SAMUEL HOPPER v. LAWYERS TITLE INSURANCE CORPORATION

Reset A A Font size: Print

Court of Appeal, Second District, California.

H. SAMUEL HOPPER, Plaintiff and Appellant, v. LAWYERS TITLE INSURANCE CORPORATION, Defendant and Respondent.

B231344

Decided: October 21, 2011

Herbert Abrams for Plaintiff and Appellant. Fidelity National Law Group, James A. Hazlehurst, and Gregory A. Dawley for Defendant and Respondent.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

Plaintiff and appellant H. Samuel Hopper (plaintiff) appeals from a judgment of dismissal entered following an order sustaining without leave to amend defendant Lawyers Title Insurance Corporation's (Lawyers Title) demurrer to the second amended complaint.   We find that plaintiff has stated a cause of action for breach of contract, and thus we reverse.

STATEMENT OF FACTS AND OF THE CASE

Plaintiff filed the present action on November 10, 2009, and filed the operative second amended complaint on November 10, 2010.1  It alleges as follows.

Plaintiff owns real property in Long Beach, California (the property).   In September 2008, he attempted to refinance the property and sought a title insurance policy from Lawyers Title.   Lawyers Title issued a preliminary title report listing several exceptions to coverage, including a “deed of trust to secure an indebtedness” in the amount of $43,750 in favor of Citizen's Thrift & Loan (Citizens).   Subsequently, plaintiff executed an indemnity agreement in favor of Lawyers Title and posted collateral of $87,500 as required by the indemnity agreement, and Lawyers Title issued a title insurance policy.2

Plaintiff alleges that the indemnity agreement “specifically provides on page 1, paragraph B, that Plaintiff was indemnifying Defendant, LAWYERS TITLE, for the ‘Exception’ listed on page 3 of said Indemnity Agreement”—i.e., the deed of trust for $43,750 in favor of Citizens (the deed of trust).   Plaintiff further alleges that the indemnity agreement incorporated by reference the preliminary title report, which stated that the deed of trust had been assigned to Christiana Bank & Trust Company on December 2, 2002.

Plaintiff alleges that since the assignment to Christiana Bank & Trust Company was the only assignment listed on the preliminary title report, he contacted Christiana and determined that it “would not and could not” enforce the deed of trust.   Plaintiff subsequently retained counsel “to render said Deed of Trust and the judgment obtained thereon ․ null and void, since the judgment thereon was not renewed as required by law.”   Plaintiff then demanded the return of the indemnity funds of $87,500, but Lawyers Title refused to return them, purportedly on the basis of another assignment of the deed of trust not shown on the preliminary title report.   Plaintiff alleges that such refusal is a breach of the indemnity agreement (first cause of action) and constitutes insurance bad faith (second cause of action).

Lawyers Title demurred to the second amended complaint on November 16, 2010, asserting that plaintiff had not pled that he performed under the indemnity agreement by extinguishing the deed of trust, and thus that he had not satisfied an element of his cause of action for breach of contract.   It urged that the demurrer be sustained without leave to amend because plaintiff “can plead no facts to state any cause of action against Lawyers Title.”   Plaintiff opposed the motion, asserting that he adequately alleged a breach of the indemnity agreement.

The trial court sustained the demurrer without leave to amend on December 10, 2010, and entered a judgment of dismissal on January 7, 2011.3  Plaintiff timely appealed.

DISCUSSION

“A demurrer tests the legal sufficiency of the factual allegations in a complaint.   We independently review the sustaining of a demurrer and determine de novo whether the complaint alleges facts sufficient to state a cause of action or discloses a complete defense.  (McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal.4th 412, 415;  Cryolife, Inc. v. Superior Court (2003) 110 Cal.App.4th 1145, 1152.)   We assume the truth of the properly pleaded factual allegations, facts that reasonably can be inferred from those expressly pleaded, and matters of which judicial notice has been taken.  (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.)   We construe the pleading in a reasonable manner and read the allegations in context.  (Ibid.) [¶] We must affirm the judgment if the sustaining of the demurrer was proper on any of the grounds stated in the demurrer, regardless of the trial court's stated reasons.  (Aubry v. Tri–City Hospital Dist. (1992) 2 Cal.4th 962, 967.)”   (City of Industry v. City of Fillmore (2011) 198 Cal.App.4th 191, 205.)

I. Breach of Contract

To state a cause of action for breach of contract, plaintiff must plead (1) the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) resulting damages.  (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821, citing Reichert v. General Ins. Co. (1968) 68 Cal.2d 822, 830.)

Lawyers Title demurred on the grounds that plaintiff had not adequately pled the second element—his performance under the indemnity agreement.   According to Lawyers Title, plaintiff warranted in the indemnity agreement to “take such action as in the

The problem with Lawyers Title's contention is that it requires us to resolve a number of factual disputes, which we may not do on demurrer.   Lawyers Title supports its factual assertions with several documents, including a “Master Assignment of the Deeds of Trust” recorded August 28, 1996, of which it sought judicial notice.   Even if these documents were the proper subjects of judicial notice (a matter that we need not now decide), “ ‘ “judicial notice of matters upon demurrer will be dispositive only in those instances where there is not or cannot be a factual dispute concerning that which is sought to be judicially noticed.” ’  (Joslin v. H.A.S. Ins. Brokerage (1986) 184 Cal.App.3d 369, 375, citing Cruz v. County of Los Angeles (1985) 173 Cal.App.3d 1131, 1134.)”  (Williams v. Southern California Gas Co. (2009) 176 Cal.App.4th 591, 600.)   In the present case, the documents on which Lawyers Title relies give rise to important factual disputes, including whether the assignment to First Trust was valid and whether, as a result, the deed of trust therefore may be foreclosed on in the future.   Thus, while the trial court arguably could take judicial notice of the assignment, it could not properly infer that the assignment was valid or that it creates the possibility that the deed of trust may be foreclosed on in the future.

Since we may not consider the documents of which Lawyers Title seeks judicial notice, we look to the face of the second amended complaint to determine whether it adequately pleads plaintiff's performance of the contract.   The indemnity agreement, attached as an exhibit to the complaint, provides in paragraph 1 that plaintiff “shall take such action as in the opinion of Title Company is necessary to timely remove, satisfy or discharge the Exception prior to the Release Date, if any.”   The “Exception” was identified in the indemnity agreement as follows:

“Deed of Trust

“Amount:  $43,750.00

“Trustor:  H. Samuel Hopper

“Trustee:  Citizens Group, Inc.

“Beneficiary:  Citizens Thrift and Loan

“RELEASE DATE:  Upon receipt of payable demand

“COLLATERAL:  $87,500.00 ”

In satisfaction of his duties under the indemnity agreement, the second amended complaint pleads as follows:

“13. Since the assignment [of the deed of trust] to Christiana Bank & Trust Company was the only item listed [in the Preliminary Title Report], ․ [p]laintiff contacted Christiana Bank & Trust Company and determined that Christiana Bank & Trust Company could not and would not enforce said Deed of Trust.

“14. Plaintiff subsequently retained an attorney, Herbert Abrams, who took the actions described on Exhibit D, to render said Deed of Trust and the judgment obtained thereon by Citizens Thrift & Loan, null and void, since the judgment thereon was not renewed as required by law.”

We conclude that paragraph 14, and specifically plaintiff's allegation that, through his counsel, he took the actions necessary to render the deed of trust “null and void,” is sufficient to allege performance of plaintiff's obligation under paragraph 1 of the indemnity agreement to “take such action as in the opinion of Title Company is necessary to timely remove, satisfy or discharge ” the deed of trust.  (Italics added.)   Thus, the trial court erred in sustaining the demurrer to the cause of action for breach of contract.

II. Insurance Bad Faith

Although plaintiff appealed from the judgment in its entirety, his appellant's opening brief does not contend or cite authority for the proposition that the trial court erred in sustaining the demurrer as to the insurance bad faith cause of action.   He therefore has forfeited any contention in that regard (e.g., Antounian v. Louis Vuitton Malletier (2010) 189 Cal.App.4th 438, 455 [“an argument not raised in the opening brief is forfeited on appeal”];  Christoff v. Union Pacific Railroad Co. (2005) 134 Cal.App.4th 118, 125 [“an appellant's failure to discuss an issue in its opening brief forfeits the issue on appeal”] ), and we affirm the trial court's order sustaining the demurrer as to the cause of action for insurance bad faith.4

DISPOSITION

The judgment of dismissal and the order sustaining the demurrer as to the first cause of action only are reversed.   Each party shall bear its own costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

We concur:

FOOTNOTES

FN1. Defendant filed demurrers to the original and first amended complaints.   The trial court sustained a demurrer with leave to amend on June 24, 2010, presumably to the original complaint;  on the present record, we cannot determine what became of the first amended complaint..  FN1. Defendant filed demurrers to the original and first amended complaints.   The trial court sustained a demurrer with leave to amend on June 24, 2010, presumably to the original complaint;  on the present record, we cannot determine what became of the first amended complaint.

FN2. The complaint does not allege the circumstances under which the indemnity agreement was executed and collateral held by Lawyers Title, but in its respondent's brief, Lawyers Title explains the transaction as follows:  “Without paying off the loan [secured by Citizens' deed of trust], ․ the [Citizens'] Deed of Trust would have priority over the Bank Deed of Trust [to be issued in connection with the refinance].   Therefore, Lawyers Title was unwilling to insure the Bank Deed of Trust in first priority position unless Hopper agreed to indemnify Lawyers Title from risk or loss caused by the [Citizens'] Deed of Trust.”.  FN2. The complaint does not allege the circumstances under which the indemnity agreement was executed and collateral held by Lawyers Title, but in its respondent's brief, Lawyers Title explains the transaction as follows:  “Without paying off the loan [secured by Citizens' deed of trust], ․ the [Citizens'] Deed of Trust would have priority over the Bank Deed of Trust [to be issued in connection with the refinance].   Therefore, Lawyers Title was unwilling to insure the Bank Deed of Trust in first priority position unless Hopper agreed to indemnify Lawyers Title from risk or loss caused by the [Citizens'] Deed of Trust.”

FN3. Because plaintiff has not included a reporter's transcript or minute order in the appellate record, we do not know the basis on which the demurrer was sustained..  FN3. Because plaintiff has not included a reporter's transcript or minute order in the appellate record, we do not know the basis on which the demurrer was sustained.

FN4. We caution plaintiff's counsel that he only narrowly avoided forfeiting plaintiff's appellate claims entirely.   Plaintiff's two-and-a-half page “Statement of the Case” does not include the pertinent procedural history (including, most notably, the fact that the present appeal is from a judgment entered after the trial court sustained a demurrer without leave to amend) and it contains few citations to legal authority.   Further, it barely identifies the elements of plaintiff's causes of action or the factual allegations of the second amended complaint that satisfy the elements of these claims.   We have elected to overlook these deficiencies and address the merits of the purely legal issues raised on appeal, but we urge counsel that he must comply with our appellate rules and warn that future failure to do so may result in forfeiture of his client's appellate claims..  FN4. We caution plaintiff's counsel that he only narrowly avoided forfeiting plaintiff's appellate claims entirely.   Plaintiff's two-and-a-half page “Statement of the Case” does not include the pertinent procedural history (including, most notably, the fact that the present appeal is from a judgment entered after the trial court sustained a demurrer without leave to amend) and it contains few citations to legal authority.   Further, it barely identifies the elements of plaintiff's causes of action or the factual allegations of the second amended complaint that satisfy the elements of these claims.   We have elected to overlook these deficiencies and address the merits of the purely legal issues raised on appeal, but we urge counsel that he must comply with our appellate rules and warn that future failure to do so may result in forfeiture of his client's appellate claims.

EPSTEIN, P. J. WILLHITE, J.