Court Opinion

ID: 9371885
Source: CourtListenerOpinion
Date Created: 2023-02-17 00:02:49.804589+00
Date Added: 2024-06-11T17:16:30.870345
License: Public Domain

Filed 2/16/23 Fleming v. JPMorgan Chase Bank CA2/5
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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

                         SECOND APPELLATE DISTRICT

                                        DIVISION FIVE

FLORENCE FLEMING,                                          B316665

         Plaintiff and Appellant,                          (Los Angeles County
                                                           Super. Ct. No.
         v.                                                20STCV26552)

JPMORGAN CHASE BANK,
N.A.,

     Defendant and
Respondent.

      APPEAL from a judgment of the Superior Court of Los
Angeles, Armen Tamzarian, Judge. Affirmed.
      Law Office of Norman Rasmussen, Norman Rasmussen and
Mark B. Simpkins; Friedhofer and James F. Friedhofer, for
Plaintiff and Appellant.
      Akerman, Parisa Jassim, Jacqueline Foroutan, and Preston
K. Ascherin for Defendant and Respondent.
                      I. INTRODUCTION

     Plaintiff Florence Fleming appeals from a judgment of
dismissal following an order sustaining a demurrer without leave
to amend. We affirm.

                      II. BACKGROUND

A.    Factual Background1

       Plaintiff was married to Brian Fleming for approximately
40 years. During the marriage, Brian managed the marital
estate’s finances and plaintiff trusted and relied on him for
advice.
       On April 20, 1990, plaintiff and Brian purchased a
residential condominium located on Wilshire Boulevard in Los
Angeles (the Property). The Property was purchased with
community property assets and a “small” purchase money loan.
Plaintiff believed the only loan on the Property that she was
obligated to pay was the purchase money loan.
       Brian engaged in numerous extramarital affairs during the
marriage. In 2003, he devised a plan to use, without plaintiff’s
knowledge, community property assets to support one of his
affair partners.

1      “In this appeal following the sustaining of a demurrer, 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.”
(Fierro v. Landry’s Restaurant, Inc. (2019) 32 Cal.App.5th 276,
281.)

                                 2
      On or about November 10, 2005, Brian recorded a
fraudulent deed that contained plaintiff’s forged (or unknowingly
placed) signature. The fraudulent deed purported to transfer
plaintiff and Brian’s community interest in the Property to Brian
as his sole and separate property.
      On November 9 and 10, 2005, Brian obtained a $825,000
loan and a $165,000 loan from Washington Mutual Bank
(Washington Mutual). The loans were secured by two deeds of
trust against the Property. Plaintiff did not know of or consent to
the loans. The deeds of trust were recorded on November 17,
2005.
      On November 18, 2005, Brian recorded a quitclaim deed
purporting to transfer title in the Property from himself to him
and plaintiff as community property. Brian then had the deed
and deeds of trust mailed to his work address instead of to the
Property.
      On April 2, 2007, plaintiff filed a petition for divorce.
      On September 25, 2008, defendant JPMorgan Chase Bank,
N.A. (Chase) acquired the Washington Mutual loans.
      In 2010, Brian obtained a modification of the loans from
Chase. As alleged by plaintiff, “because title [to the Property]
was held as community property in 2010 when Chase . . .
modified the fraudulent loans, Chase . . . had notice of [p]laintiff’s
interest in the Property and it could not properly modify the
loans without giving [p]laintiff notice, and obtaining her consent,
which Chase . . . never did.”
      On June 13, 2011, plaintiff signed the Marital Settlement
Agreement (Agreement). The Agreement listed the Property as
“community property” that would be divided in the following
manner: “Title to [the Property] is currently held jointly by the

                                  3
Parties. The parties shall hold title as Joint Tenants. It is the
primary residence of Brian and he shall have the exclusive use
and occupancy of it for his lifetime as long as he uses it as his
primary residence. Brian shall pay all expenses related to it on a
timely basis. If the [P]roperty is sold, the parties will equally
divide the net proceeds from the sale (sale price, less remaining
secured debt that is now in existence, less expenses). On
August 17, 2010, Brian entered into a mortgage modification with
Chase Bank . . . that extended the mortgage maturity 10 years to
2045 . . . . This modified mortgage has a principal balance of
$869,034 at [sic] August 31, 2010. . . . [¶] Other than is
otherwise specifically set forth herein, Brian will pay all
mortgage, taxes, utilities, maintenance and other expenses
related to the [Property] without the right to reimbursement.”
      The Agreement disclosed that two notes were secured by
the Property: “Chase Bank account No. 3591 (first) and Chase
Bank account No. 5797 (second).”
      The Agreement also stated that each undersigned party
“has read, considered, and understands each provision of this
Agreement.”
      On August 8, 2011, plaintiff and Brian finalized their
divorce.
      On December 31, 2015, the deeds of trust were assigned to
Chase.
      Plaintiff did not discover the fraud until after Brian’s death
in 2019.

                                 4
B.    Procedural History

     On July 14, 2020, plaintiff filed her complaint, alleging
causes of action for quiet title and injunctive and declaratory
relief against Chase.2 On December 30, 2020, Chase demurred
and requested judicial notice of eight documents recorded by the
Los Angeles County Recorder’s Office. On February 11, 2021, the
trial court granted the requests for judicial notice and sustained
the demurrer with leave to amend.
       On February 23, 2021, plaintiff filed her first amended
complaint. On April 19, 2021, Chase demurred. The trial court
sustained the demurrer for failure to exhaust administrative
remedies pursuant to the Financial Institutions Reform,
Recovery and Enforcement Act of 1989 (FIRREA, 12 U.S.C.
§ 1811 et seq.).
       On May 25, 2021, plaintiff filed her second amended
complaint, again alleging quiet title, injunctive relief, and
declaratory relief against Chase. Plaintiff alleged among other
things that Washington Mutual and Chase participated in
Brian’s fraud. Specifically, plaintiff alleged that Brian could not
have succeeded in the fraud “without the assistance, negligence,
breaches of duty, and/or participation of . . . employees of
Washington Mutual . . . . [T]he entire structure of the [2005]
loans . . . raises a red flag and any prudent lender would have at
least contacted Plaintiff to confirm that she intended to make a
gift of her community property interest in the Property.”
Plaintiff further alleged that Chase “affirmed and ratified the

2    Plaintiff also alleged other claims against other defendants,
which are not at issue on appeal.

                                 5
[earlier] fraud in 2010 when it modified the fraudulent loans and
deeds of trust.”
       On July 28, 2021, Chase demurred, arguing that the second
amended complaint was barred by the statute of limitations and
FIRREA. In support, Chase cited the recorded documents that
the trial court had judicially noticed. On September 28, 2021, the
court again took judicial notice of certain recorded documents3,
and sustained the demurrer without leave to amend on statute of
limitations grounds, finding that plaintiff was required to file her
lawsuit by June 13, 2014. Judgment was entered on
September 28, 2021. Plaintiff timely appealed.

                        III. DISCUSSION

A.    Judicial Notice

       Plaintiff challenges the trial court’s granting of judicial
notice of certain recorded documents. We review judicial notice
rulings for abuse of discretion. (Physicians Committee for
Responsible Medicine v. Los Angeles Unified School Dist. (2019)
43 Cal.App.5th 175, 182.)
       Plaintiff does not dispute that the recorded documents were
appropriate subjects of judicial notice. Instead, she contends that
the trial court erred in relying on the “content of the documents,
including the legal effect of the documents . . . .” We disagree.

3    The court granted judicial notice as to Exhibits 3, 4, and 8,
which were the two 2005 deeds of trust and the assignment of the
second deed of trust to Chase on December 15, 2015. It is unclear
why the court did not judicially notice any other recorded
documents as it had done previously.

                                 6
The court stated that it took judicial notice “of the existence,
facial contents, and legal effects” of defendant’s exhibits. There is
no prohibition against the court taking such judicial notice.
(Evid. Code, § 452, subd. (h); Yvanova v. New Century Mortgage
Corp. (2016) 62 Cal.4th 919, 924, fn. 1; Scott v. JPMorgan Chase
Bank, N.A. (2013) 214 Cal.App.4th 743, 754.)
       Plaintiff complains that the trial court’s statement, “[b]oth
deeds of trust identify the ‘borrower’ as Brian Fleming, a married
man as his sole and separate property,” demonstrates that “the
trial court did, in fact, rely upon the content of the disputed deeds
of trust in making its ruling . . . .” To the extent plaintiff
suggests the court improperly relied on the truth of the matter
asserted in the deeds of trust, we disagree. The court did not
assume that Brian was the sole owner of the Property, an issue
that was not before the court or before us. Accordingly, we find
no error.

B.    Demurrer

      1.    Standard of Review

       We next consider plaintiff’s challenge to the trial court’s
sustaining of Chase’s demurrer. “In reviewing the sufficiency of a
complaint against a general demurrer, we are guided by long-
settled rules. ‘We treat the demurrer as admitting all material
facts properly pleaded, but not contentions, deductions or
conclusions of fact or law. [Citation.] We also consider matters
which may be judicially noticed.’ (Serrano v. Priest (1971) 5
Cal.3d 584, 591 . . . .) Further, we give the complaint a
reasonable interpretation, reading it as a whole and its parts in

                                 7
their context. (Speegle v. Board of Fire Underwriters (1946) 29
Cal.2d 34, 42 . . . .) When a demurrer is sustained, we determine
whether the complaint states facts sufficient to constitute a cause
of action. (See Hill v. Miller (1966) 64 Cal.2d 757, 759 . . . .) And
when it 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. (Kilgore v. Younger (1982) 30 Cal.3d 770, 781 . . . ;
Cooper v. Leslie Salt Co. (1969) 70 Cal.2d 627, 636 . . . .) The
burden of proving such reasonable possibility is squarely on the
plaintiff. (Cooper v. Leslie Salt Co., supra, [70 Cal.2d] at p. 636.)”
(Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)

      2.    FIRREA

        First, we consider whether plaintiff’s claims are barred by
her failure to exhaust administrative remedies under FIRREA.
Title 12 United States Code section 1821(d)(13)(D) provides:
“Except as otherwise provided in this subsection, no court shall
have jurisdiction over— [¶] (i) any claim or action for payment
from, or any action seeking a determination of rights with respect
to, the assets of any depository institution for which the [Federal
Deposit Insurance Corporation (FDIC)] has been appointed
receiver, including assets which the [FDIC] may acquire from
itself as such receiver; or [¶] (ii) any claim relating to any act or
omission of such institution or the [FDIC] as receiver.” ‘Thus,
‘[f]ailure to comply with the claims procedure bars any lawsuit
against a failed depository institution.’” (Saffer v. JP Morgan
Chase Bank, N.A. (2014) 225 Cal.App.4th 1239, 1247.)

                                  8
       “‘Where a claim is functionally, albeit not formally, against
a depository institution for which the FDIC is receiver, it is a
“claim” within the meaning of FIRREA’s administrative claims
process.’” (Benson v. JPMorgan Chase Bank, N.A. (9th Cir. 2012)
673 F.3d 1207, 1214 (Benson).) Accordingly, “FIRREA’s
jurisdictional bar applies to claims asserted against a purchasing
bank when the claim is based on the conduct of the failed
institution.” (Ibid., fn. omitted.) Here, plaintiff’s allegation that
Chase “affirmed and ratified the [earlier] fraud” is, at bottom, a
claim based on Washington Mutual’s 2005 conduct and therefore
is barred by FIRREA for failure to exhaust administrative
remedies.
       By contrast, “a claim alleging liability based only on post-
purchase misconduct of a purchasing bank would not ‘relate to’
acts or omissions of a failed bank for purposes of FIRREA.”
(Benson, supra, 673 F.3d at p. 1216.) In other words, “[an]
adequately pled claim based on [Chase’s] own misconduct cannot
fail merely because it is coupled with a barred claim against
[Washington Mutual].” (Ibid.) Here, plaintiff alleged that Chase
failed to obtain plaintiff’s consent when it entered into a loan
modification with Brian in 2010, even though it had notice that
the Property was held, in part, by her as community property.
Thus, plaintiff’s claims based on Chase’s alleged misconduct in
2010 are not jurisdictionally barred by FIRREA.

      3.    Statute of Limitations

     Having found that plaintiff’s causes of action survive
FIRREA’s jurisdictional bar only with respect to Chase’s alleged
2010 misconduct, we next consider whether the statute of

                                  9
limitations bars those remaining causes of action. The parties
agree that the applicable statute of limitations is three years.
(See Code Civ. Proc., § 338, subd. (d) [action for relief on ground
of fraud or mistake has three-year limitation period; “The cause
of action in that case is not deemed to have accrued until the
discovery, by the aggrieved party, of the facts constituting the
fraud or mistake”].)
         “The California rule on delayed discovery of a cause of
action is the statute of limitation begins to run ‘when the plaintiff
has reason to suspect an injury and some wrongful cause . . . .’
(Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 803
. . . .) ‘A plaintiff need not be aware of the specific “facts”
necessary to establish the claim; that is a process contemplated
by pretrial discovery . . . . So long as a suspicion exists, it is clear
that the plaintiff must go find the facts; she cannot wait for the
facts to find her.’ (Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103,
1111 . . . .)” (MGA Entertainment, Inc. v. Mattel, Inc. (2019) 41
Cal.App.5th 554, 561.)
         “The statute commences to run only after one has
knowledge of facts sufficient to make a reasonably prudent
person suspicious of fraud, thus putting him on inquiry. . . . In
many cases it has been said that means of knowledge are
equivalent to knowledge. [Citations.] This is true, however, only
where there is a duty to inquire, as where plaintiff is aware of
facts which would make a reasonably prudent person suspicious.”
(Hobart v. Hobart Estate Co. (1945) 26 Cal.2d 412, 437–438;
accord, Vega v. Jones, Day, Reavis & Pogue (2004) 121
Cal.App.4th 282, 298 & fn. 15.)
         We agree with the trial court that the statute of limitations
began to run on June 13, 2011, when plaintiff signed the

                                  10
Agreement. That Agreement disclosed the Property was
encumbered by a mortgage that originated from Chase’s loan
modification with Brian in 2010. As noted, plaintiff alleged that
Chase was on notice that the Property was held as community
property and thus it was required to obtain plaintiff’s consent
before modifying the loan. (See Fam. Code, § 1102, subd. (a)
[“both spouses, either personally or by a duly authorized agent,
are required to join in executing an instrument by which that
community real property or an interest therein is . . .
encumbered”].) But plaintiff also was aware that in 2010, the
Property was held as community property and that she had not
signed a loan modification. And, the Agreement disclosed that
“[o]n August 17, 2010, Brian entered into a mortgage
modification with [Chase] . . . [which] ha[d] a principal balance of
$869,034 . . . .”
       According to plaintiff, the statements in the Agreement did
not trigger a duty of inquiry because she was entitled to rely
upon Brian’s representations to her as a fiduciary. (See Fam.
Code, § 721, subd. (b) [with limited exceptions, “in transactions
between themselves, spouses are subject to the general rules
governing fiduciary relationships that control the actions of
persons occupying confidential relations with each other. This
confidential relationship imposes a duty of the highest good faith
and fair dealing on each spouse, and neither shall take any unfair
advantage of the other”].) In plaintiff’s view, her fiduciary
relationship with Brian postponed the accrual of the action until
the date of Brian’s death. We disagree.
       “‘Where a fiduciary obligation is present, the courts have
recognized a postponement of the accrual of the cause of action
until the beneficiary has knowledge or notice of the act

                                11
constituting a breach of fidelity. [Citations.] The existence of a
trust relationship limits the duty of inquiry. “Thus, when a
potential plaintiff is in a fiduciary relationship with another
individual, that plaintiff’s burden of discovery is reduced and he
is entitled to rely on the statements and advice provided by the
fiduciary.”’” (WA Southwest 2, LLC v. First American Title Ins.
Co. (2015) 240 Cal.App.4th 148, 157 (WA Southwest 2, LLC).)
Even assuming that plaintiff’s fiduciary relationship with Brian
could postpone the accrual of her claims against Chase,4 it does
not bar the application of the statute of limitations here.
      On June 13, 2011, plaintiff had actual knowledge that
Brian alone had entered into a loan modification with Chase that
encumbered the Property and that the principal balance of the
mortgage was over $860,000. This conduct serves as the basis of
plaintiff’s remaining claims against Chase. (See also WA
Southwest 2, LLC, supra, 240 Cal.App.4th at p. 157 [“even
assuming for the sake of argument that each of the respondents
had a fiduciary duty to plaintiffs, this does not mean that
plaintiffs had no duty of inquiry if they were put on notice of a
breach of such duty”].) Accordingly, the statute of limitations
required plaintiff to file her complaint for quiet title and
injunctive and declaratory relief against Chase by June 13, 2014,

4     Chase is not in a fiduciary relationship with plaintiff nor
was it in a fiduciary relationship with Brian. (See Das v. Bank of
America, N.A. (2010) 186 Cal.App.4th 727, 740 [“Under the
common law, banks ordinarily have limited duties to borrowers.
Absent special circumstances, a loan does not establish a
fiduciary relationship between a commercial bank and its
debtor”].)

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which she did not do. The trial court did not err by sustaining
Chase’s demurrer without leave to amend.5

                       IV. DISPOSITION

     The judgment of dismissal is affirmed. Defendant
JPMorgan Chase Bank, N.A., is entitled to recover costs on
appeal.

      NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                          KIM, J.

I concur:

            MOOR, J.

5     Plaintiff makes no argument that she can amend her
pleadings to cure the deficiencies in her second amended
complaint.

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Florence Fleming v. JPMorgan Chase Bank, N.A.
B316665

BAKER, Acting P. J., Concurring

       I do not join the majority’s statute of limitations discussion.
I agree, however, that the trial court’s ruling should be affirmed.
The operative complaint clearly alleges that defendant JPMorgan
Chase “had notice of the underlying fraud in the initial
[Washington Mutual] loans at the time that it modified those
loans and deeds of trust” and “[i]n so doing . . . ratified and
adopted the prior fraud as its own.” The Financial Institutions
Reform, Recovery and Enforcement Act exhaustion bar therefore
fully applies. The majority concludes otherwise by reading the
operative complaint to include a claim that is not properly pled.

                        BAKER, Acting P. J.