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Court of Appeal, First District, Division 3, California.

Mark MULLIN, Plaintiff and Appellant, v. BANK OF AMERICA, Defendant and Respondent.

No. A031793.

Decided: March 09, 1988

Paula F. Schmidt, San Francisco, for plaintiff and appellant. Harvey L. Leiderman, Curtis E.A. Karnow, Landels, Ripley & Diamond, Office of the General Counsel, Bank of America Nat. Trust and Sav. Ass'n, Winslow Christian, John F. Cooney, Jr., San Francisco, for defendant and respondent.

Appellant Mark Mullin appeals from an order sustaining a demurrer without leave to amend and dismissing his action against respondent Bank of America National Trust and Savings Association.1  We conclude that although the complaint is insufficient under most theories alleged by appellant, it does allege facts sufficient to state a cause of action based on conspiracy to commit fraud or for constructive trust.


The allegations of appellant's complaint are as follows.   In 1977, appellant was a tenant in Diamond Heights Village, an apartment complex owned by George I. Benny.   In November 1977, Benny entered into a settlement agreement with the City and County of San Francisco (the City) in which the City approved the conversion of the complex to condominiums.   Among the conditions of the approval was that tenants had “a right of first refusal to purchase their own unit or any other [available] unit ․, for a period of 60 days prior to the start of sales to the general public;”  at a discounted price.   Sales to the general public were not to start before May 15, 1978.

The complaint also alleges that the agreement was recorded on May 2, 1978, and that despite the agreement, appellant was never given the opportunity to purchase his unit.   He was told through September 1, 1981, that the unit was not yet available for sale.   On about March 24, 1980, however, without offering the unit to appellant, Benny sold it to Sharon Wray and Angelo Orphan.   Their purchase was financed by a $115,000 loan from respondent, secured by a deed of trust.   Respondent did not contact appellant before financing the transaction to determine whether he had been offered or waived his right of first refusal.   Wray and Orphan quitclaimed the property to Benny in September 1980.   Appellant has remained in the unit as a tenant.


In November 1982, appellant filed an action against Benny, Diamond Heights Village, and numerous Does.   The complaint was later amended to add respondent as a defendant.   Appellant's second amended complaint purported to allege breach of contract, implied in law contract, fraud, conspiracy, and breach of a restrictive covenant.   He sought damages, specific performance, imposition of a constructive trust, and declaratory relief.   Respondent's demurrer was sustained without leave to amend in April 1983 and the action was dismissed with prejudice as to respondent.   This appeal followed.2

 When reviewing an order sustaining a demurrer without leave to amend, this court must treat the demurrer as admitting all properly pleaded facts, but not contentions, deductions, or conclusions of fact or law.   We must read the complaint as a whole and give it a reasonable interpretation.  (Blank v. Kirwan (1985) 39 Cal.3d 311, 318, 216 Cal.Rptr. 718, 703 P.2d 58.)   If the complaint, liberally construed, can state a cause of action, or if it is reasonably possible that the plaintiff can cure the complaint by amendment, the trial court should not sustain a demurrer without leave to amend.   (Heckendorn v. City of San Marino (1986) 42 Cal.3d 481, 486, 229 Cal.Rptr. 324, 723 P.2d 64.)   The burden is on the plaintiff to establish the reasonable possibility that the defect is curable.  (Blank v. Kirwan, supra, 39 Cal.3d at p. 318, 216 Cal.Rptr. 718, 703 P.2d 58.)   A demurrer is properly sustained without leave to amend if it appears that under applicable substantive law there is no reasonable possibility that an amendment could remedy the defects.  (Heckendorn v. City of San Marino, supra, 42 Cal.3d at p. 486, 229 Cal.Rptr. 324, 723 P.2d 64.)

a. Breach of Contract

 In his first count, appellant alleged that the agreement between Benny and the City was made for appellant's benefit and that Benny breached that agreement by selling appellant's unit without first offering it to him.   In his third count, appellant alleged that respondent also breached that agreement by financing the purchase without either offering the unit to him or determining whether he had waived his right of first refusal.

Appellant relies on Citizens Suburban Co. v. Rosemont Dev. Co. (1966) 244 Cal.App.2d 666, 53 Cal.Rptr. 551 to urge that even though respondent was not a party to the agreement, it was bound to comply with its terms.   At issue in that case was whether the present developer of a subdivision was bound by an agreement between a water company and the original developer which explicitly bound the parties' “ ‘successors and assigns.’ ”   The court held that the evidence supported a conclusion that the present developer was a successor under the water contract as a matter of law and was obligated to assume its burdens because it had knowingly and voluntarily accepted the benefits of the water service.   Evidence of written contract assignments from one developer to the other was unnecessary.  (Id., at pp. 675–677, and fn. 3, 53 Cal.Rptr. 551.)

The case is inapposite.   It does stand for the proposition that one who knowingly accepts the benefits of a contract may be held to its burdens;  however, it does not support appellant's theory that merely because respondent financed the purchase of one of the units, it accepted the benefits of the condominium conversion agreement with the City and became obligated to comply with its terms.

b. Specific Performance

In his fourth count, appellant purports to state a cause of action for specific performance, alleging his willingness to purchase the unit.

 Specific performance is an alternative remedy to damages in an action for breach of contract.  (See Abrams v. Motter (1970) 3 Cal.App.3d 828, 847, 83 Cal.Rptr. 855.)   A complaint seeking the equitable remedy of specific performance must make allegations sufficient to establish both the right to recover for breach of contract and entitlement to that remedy.  (5 Witkin, Cal.Procedure (3d ed. 1985)  Pleading, §§ 732–733, pp. 180–181.)   Our conclusion that appellant's complaint fails to state a cause of action for breach of contract would ordinarily be fatal to his claim for specific performance.

 However, appellant also claims statutory entitlement to specific performance under Civil Code section 3395.  Section 3395 provides in pertinent part:  “Whenever an obligation in respect to real property would be specifically enforced against a particular person, it may be in like manner enforced against any other person claiming under him by a title created subsequently to the obligation, except a purchaser or encumbrancer in good faith and for value, ․”  Although the applicability of the statute is raised for the first time on appeal, a demurrer is directed to the face of a complaint and raises only questions of law;  thus an appellant challenging the sustaining of a general demurrer may change his or her theory on appeal.  (Carman v. Alvord (1982) 31 Cal.3d 318, 324, 182 Cal.Rptr. 506, 644 P.2d 192;  B & P Development Corp. v. City of Saratoga (1986) 185 Cal.App.3d 949, 959, 230 Cal.Rptr. 192.)

Appellant reasons as follows:  (1) he would have been entitled as a third party beneficiary to specific performance of Benny's contract with the City granting tenants right of first refusal;  (2) respondent claims title under Benny because of its status as beneficiary of a deed of trust on the unit;  and (3) respondent is not a good faith purchaser or encumbrancer because it had constructive notice of appellant's rights under the settlement agreement.

 We consider the question of constructive notice first.   As we have stated, appellant's complaint alleged that the settlement agreement was recorded on May 2, 1978.   However, a pleading must be read as if it contained all matters of which the court can properly take judicial notice, even in the face of allegations in the pleading to the contrary.  (See El Rancho Unified School Dist. v. National Education Assn. (1983) 33 Cal.3d 946, 950, fn. 6, 192 Cal.Rptr. 123, 663 P.2d 893;  Weiner v. Mitchell, Silberberg & Knupp (1980) 114 Cal.App.3d 39, 47, 170 Cal.Rptr. 533;  4 Witkin, Cal.Procedure (3d ed. 1985) Pleading, § 394, p. 442.)   We judicially notice that (1) on May 2, 1978, a final condominium map was recorded which included a copy of City Ordinance No. 546–77, authorizing the City Attorney to settle a Superior Court action by Benny against the City “by entering into and executing a Settlement Agreement a copy of which is on file in File No. 45–77–32,”;  and (2) on August 22, 1980, the settlement agreement itself was recorded.3

At oral argument, appellant conceded what we have judicially noticed, i.e., that despite the allegations of his complaint, the settlement agreement itself was not recorded until after respondent financed the purchase of the unit in March 1980.   Appellant asserted, however, that because the final map, which was recorded in May 1978, referred to the settlement agreement, respondent had constructive notice of its terms and of appellant's rights under the agreement.

The recording of a final map “shall impart constructive notice thereof.”   (Gov.Code, § 66468.)   In dictum, our Supreme Court has stated that a recorded instrument is constructive notice of its own contents and of other documents referred to by it.  (Caito v. United California Bank (1978) 20 Cal.3d 694, 702, 144 Cal.Rptr. 751, 576 P.2d 466.)   In American Medical International, Inc. v. Feller (1976) 59 Cal.App.3d 1008, 131 Cal.Rptr. 270, the court held that a party acquiring an interest in property must investigate a document referred to in a recorded instrument and has constructive notice of the provisions of that document.  (Id., at p. 1020, 131 Cal.Rptr. 270.)

 We also note that “[e]very person who has actual notice of circumstances sufficient to put a prudent [person] upon inquiry as to a particular fact, has constructive notice of the fact itself in all cases in which, by prosecuting such inquiry, he [or she] might have learned such fact.”  (Civ.Code, § 19.)   The general rule is that possession of real property by one other than the seller is notice sufficient to put an intending purchaser or encumbrancer of property on inquiry as to the rights of the occupant unless under the peculiar circumstances of the case there is no duty to make inquiry.  (Three Sixty Five Club v. Shostak (1951) 104 Cal.App.2d 735, 738, 232 P.2d 546;  Asisten v. Underwood (1960) 183 Cal.App.2d 304, 309, 7 Cal.Rptr. 84.)

 We have concluded, however, that in this case, even if the recording of the final map gave respondent constructive notice of the terms of the settlement agreement, neither the settlement agreement nor appellant's possession of the property charged respondent with constructive notice of appellant's thwarted right to purchase.

First, we note that according to the Subdivision Map Act (Gov.Code, § 66410 et seq.), approval of the legislative body is required before the recording of a final condominium map.  (Gov.Code, § 66464;  see also § 66426.)   When the final map at issue in this case was recorded in 1978, Government Code section 66427.1, subdivision (b), prohibited a legislative body from approving a final map for a condominium project unless it found that each tenant had been or would be given notice of an exclusive right to contract for the purchase of their respective units upon the same terms and conditions that such units would be offered to the public or on terms more favorable to the tenant.  (Stats.1976, ch. 890, § 1. pp. 2047–2048;  Stats.1979, ch. 1192, § 4, pp. 4692–4693.)   The bank was entitled to presume that the necessary findings about tenant notification had been made by the City before the subdivision map was recorded in May 1978.  (See Evid.Code, § 664;  Bringle v. Board of Supervisors (1960) 54 Cal.2d 86, 89, 4 Cal.Rptr. 493, 351 P.2d 765 [when authorized board grants a variance, it will be presumed that official duty performed and existence of necessary facts found].)

In addition, the settlement agreement referenced in the final map did not give appellant and the other tenants an absolute or indefinite right of first refusal;  instead, it guaranteed tenants the right to purchase their units at a discounted price only for a very limited time.   The agreement specified that no sales would be made to the general public before May 15, 1978, and that tenants should have a right of first refusal to purchase their own unit for 60 days prior to the start of sales to the general public.   Appellant's complaint alleges that respondent financed the purchase of appellant's unit when it was sold by Benny in March, 1980, or well over a year and a half after the right of tenants to purchase at a discounted price had apparently expired under the settlement.

We conclude that given the terms of the settlement agreement, neither that agreement nor appellant's possession of the unit in March 1980 imposed a duty upon respondent to inquire at that time about the nature of appellant's possession.   Under the circumstances, respondent was entitled to assume that if appellant was a tenant at the time of the conversion, he had elected not to purchase his unit.   Accordingly, respondent was an encumbrancer in good faith and section 3395 is inapplicable.

c. Implied in Law Contract

 Although the complaint itself is ambiguous, in his brief to this court appellant states that his second count seeks recovery under an implied in law or quasi-contract theory.   The principle of unjust enrichment forms the basis for the right to restitution on an implied in law or quasi-contract contract theory.   When one obtains a benefit which he or she may not justly retain, the law creates an obligation, regardless of the parties' intention, that the unjustly enriched person must restore the aggrieved party to his or her former position by returning the thing or its equivalent in money.  (Branche v. Hetzel (1966) 241 Cal.App.2d 801, 807, 51 Cal.Rptr. 188;  1 Witkin, Summary of Cal.Law (9th ed. 1987) Contracts, § 91 et seq., p. 122.) 4

 A complaint which fails to allege facts establishing how one party has been unjustly enriched is not sufficient to state a cause of action under a quasi-contract theory.  (See Otworth v. Southern Pac. Transportation Co. (1985) 166 Cal.App.3d 452, 460, 212 Cal.Rptr. 743.)   In light of our conclusions about respondent's status as a good faith encumbrancer, appellant's allegations that respondent loaned the purchasers $115,000 and in return was named as beneficiary on a deed of trust do not allege any unjust enrichment.   (See 1 Witkin, Summary of Calif.Law, supra, § 94, p. 124 [status as a bona fide purchaser may be a defense to a quasi-contract action];  see also Rest., Restitution, §§ 13, 14.)   The demurrer to this count was properly sustained.

d. Fraud

 Appellant's sixth count is for fraud and deceit and alleges that when respondent financed the sale of the unit at issue, it wrongfully and knowingly concealed that fact from him to prevent him from taking any action to perfect his purchase rights.   He alleges that he relied on the absence of notice of any proposed sale in believing his rights to purchase the property were protected.

The validity of a cause of action for fraud based on allegations of omissions or nondisclosure depends on allegations establishing a duty of disclosure owed by the defendant.  (Goodman v. Kennedy (1976) 18 Cal.3d 335, 346–347, 134 Cal.Rptr. 375, 556 P.2d 737.)   A confidential relationship between the parties is not a prerequisite to the existence of a duty of disclosure.   Such a duty may exist when one party to a transaction has sole knowledge or access to material facts and knows that those facts are not known to or reasonably discoverable by the other party.  (Id., at p. 347, 134 Cal.Rptr. 375, 556 P.2d 737.)   There are no allegations in appellant's complaint establishing any duty of disclosure owed him by respondent, as he was not a party to the loan transaction between respondent and the purchasers of the property.

Appellant relies on Wells v. John Hancock Mut. Life Ins. Co. (1978) 85 Cal.App.3d 66, 149 Cal.Rptr. 171 to urge that no business or other relationship is required to establish a duty to disclose, but the case is inapposite.   In Wells an insurance company was notified that a life insurance policy it issued had been assigned as security for a loan.   The question was whether the insurer was under a duty to inform the assignee that the policy was worthless, having lapsed for nonpayment of premiums.   The court held that since the processing of assignments was part of the insurer's regular business, since its involvement in that process served its own business purposes, and since it was fully aware of a vital fact unknown to the assignee, it was under a duty to disclose that fact.   The case does not support appellant's contention that a duty to disclose exists absent some existing business or other similar relationship between the parties.   On the contrary, the court emphasized the insurer's involvement in the assignment transaction and cited Restatement Second of Torts, section 551, on the duty of one party to a business transaction to the other party.  (Wells, supra, 85 Cal.App.3d at pp. 71–72 & fn. 8, 149 Cal.Rptr. 171.)  Curran v. Heslop (1953) 115 Cal.App.2d 476, 252 P.2d 378 is also inapposite;  it involves the duty of the seller of property owed to the buyer.  (Id., at pp. 480–481, 252 P.2d 378.)

Appellant's complaint is also deficient in that it fails to allege facts which, if proved, would establish his own justifiable reliance on respondent's alleged nondisclosure.  (See Goodman v. Kennedy, supra, 18 Cal.3d at p. 349, 134 Cal.Rptr. 375, 556 P.2d 737.)   The complaint alleges that appellant did not discover respondent's involvement in the March 24, 1980, sale until August 1, 1982.   On its face, therefore, the complaint refutes any assertion that appellant relied on respondent's nondisclosure when he failed to take action at or before the time of the sale to protect his rights.

e. Conspiracy to Defraud

Appellant also alleges that respondent, Benny, and Diamond Heights Village conspired to conceal the facts of the sale and its financing from him to defraud him and prevent him from purchasing the property.

 Respondent urges that because the complaint fails to state a cause of action against itself for fraud, it necessarily fails to state a cause of action for conspiracy to defraud.   Respondent's argument ignores the nature of a cause of action alleging conspiracy.   Proof of a conspiracy to commit a wrong renders each participant in the wrongful act responsible as a joint-tortfeasor for all damages from the wrong, whether or not he or she was a direct actor and regardless of the degree of his activity.  (Wise v. Southern Pacific Co. (1963) 223 Cal.App.2d 50, 64, 35 Cal.Rptr. 652.)  “The advantage to the pleader in charging a conspiracy is to implicate all participating in the common design and thus fasten liability on him who agreed to the plan to commit the wrong as well as on him who actually carried it out.”  (Ibid.)

 Conspiracy alone is not actionable.   The cause of action arises out of some wrongful act committed by one or more of the alleged conspirators.   To state a cause of action for conspiracy, the complaint must allege (1) the formation and operation of the conspiracy;  (2) the wrongful act or acts done pursuant thereto;  and (3) the damage resulting.  (Unruh v. Truck Insurance Exchange (1972) 7 Cal.3d 616, 631, 102 Cal.Rptr. 815, 498 P.2d 1063.)   The pleaded facts must show something was done which, without the conspiracy, would give rise to a right of action.  (Legg v. Ford (1960) 185 Cal.App.2d 534, 541, 8 Cal.Rptr. 392.)

 First, we consider whether appellant's complaint adequately alleges the formation and operation of the conspiracy.

In Greenwood v. Mooradian (1955) 137 Cal.App.2d 532, 535–536, 290 P.2d 955, a complaint alleged that defendants “ ‘․ have conspired together to appropriate to themselves and convert to their own use and benefit the assets and profits of the aforesaid joint venture․’ ”  The court rejected an argument that the averment of conspiracy was too general and held that the acts constituting the conspiracy itself, as opposed to those “inflicting the wrong pursuant thereto,” need not be alleged in detail.  (Id., at pp. 536–538, 290 P.2d 955.)   In Schessler v. Keck (1954) 125 Cal.App.2d 827, 271 P.2d 588, the court held that to state a cause of action for conspiracy to commit libel, a complaint is sufficient if its allegations, considered together, charge the defendants with having acted jointly, according to a preconceived plan, to commit the tortious act.   Considered in isolation, averments of “ ‘conspiracy,’ ” “ ‘combination,’ ” or “ ‘common design’ ” may be allegations of legal conclusions.   However, a complaint making such allegations will withstand a demurrer if it also includes other allegations which elaborate on the mutual understanding of the defendants.  (Id., at p. 833, 271 P.2d 588.)   A complaint alleging that defendants “ ‘did agree together’ ” to further the candidacy of a candidate for Congress by libeling his opponent and published certain articles in furtherance of that conspiracy was held sufficient in Farr v. Bramblett (1955) 132 Cal.App.2d 36, 47, 281 P.2d 372.   The court stated, “Plaintiffs could not more clearly allege the ultimate fact of conspiracy than by pleading that defendants ‘did agree together.’   [Citations.]”  (Ibid.)

 In this case appellant's conspiracy count alleges that on or about March 24, 1980, respondent, Benny, and Diamond Heights Village “knowingly and willfully conspired and agreed among themselves to conceal the facts of the sale and financing of the sale property from plaintiff doing so to defraud plaintiff and prevent him from purchasing the property so as to create higher profits for the defendants.”  (Emphasis added.)   In light of Farr v. Bramblett, supra, 132 Cal.App.2d 36, 281 P.2d 372, and the other cases discussed above, the general, nonspecific allegations of the complaint concerning the formation and operation of the alleged conspiracy are adequate.

We next consider whether the complaint adequately alleges fraud by any one of the alleged coconspirators done in furtherance of the conspiracy to defraud.  “In pleading a cause of action for deceit, a plaintiff must specifically plead the following elements:  (1) a false representation (ordinarily of a fact) made by the defendant;  (2) knowledge or belief on the part of the defendant that the representation is false ․;  (3) an intention to induce the plaintiff to act or to refrain from action in reliance upon the misrepresentation;  (4) justifiable reliance upon the representation by the plaintiff;  (5) damage to the plaintiff, resulting from such reliance.   [Citations.]”  (Barbara A. v. John G. (1983) 145 Cal.App.3d 369, 376, 193 Cal.Rptr. 422.)

Read in its entirety and liberally construed, the complaint includes all the essential allegations.   It alleges that Benny falsely represented to appellant through September 1981 that he would be offered his right to purchase his unit, although Benny had sold the unit to someone else in March 1980;  that Benny made these representations with the intent to prevent appellant from purchasing his apartment at a favorable price and to induce him to continue paying rent;  that Benny never intended to offer the unit to appellant and always intended to transfer ownership to others to maximize profits;  that Benny and respondent agreed among themselves to conceal the facts of the sale and its financing to prevent appellant from purchasing the property, and concealed those facts in furtherance of the conspiracy;  that appellant relied on absence of notice of any sale in believing his rights to purchase the property were protected and took no action to further protect his rights;  and that he was damaged thereby.

Accordingly, the trial court erred in sustaining the demurrer without leave to amend as to this count and dismissing appellant's complaint in its entirety.   We emphasize that whether appellant will be able to prove his allegations of conspiracy to defraud is not before us.  “[U]nder settled law, we must regard [those allegations] as true, however improbable they may be ․” in reviewing the order sustaining the demurrer without leave to amend.  (Weiner v. Mitchell, Silberberg & Knupp, supra, 114 Cal.App.3d 39, 44, fn. 2, 170 Cal.Rptr. 533.)

f. Conspiracy to Breach Contract

 Appellant also purports to allege a cause of action for “conspiracy to breach a contract.”   California law recognizes a cause of action for conspiracy to induce breach of contract.  (Owens v. Foundation for Ocean Research (1980) 107 Cal.App.3d 179, 185, 165 Cal.Rptr. 571.)   In addition to alleging the formation and operation of the conspiracy, the complaint must allege the elements of an action to induce breach of contract and the resulting damage.  (See Olivet v. Frischling (1980) 104 Cal.App.3d 831, 837–840, 164 Cal.Rptr. 87 [elements of cause of action for conspiracy to interfere with prospective economic advantage].)   An action to induce breach of contract includes the following components:  (1) plaintiff had a valid and existing contract;  (2) defendant had knowledge of the contract and intended to induce its breach;  (3) the contract was breached by the contracting party;  (4) the breach was caused by the defendant's wrongful conduct;  and (5) plaintiff has suffered damage as a result.  (Dryden v. Tri–Valley Growers (1977) 65 Cal.App.3d 990, 995, 135 Cal.Rptr. 720.)   A cause of action will lie only if an act by the defendant induced the breach of contract between the plaintiff and the third party or if the defendant purposely caused a third person not to perform the contract with another.   (Id., at pp. 995–996, 135 Cal.Rptr. 720.)   The complaint does not state a cause of action under this theory, as it does not allege that respondent induced Benny to breach the settlement agreement with the City or that the breach was caused by respondent's conduct.

g. Breach of Restrictive Covenant

 Appellant contends his complaint alleges a cause of action under Civil Code section 1354.   That section, part of the Davis–Stirling Common Interest Development Act (Civ.Code, § 1350 et seq.), provides for the enforceability of covenants and restrictions contained in the declaration which must be filed whenever a common interest development is created.  (Civ.Code, §§ 1352, 1353.)  Section 1354 is inapplicable for several reasons, among them that the statute does not give a nonowner such as appellant any right of enforcement.

 Next, we mention only one of many flaws in appellant's theory that his complaint alleges breach of a covenant running with the land.   The instrument creating such a covenant must expressly state that successive owners of the land are to be bound thereby.  (Civ.Code, § 1468, subd. (b).)  As respondent points out, insofar as the settlement agreement includes a promise to appellant that he will have a 60–day right of first refusal, that promise does not expressly bind subsequent owners of appellant's unit.   On the contrary, it would have been logically inconsistent with the terms of the promise to make it binding on subsequent owners.

h. Constructive Trust

Appellant's complaint also seeks imposition of a constructive trust.

 “One who wrongfully detains a thing is an involuntary trustee thereof, for the benefit of the owner.”  (Civ.Code, § 2223.)   “Constructive trust is an equitable remedy to prevent unjust enrichment and enforce restitution, under which one who wrongfully acquires property of another holds it involuntarily as a constructive trustee, ․”  (Coppinger v. Superior Court (1982) 134 Cal.App.3d 883, 891, 185 Cal.Rptr. 24;  Lazar v. Hertz Corp. (1983) 143 Cal.App.3d 128, 139, 191 Cal.Rptr. 849.)   To create a constructive trust, three conditions must be satisfied:  the existence of a res (property or some interest in the property);  the plaintiff's right to that res;  and the defendant's acquisition of the res by some wrongful act.  (Calistoga Civic Club v. City of Calistoga (1983) 143 Cal.App.3d 111, 116, 191 Cal.Rptr. 571.)  “[A] constructive trust may be imposed in practically any case where there is a wrongful acquisition or detention of property to which another is entitled.  [Citations.]”  (Weiss v. Marcus (1975) 51 Cal.App.3d 590, 600, 124 Cal.Rptr. 297.)  “ ‘The cause of action ․ consists of the fraud, breach of fiduciary duty, or other act which entitles the plaintiff to some relief.’ ”  (Ibid.)  We have already concluded that appellant's conspiracy allegations are sufficient to withstand a demurrer.   Those allegations, coupled with the allegations that respondent acquired its security interest in the property by virtue of that wrongful conduct, are sufficient to state a cause of action for relief in the form of a constructive trust.   Again, we emphasize that whether appellant will be able to prove his allegations is not before us.

i. Declaratory Relief

 Appellant's final count is for declaratory relief.   He alleges that a controversy has arisen between him and respondent as to their respective rights in the unit at issue, and that he seeks a judicial determination of their respective rights to that property.   In an action for declaratory relief, the court is authorized to determine and declare only the issues between the parties to the action.  (Case v. City of Los Angeles (1956) 142 Cal.App.2d 66, 70, 298 P.2d 50.)

 A complaint for declaratory relief is legally adequate if it alleges facts showing the existence of an actual controversy relating to the legal rights and duties of the parties with respect to property and requests their adjudication by the court.   If these requirements are met and no basis for declining declaratory relief appears, the court should declare the rights of the parties rather than dismiss the action even if the facts establish that the plaintiff would not be entitled to favorable declaration.  (Wellenkamp v. Bank of America (1978) 21 Cal.3d 943, 947, 148 Cal.Rptr. 379, 582 P.2d 970;  5 Witkin, Cal.Procedure (3d ed. 1985) Pleading, §§ 825–826, pp. 268–270.)   Nevertheless, when a court dismisses a declaratory relief complaint rather than declaring the plaintiff entitled to no relief, reversal is not required if any declaration of the rights of the parties would necessarily have been unfavorable to plaintiff.  (Haley v. L.A. County Flood Control Dist. (1959) 172 Cal.App.2d 285, 292–294, 342 P.2d 476.)   In such a case, the appellate opinion is in effect the declaration of the rights of the parties.   (Newby v. Alto Riviera Apartments (1976) 60 Cal.App.3d 288, 303–304, 131 Cal.Rptr. 547.)   We have already concluded that the complaint is sufficient to state a conspiracy to defraud cause of action and that if appellant can prove the conspiracy, he may be entitled to the remedy of constructive trust.


With respect to the counts alleging conspiracy to defraud and seeking imposition of a constructive trust, the order sustaining the demurrer without leave to amend and dismissing the complaint is reversed.   In all other respects, the order is affirmed.   Each party to bear its own costs.


1.   A written order of dismissal signed by the court and filed in the action constitutes a judgment in that action and is effective for all purposes.  (Code Civ. Proc., § 581d.)

2.   On August 22, 1985, the Supreme Court stayed the foreclosure sale of the property, pending the final determination of this appeal.

3.   We may judicially notice our own records in other cases.   (Evid.Code, § 452, subd. (d).)  In Nazarian v. Benny A035391, currently pending before this court, the trial court's statement of decision states that the settlement was referenced at page 65 of the Final Map recorded May 2, 1978 and recorded on August 22, 1980.   We may take judicial notice of the truth of facts asserted in documents such as orders, findings of fact and conclusions of law, and judgment.  (People v. Thacker (1985) 175 Cal.App.3d 594, 599, 221 Cal.Rptr. 37.)   A statement of decision is such a document.

4.   A contract implied in law is to be distinguished from a contract implied in fact.   Unlike an implied in law or quasi-contract, and implied-in-fact contract is based on the intention of the parties, implied from their conduct rather than expressed in words.  (Weitzenkorn v. Lesser (1953) 40 Cal.2d 778, 794, 256 P.2d 947;  Civ.Code, § 1621.)

WHITE, Presiding Justice.

BARRY–DEAL and MERRILL, JJ., concur.

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