Coats v. Nelson
Filed 11/6/13 Coats v. Nelson CA4/3
OFFICIAL REPORTS
California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
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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opinion has not been certified for publication or ordered published for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,
v.
RONALD W. NELSON
et al.,
Defendants and Respondents.
G046753, G046758
(Super. Ct. No. 30-2010-00428773)
O P I N I O N
Appeals
from a judgment of the Superior Court of
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
Ronald and Vicky Nelson (collectively the Nelsons) on a complaint filed by
Michael Coats and Jeremy Coats (collectively the plaintiffs).
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.
“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.[
“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 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.†(
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.
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.]â€
(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.†(
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.]†(
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.]â€
(Kapsimallis v. Allstate Ins. Co. (2002) 104 Cal.App.4th 667, 672.)
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.â€
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 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.
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.
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.
name="_ftnref4" title="">[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
(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 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.
name="_ftn1" title="">[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.
name="_ftn2" title="">[2] According to the complaint, the Nelsons “should have transferred
title†back to the trust on or about June 15, 2007.
