Coats v. Nelson CA4/3

Filed 11/6/13 Coats v. Nelson CA4/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
MICHAEL R. COATS et al.,
Plaintiffs and Appellants, G046753, G046758
v. (Super. Ct. No. 30-2010-00428773)
RONALD W. NELSON et al., OPINION
Defendants and Respondents.
Appeals from a judgment of the Superior Court of Orange County, Linda S.
Marks, Judge. Affirmed.
Michael R. Coats, in pro. per., and Jeremy Coats, in pro. per., for Plaintiffs
and Appellants.
Law Office of Michael J. Coppess and Michael J. Coppess for Defendants
and Respondents.
* * *
This is an appeal following judgment after the court sustained a demurrer
and granted a motion for judgment on the pleadings by Ronald and Vicky Nelson
(collectively the Nelsons) on a complaint filed by Michael Coats and Jeremy Coats
(collectively the plaintiffs).1 The complaint alleged claims against the Nelsons for quiet
title, fraud, and other causes of action relating to a piece of real property owned by a
trust. The Nelsons, joining with two institutional defendants, successfully demurred to
all of the causes of action except for quiet title on the grounds that plaintiffs were not real
parties in interest, but beneficiaries of the trust. The Nelsons then brought a motion for
judgment on the pleadings on the same grounds, which the court granted. We agree with
the Nelsons that the trial court properly sustained the demurrer and granted the motion for
judgment on the pleadings, and therefore affirm.
I
FACTS
We repeat the statement of facts from a prior appeal in this case as to the
two institutional defendants, JP Morgan Chase Bank, N.A. (Chase) and California
Reconveyance Company. “We draw the facts primarily from the complaint. In 1998,
Lillian Fossa created the LEC Trust (the trust) and was its manager. Jeremy and Michael
Coats, her children, were both beneficiaries of the trust. Ronald Nelson was a ‘former
Trustee’ and Vicky Nelson was a ‘former Agent’ of the trust.
“Fossa had owned a home in Buena Park (the property) since 1976. In
1998, she transferred the property into the trust. According to the complaint, in 2004,
‘for the sole purpose of refinancing’ the property, a trustee, Nancy Wright, transferred the
property to Ronald and Vicky Nelson (the Nelsons). That transaction was completed,
and they reconveyed a grant deed back to the trust.
1 Where it is necessary to distinguish them, we refer to the parties by their first names due
to their common surname. No disrespect is intended.
2
“In 2007, Fossa allegedly asked Ronald Nelson if the Nelsons would once
again refinance the property. After some discussion, they agreed to do so. As
compensation, Ronald Nelson wanted ‘Trust documents’ created for the Nelsons. Wright
again transferred the property to the Nelsons. In May 2007, a new loan in the amount of
$260,000 from GreenPoint Mortgage was initiated.[2]
“A dispute then arose between Fossa and the Nelsons over a $6000 loan the
Nelsons had made to the trust in 2006. A number of attempts to resolve the matter
followed, but according to the complaint, the Nelsons refused to reconvey the property to
the trust. Issues with payments on the new loan began to arise immediately. In July,
Ronald Nelson resigned as trustee. The complaint alleged he threatened to sell the house
‘if his demands were not met.’ Timely payments were purportedly made in August and
September.
“At some point in the fall of 2007, Fossa learned that servicing of the loan
was transferred from GreenPoint Mortgage to Washington Mutual. Ronald Nelson
allegedly failed to communicate the change in lenders to Fossa or anyone connected with
the trust. Litigation between the Nelsons and Fossa, on behalf of the trust, followed,
which resulted in a dismissal of both complaint and cross-complaint.
“As a result of the litigation, the complaint alleged, Fossa became aware of
the change in loan servicers and sought information from Washington Mutual regarding
the delinquency. The trust was provided with a total delinquency amount, without a
breakdown. She was told the Nelsons’ authorization was required before the bank could
send duplicate statements.
“In September 2008, Chase acquired the subject loan from the FDIC after
Washington Mutual’s failure. In 2009, California Reconveyance Company recorded a
2According to the complaint, the Nelsons “should have transferred title” back to the trust
on or about June 15, 2007.
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notice of default on the loan. According to the complaint, defects in the chain of title
exist between GreenPoint and Chase.
“In November 2010, Michael and Jeremy Coats filed their initial pleading
in the instant case. The instant complaint, filed in April 2011, alleged causes of action
for quiet title, fraud, fraud and negligent misrepresentation, civil conspiracy, accounting
and declaratory relief. . . .
“In May 2011, defendants filed a demurrer, arguing both that defendants
lacked standing to sue, and their causes of action failed to allege facts sufficient to state a
cause of action. No opposition was filed, and the court sustained the demurrer.
Judgment was subsequently entered for defendants.” (Coats v. JP Morgan Chase Bank,
N.A., et al. (Jan. 3, 2013, G045921) [nonpub. opn.].)
The Nelsons joined Chase’s May 2011 demurrer, which addressed all
causes of action except for quiet title. The Nelsons, acting in propria persona at that
point, also filed a points and authorities as part of their notice of joinder which attempted
to address the quiet title claim. Neither plaintiff filed an opposition to the demurrer.
Joinder was granted and the demurrer was sustained as to all causes of action except the
one for quiet title, with the court noting that no demurrer had been filed. The court
ordered the Nelsons to answer the quiet title cause of action, which they did.
The Nelsons, now represented by counsel, filed a motion for judgment on
the pleadings as to the first cause of action in August 2011. Plaintiffs filed a purported
opposition which was signed by Fossa as “Agent, Attorney-in-Fact.” The Nelsons
objected and filed a request to strike due to Fossa’s signature. Michael, whose address
was Salinas Valley State Prison, signed identical opposition papers. Jeremy filed no
opposition, and neither plaintiff appeared at the hearing.3 At the hearing, the court
3 The Nelsons request we take judicial notice of a new complaint against them by Tina
Perez, filed while the motion for judgment on the pleadings was pending. This complaint
is nearly identical to plaintiffs’ complaint, and Perez’s address is the same Buena Park
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concluded that plaintiffs had not established standing as real parties in interest, and
granted the motion. Judgment was subsequently entered on January 25, 2012.
In April 2012, plaintiffs filed two separate notices of appeal, with each
plaintiff appealing separately. In January 2013, they filed separate, substantively
identical briefs. In April 2013, we consolidated the appeals and the Nelsons filed a
consolidated brief. Despite extensions of time, neither Michael nor Jeremy filed a reply
brief.
II
DISCUSSION
Standard of Review
“In our de novo review of an order sustaining a demurrer, we assume the
truth of all facts properly pleaded in the complaint or reasonably inferred from the
pleading, but not mere contentions, deductions, or conclusions of law. [Citation.] We
then determine if those facts are sufficient, as a matter of law, to state a cause of action
under any legal theory. [Citation.]” (Intengan v. BAC Home Loans Servicing LP (2013)
214 Cal.App.4th 1047, 1052. “In order to prevail on appeal from an order sustaining a
demurrer, the appellant must affirmatively demonstrate error. Specifically, the appellant
must show that the facts pleaded are sufficient to establish every element of a cause of
action and overcome all legal grounds on which the trial court sustained the demurrer.
[Citation.] We will affirm the ruling if there is any ground on which the demurrer could
have been properly sustained.” (Ibid.)
property at issue here. While the Nelsons correctly note we are statutorily authorized to
take judicial notice of court records (Evid. Code, §§ 452, subd. (d), 459), only relevant
evidence is subject to judicial notice. (Mangini v. R.J. Reynolds Tobacco Co. (1994) 7
Cal.4th 1057, 1063.) They fail to identify how Perez’s complaint is relevant to a material
issue. (People ex. rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422, fn. 2.)
We therefore deny the request.
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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 affirm. [Citation.] The burden of proving such reasonable possibility
is squarely on the plaintiff. [Citation.]” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)
“A judgment on the pleadings in favor of the defendant is appropriate when
the complaint fails to allege facts sufficient to state a cause of action. [Citation.] A
motion for judgment on the pleadings is equivalent to a demurrer and is governed by the
same de novo standard of review. [Citations.] All properly pleaded, material facts are
deemed true, but not contentions, deductions, or conclusions of fact or law; judicially
noticeable matters may be considered. [Citations.]” (Kapsimallis v. Allstate Ins. Co.
(2002) 104 Cal.App.4th 667, 672.)
Lack of Standing
The trial court concluded that plaintiffs, as beneficiaries, lacked standing to
pursue this action on behalf of the trust. Code of Civil Procedure section 367 states,
“Every action must be prosecuted in the name of the real party in interest, except as
otherwise provided by statute.” Generally, the trustee is the real party in interest with
standing to sue and defend on the trust’s behalf. (Wolf v. Mitchell, Silberberg & Knupp
(1999) 76 Cal.App.4th 1030, 1035-1036.) If someone other than the real party in interest
files a lawsuit, the complaint is subject to a general demurrer. (Code Civ. Proc., §
430.10; Carsten v. Psychology Examining Com. (1980) 27 Cal.3d 793, 796.)
The only exception relevant is that a trust’s beneficiaries can bring an
action against a trustee for breach of trust. (Prob. Code, § 16420, subd. (a); City of
Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445,
463.) The problem for plaintiffs is that the gravamen of this case is not a breach of trust,
but a breach of an oral agreement between the Nelsons and Fossa to refinance a mortgage
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of trust property. This is well outside the scope of the trust itself, and cannot, therefore,
reasonably be called a “breach of trust.” Therefore, as beneficiaries, plaintiffs lack
standing to sue. The demurrer was properly sustained on this ground.
Statute of Limitations
In addition to the lack of standing, the Nelsons argue the applicable statutes
of limitation bar any relief. They claim that plaintiffs’ claims against them accrued,
according to the verified complaint, on or about June 15, 2007, which is the date that the
complaint alleges the Nelsons were supposed to reconvey the property back to the trust.
The initial complaint in this matter was filed on November 30, 2010, some three years
and four months later.
In a claim for quiet title, the underlying theory of relief determines which
statute of limitations applies. (Ankoanda v. Walker-Smith (1996) 44 Cal.App.4th 610,
615.) Here, the Nelsons argue, and we agree, that the underlying theory is breach of an
oral contract. The complaint alleged that the Nelsons had agreed to undertake the second
refinance of the property “as they had in the past (with no monetary charge to the Trust
and title being transferred back into the trust.)” Then, the complaint alleges, the Nelsons
refused to reconvey the property back to the trust. The complaint does not allege that this
particular arrangement was ever reduced to writing, and thus, it was an oral contract. The
applicable statute of limitations for breach of an oral contract is two years (Code Civ.
Proc., § 339, subd. (1).) A cause of action accrues, and the statute begins to run, when all
of the elements of the cause of action have occurred. (Howard Jarvis Taxpayers Assn. v.
City of La Habra (2001) 25 Cal.4th 809, 815.) Thus, a cause of action for breach of
contract does not accrue before the time of breach, which, according to plaintiffs, was on
or about June 15, 2007. Even if the date in the complaint was approximate, no
reasonable version of the facts would extend accrual to November 2008. Thus, the quiet
title action is time-barred.
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The second cause of action is for fraud. The fraud alleged in the complaint
was that defendants led Fossa “to believe that they had agreed to refinance the ‘subject
property’ for the LEC Trust and to return title to the Trust after the refinance had become
complete. Defendants had no intention of returning the ‘subject property’ back to the
trust.” The statute of limitations for fraud is three years, and the claim accrues when the
aggrieved party discovers the facts constituting the fraud or mistake. (Code Civ. Proc., §
338, subd. (d).) If we deem this claim accrued on the latest possible date, that is October
2007, when Ronald Nelson stopped forwarding mortgage statements to Fossa. Logically,
the accrual was considerably earlier, either during a July board meeting or when Ronald
Nelson subsequently resigned. But in any event, the complaint was filed more than three
years later, and is therefore barred by the statute of limitations.4
Plaintiffs’ claim for negligent misrepresentation fares no better. It is
pleaded here based on the same operative facts as the fraud claim, and is therefore
governed by the same expired statute of limitations. (See Ventura County Nat. Bank v.
Macker (1996) 49 Cal.App.4th 1528, 1530 [nature of right sued upon determines statute
of limitations].) The same rule applies to conspiracy. (Maheu v. CBS, Inc. (1988) 201
Cal.App.3d 662, 673) The nature of the conspiracy is not precisely defined, but we agree
with the Nelsons that fraud seems to be the closest fit, and therefore the same three-year
statute of limitations applies.
While the Nelsons are named in the headings to the final two causes of
action, accounting and declaratory relief, there are no facts alleged or actions requested
by the court with respect to the Nelsons. Therefore, the complaint failed to state a cause
4 Moreover, this cause of action utterly fails the requirement that fraud be pleaded with
specificity. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) “‘This particularity
requirement necessitates pleading facts which “show how, when, where, to whom, and by
what means the representations were tendered.”’” (Ibid.) Plaintiffs’ allegations of fraud
are entirely conclusory.
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of action against them. Further, plaintiffs cannot cure their statute of limitations
problems by amending the complaint, and therefore, leave to amend was not required.
III
DISPOSITION
The court properly granted judgment for the Nelsons, and the judgment is
accordingly affirmed. The Nelsons are entitled to their costs on appeal.
MOORE, ACTING P. J.
WE CONCUR:
FYBEL, J.
IKOLA, J.
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