s function
as a safe harbor. (Accord, Huang v. Garner (1984) 157
Cal.App.3d 404, 415 fn. 9 [“where the statute supplies the
standard of care expert testimony would not be required”],
overruled on other grounds by Aas v. Superior Court (2000) 24
Cal.4th 627.)
c. Is section 1185’s safe harbor negated if the
notary ends up being duped by the fake driver’s license?
North American suggests that a notary’s negligence must
be inferred—and that this negligence overrides the safe harbor—
from the simple fact that the notary did not detect a fraudulently
presented driver’s license.
We reject this argument for two reasons. First, it is
inconsistent with section 1185’s plain language. If, as North
American suggests, the failure to detect a fake ID mandates an
inference of negligence sufficient to impose liability, then the
liability of notaries would be strict, not negligence-based. Yet
section 1185’s safe harbor turns on whether a “reasonable
person” would be fooled and hence on whether the notary
“reasonabl[y] relie[d]” on that ID. (§ 1185, subd. (b) & (b)(3)(A).)
We decline North American’s invitation to rewrite section 1185 to
make notaries strictly liable for even their reasonable mistakes.
(Joost, supra, 131 Cal. at p. 509 [“A notary may take all due
precautions and fully comply with [section 1185] and still be
deceived. In such case he would not be held liable”]; see generally
California Teachers Assn. v. Governing Bd. of Rialto Unified
School Dist. (1997) 14 Cal.4th 627, 633 [courts have “‘no power to
rewrite [a] statute’”].) Second, North American’s argument is, at
16
bottom, a request to apply the doctrine of res ipsa loquitur. The
doctrine of res ipsa loquitur erects a presumption of negligence,
but it only applies when ‘“(1) the event must be of a kind which
ordinarily does not occur in the absence of someone’s negligence;
(2) it must be caused by an agency or instrumentality within the
exclusive control of the defendant; [and] (3) it must not have been
due to any voluntary action or contribution on the part of the
plaintiff.”’ (Howe v. Seven Forty Two Co., Inc. (2010) 189
Cal.App.4th 1155, 1161.) The doctrine is inapplicable here
because fake IDs fool careful people all the time; that is in part
why the Penal Code makes the use of fake IDs a crime. (Pen., §§
148.9, 529.) We thus refuse to adopt a holding that would
effectively apply res ipsa loquitur in a situation when its
prerequisites are lacking.
2. Applying section 1185’s safe harbor
Properly construed, the safe harbor in section 1185
warrants the entry of summary judgment in this case. As noted
above, section 1185’s safe harbor applies if a notary (1) is
“present[ed]” with and “[r]easonably reli[es]” upon a driver’s
license that purports to be issued by the DMV, and (2) does not
encounter any other “information, evidence, or other
circumstances that would lead a reasonable person to believe that
the person making the acknowledgment is not the individual he
or she claims to be.” (§ 1185, subd. (b) & (b)(3)(A).) Here,
Gugasyan declared that his usual practice was to carefully
examine the driver’s license presented to him to make sure that
the name, signature, and photograph on the license matched the
name, signature, and appearance of the person appearing before
him; to examine the license itself for authenticity in terms of
texture and color; to record the information on the license in his
17
notary book; and to refuse to notarize a document if there were
any irregularities. Because Gugasyan notarized the deeds of
trust and recorded the driver’s license information provided on
both occasions in his notary journal, Gugasyan’s declaration
establishes that he was presented with and reasonably relied
upon a license purporting to be issued by the DMV and that he
had no other evidence at the time that would give him pause.
North American provided no contrary evidence. Indeed, as noted
above, even its expert did not speak to the reasonableness of
Gugasyan’s examination of the license; instead, the expert said
Gugaysan should have done more to make it easier to catch the
imposter after the fraud was discovered (such as taking a clearer
thumbprint, having additional signature lines, and making a
copy of the license). As such, the undisputed evidence raises no
triable issue of fact on whether Gugaysan complied with section
1185.
3. North American’s arguments
North American resists this conclusion with a plethora of
arguments that we have wrangled into four pens.
First, North American raises several evidentiary objections.
North American contends that Gugasyan’s declaration is
entitled to no weight because (1) he did not specifically declare
that he followed his usual custom as to the two notarizations at
issue here, and previously stated in a deposition that he could not
remember the two specific notarizations in this case; (2) he did
not specifically declare that a driver’s license had been presented
to him; (3) he did not provide proof that the person appearing
before him executed the two deeds of trust in his capacity as a
representative of Noble Investments LLC; and (4) the trial court
has the discretion, under Code of Civil Procedure section 437c,
18
subdivision (e), not to credit the declaration of the sole witness to
an event.
Each of these challenges to Gugasyan’s declaration lacks
merit. Contrary to what North American suggests, Gugasyan did
declare that he followed his usual custom and practice. His
declaration set forth his “custom and practice” “[a]t all times
relevant herein.” It is hard to think of a time more “relevant
herein” than the times he notarized the two deeds of trust
underlying this lawsuit. (Accord, Evid. Code, § 1105 [“evidence of
habit or custom is admissible to prove conduct on a specific
occasion in conformity with the habit or custom”].) What is more,
Gugasyan’s notary journal constitutes uncontroverted evidence
that he followed his usual custom and practice in this case
because the journal contains entries for both notarizations with
all of the information he declared it was his usual practice to
record. North American is effectively asking us to read
Gugasyan’s declaration as indicating his “custom and practice”
“[a]t all times relevant herein except the two most pertinent
times.” The maxim that we construe evidence liberally against
summary judgment does not empower us to rewrite declarations
to favor the nonmoving party. North American’s next argument
that there is no evidence that Gugasyan was presented with a
fake driver’s license is contradicted by North American’s own
separate statement, in which it listed as undisputed facts that
Gugasyan “was presented with a fake ID at the signing” relating
to the first and second deeds of trust. The absence of proof that
the person pretending to be Gabay was acting as the
representative of Noble Investments LLC is irrelevant: It is
undisputed that the real Gabay is the president of Noble
Investments LLC; the problem is that the person who executed
19
the deeds was not the real Gabay. And while a trial court has
discretion to deny summary judgment “if the only proof of a
material fact offered in support of the summary judgment is a[] . .
. declaration made by an individual who was the sole witness to
that fact” (Code Civ. Proc., § 437c, subd. (e)), “‘the converse is also
true, and a court has the discretion to grant a motion for
summary [judgment] under such circumstances as well.”’
(Trujillo v. First American Registry, Inc. (2007) 157 Cal.App.4th
628, 636, overruled on other grounds by First Student Cases
(2018) 5 Cal.5th 1026.) Here, North American has made no effort
to explain why the trial court abused its discretion in relying
upon Gugasyan’s declaration.
As its final evidentiary challenge, North American faults
the notaries for not producing Gugasyan’s original notary journal,
suggesting that its absence is somehow nefarious. North
American conveniently neglects to mention the reason why the
original has yet to be disclosed—namely, because the FBI seized
it as part of an investigation into the fraud. The absence of the
original journal is of no consequence under the secondary
evidence rule in any event. That rule allows a trial court to rely
upon a copy of a writing unless “[a] genuine dispute exists
concerning material terms of the writing and justice requires the
exclusion” or “[a]dmission of the” copy “would be unfair.” (Evid.
Code, § 1521, subd. (a).) Here, the color copies of the journal
submitted to the trial court are remarkably clear. As discussed
more fully below, there is also no genuine dispute regarding the
material terms of the journal. We also perceive no abuse of
discretion as to why admission of the copy when the original
apparently is in the FBI’s possession is unjust or unfair.
20
Second, North American asserts that there are other triable
issues of fact that preclude summary judgment. It articulates
two. To begin, North American posits that there is a dispute over
whether, in Gugasyan’s notary journal, he recorded the last digit
of the driver’s license presented to him with respect to the second
deed of trust as a “1” or a “0”—North American reads Gugasyan’s
handwriting as being a “0,” while Gugasyan says it was a “1.”
North American urges that this dispute is material because, if
the last digit is a “0,” then the person pretending to be Gabay
would have presented driver’s licenses with two different
numbers, which should have put Gugasyan on notice that
something was amiss. From our examination of the notary
journal, it is not clear that what North American sees as a “0” is
anything more than a sloppily drawn “1.” So there may be no
dispute at all. Further, we do not believe that any such
evidentiary dispute is sufficient to overcome the presumption in
section 1185. Gugasyan testified that he conducts between 10
and 15 notary appointments per week, so he likely completed
between 40 and 60 other appointments between the two with the
imposter at issue in this case. To adopt North American’s
proffered inference that Gugasyan should have recalled that the
driver’s license presented at the second appointment had a one-
digit discrepancy compared to the license presented at the first
appointment would impose a burden on notaries of recalling
every appointment and investigating every driver’s license—a
requirement not embodied in section 1185’s “reasonable notary”-
based standard. Indeed, North American failed to submit
evidence supporting such an implausible inference; its own expert
offered no opinion that a reasonable notary in Gugasyan’s
position would have recalled that the appointment was with a
21
repeat customer and thus should have reviewed the driver’s
license information in his journal to investigate whether the
licenses presented were the same (and hence more likely to be
legitimate). Further, North American argues that there are
triable issues regarding proximate causation. Because we have
concluded that summary judgment is appropriate based on
section 1185’s safe harbor, we have no occasion to address this
possible alternative ground for summary judgment.
Third, North American argues that the trial court erred in
granting summary judgment for Aintablian. We reject this
argument. It is undisputed that Aintablian’s sole role was as
Gugasyan’s superior, and that any liability he had was solely
vicarious. (See generally Perez v. Van Groningen & Sons (1986)
41 Cal.3d 962, 967 [discussing vicarious liability for an
employee’s torts].) Because we have concluded that Gugasyan is
not liable, it follows that Aintablian is also not liable. What is
more, Aintablian moved for summary judgment along with
Gugasyan. On these facts, it makes no sense to grant summary
judgment for Gugasyan but not Aintablian.
Fourth, North American argues that the trial court erred in
ruling on the summary judgment motion without granting a
continuance so that North American could obtain further proof
that the license presented to Gugasyan was not issued by the
DMV. There was no error. Code of Civil Procedure section 437c,
subdivision (h), provides in pertinent part that “[i]f it appears
from the affidavits submitted in opposition to a motion for
summary judgment . . . that facts essential to justify opposition
may exist but cannot, for reasons stated, be presented, the court
shall deny the motion, [or] order a continuance to permit
affidavits to be obtained or discovery to be had . . . .” (Code Civ.
22
Proc., § 437c, subd. (h).) The trial court did not abuse its
discretion in declining to continue the summary judgment
hearing because further discovery to establish that the license
presented to Gugasyan was not issued by the DMV was not
“essential” because that fact was undisputed and already
established by other evidence.
II. Demurrer Ruling
North American argues that the trial court erred in (1) not
granting leave to amend its complaint after sustaining a
demurrer to its claims for declaratory relief and negligent
misrepresentation, and (2) striking its prayer for attorney fees on
a “tort of another” theory. Because North American does not
meaningfully challenge the trial court’s ruling that its
declaratory relief and negligent misrepresentation claims were
deficient as pled, our task on appeal is limited to asking whether
the court abused its discretion in denying leave to amend because
there is a “reasonable possibility that the defect can be cured by
amendment.” (Loeffler v. Target Corp. (2014) 58 Cal.4th 1081,
1100.) A plaintiff may articulate a valid amendment even for the
first time on appeal but bears the burden of articulating the
“specifi[c] way” that the operative complaint can be amended to
state a claim. (Align Technology, Inc. v. Tran (2009) 179
Cal.App.4th 949, 971; CAMSI IV v. Hunter Technology Corp.
(1991) 230 Cal.App.3d 1525, 1542.) A possible amendment is not
valid if it is foreclosed as a matter of law. (California Department
of Tax & Fee Administration v. Superior Court (2020) 48
Cal.App.5th 922, 938.)
The trial court did not abuse its discretion in denying leave
to amend North American’s claims against the notaries for
declaratory relief or for negligent misrepresentation.
23
North American’s claim of error for the declaratory relief
claim fails for one, and possibly two, reasons. First, and as a
threshold matter, North American’s proposed amendment to this
claim may face a procedural bar. North American argues that it
can amend its declaratory relief claim to allege that the notaries
did not adhere to the terms of the contract Aintablian originally
signed with North American, which obligates Aintablian to
indemnify North American and to assign to North American all
rights to the insurance policy he carries for any errors or
omissions. North American first presented this proposed
amendment after learning of the trial court’s inclination to grant
summary judgment. The law is well settled that a trial court
does not abuse its discretion in denying a request for leave to
amend made for the first time at the hearing on summary
judgment. (580 Folsom Assocs. v. Prometheus Development Co.
(1990) 223 Cal.App.3d 1, 18; Shugart v. Regents of University of
California (2011) 199 Cal.App.4th 499, 508; Leibert v.
Transworld Systems, Inc. (1995) 32 Cal.App.4th 1693, 1699.)
North American’s argument that the court abused its discretion
because that late request was preceded by a successful demurrer
is ostensibly an end run around the rule that requires
amendments to be made in a more timely fashion. Second, and in
any event, North American’s proposed claim fails as a matter of
law. The claim fails against Gugasyan because he is not a party
to the Aintablian-North American contract. More to the point,
the claim fails against both defendants because their duty to
indemnify and the insurance company’s potential coverage only
matters if the notaries engaged in some underlying negligence; as
we have concluded above, North American failed to overcome the
conclusion dictated by the safe harbor that they did not.
24
North American’s claim of error as to the negligent
misrepresentation claim also fails for two reasons. First, North
American abstractly states that it can “provide more details”
regarding (1) the misrepresentations Gugasyan made in his
acknowledgment that the person appearing before him was
Gabay, and (2) the misrepresentations Aintablian made in
applying to be on North American’s list of approved notaries.
This vague promise of a desire to “add more details” without
specifying what they are falls short of what a plaintiff’s burden is
to articulate the “specific ways” its complaint can be amended.
Second, these claims fail as a matter of law. Negligent
misrepresentation requires underlying negligence in making a
representation (Daniels v. Select Portfolio Servicing, Inc. (2016)
246 Cal.App.4th 1150, 1166), and we have concluded that the safe
harbor insulates Gugasyan from negligence liability as a matter
of law. The absence of any negligence by Gugasyan also means
that any misrepresentation by Aintablian in applying to become a
notary in the first place has no causal connection to the damages
North American suffered here.
Because we have concluded that North American states no
claims against the notaries, we have no occasion to decide
whether they may seek attorney fees under the “tort of another”
doctrine for such claims.
III. Dismissal of Other Defendants
North American lastly asserts that the trial court erred in
ordering the dismissal of the entire case once summary judgment
was granted in favor of the notaries because North American still
had claims pending against Western and Finance. Because the
court did this without affording North American notice and an
opportunity to be heard, North American continues, the court
25
violated its right to due process. (In re Marriage of Stracyznski
(2010) 189 Cal.App.4th 531, 538.) Because this is a constitutional
claim, our review is de novo. (Conservatorship of John L. (2010)
48 Cal.4th 131, 142 [due process challenge].)
A. Western
The trial court did not err in dismissing Western. Western
was the surety for Gugasyan. As such, Western’s liability to
North American rises or falls on whether North American has a
claim against Gugasyan. (Cates Construction, Inc. v. Talbot
Partners, Inc. (1999) 21 Cal.4th 28, 38 [“In the absence of default,
the surety has no obligation”]; Breckenridge v. Mason (1967) 256
Cal.App.2d 121, 130 [“when on an official bond and primary
obligation is barred or in any legal way extinguished, the surety
is relieved”]; Hungate v. Indemnity Ins. Co. of North America
(1933) 129 Cal.App.133, 135 [a notary’s “bond is executed for the
purpose of protecting those who may suffer by his dishonesty and
the bondsman is liable for damages resulting from the fraudulent
acts of the notary committed in the performance of his duties”].)
Because North American vigorously litigated the question of
whether it had a claim against Gugasyan and does not articulate
a way in which Western can otherwise be liable, North American
had ample notice and opportunity to be heard regarding
Western’s liability. As a result, the court’s dismissal of Western
was legally appropriate and complied with due process.
B. Finance
The trial court erred in dismissing Finance. Finance’s
liability for brokering the loan by the imposter is separate and
distinct from the notaries’ liability. What is more, the court
previously struck Finance’s filings and entered a default against
Finance, meaning that Finance is ostensibly liable to North
26
American. Dismissing Finance was improper, and we reverse the
dismissal order as to Finance.
DISPOSITION
The order dismissing North American’s claims against
Finance is reversed and remanded for further proceedings. The
order dismissing North American’s claims against Aintablian,
Gugasyan, and Western is affirmed. Aintablian, Gugasyan, and
Western are entitled to their costs on appeal.
CERTIFIED FOR PUBLICATION.
______________________, J.
HOFFSTADT
We concur:
_________________________, Acting P. J.
ASHMANN-GERST
_________________________, J.
CHAVEZ
27