First American Title Ins. v. Ramsundar

Filed 9/12/07 First American Title Ins. v. Ramsundar 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

Appeal from a judgment of the Superior Court of Orange County, Daniel J. Didier, Judge. Affirmed.

Law Office of Julian Bach and Julian Bach for Defendants and Appellants. Lewis Brisbois Bisgaard & Smith and Michael W. Connally; W. Dean Cloud, for Plaintiff and Respondent.

Indrasain Ramsundar and Khaimwatee Ramsundar (collectively, Ramsundar) appeal from a judgment for First American Title Insurance Company (First American) in this action for breach of the covenant against encumbrances implied in a grant deed. Ramsundar argues it was error to grant two motions in limine that excluded evidence of his defenses to the action. We disagree and therefore affirm.

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Ramsundar purchased an apartment complex in Hawthorne in 1989.[1] By the early 1990s, it was encumbered with three deeds of trust. The second trust deed secured a $75,000 loan from Virgil and Fay Best (Best), and the third trust deed secured a $134,500 loan from the United States Small Business Administration (SBA).

In 1999, Ramsundar filed for protection under Chapter 11 of the Bankruptcy Code (11 U.S.C.A.  101 et seq.), initially under Chapter 11. On a motion by Ramsundar to determine the secured status of the two junior trust deeds, the United States Bankruptcy Court ruled both were unsecured claims in the Chapter 11 action. Later, Ramsundar converted the Chapter 11 case to a Chapter 7 case, in which he received a discharge in 2001.

In 2004, Ramsundar decided to sell the apartment complex. He engaged a real estate broker and, in due course, a purchase agreement was signed. A preliminary title report ordered from First American listed the Best and SBA trust deeds as liens against the property. The sale went ahead without paying off either one. Ramsundar executed a grant deed in favor of the buyer, and First American issued a policy of title insurance that insured the buyers title without excepting the Best or SBA liens.

Shortly thereafter, Best commenced non-judicial foreclosure of his deed of trust. First American unsuccessfully applied to the bankruptcy court for an injunction against the foreclosure. Pursuant to the title insurance policy, First American paid off Best, obtained a release of his trust deed, and succeeded to its insureds rights by subrogation. The instant action followed.

The complaint alleged the facts set out above. In addition, it alleged Ramsundar told the escrow company handling the sale that the Best trust deed was no longer a lien against the property, and the sale closed in reliance on Ramsundars representation. A single cause of action was set out for breach of the implied covenant against encumbrances by the grantor.[2] By statute, use of the word grant in any conveyance of a free simple estate (as this was) implies a covenant by the grantor that the property is free from any encumbrance done, made, or suffered by the grantor, or any person claiming under him, among others. (Civ. Code,  1113.)

Ramsundar answered with a general denial. He raised numerous affirmative defenses including estoppel, unclean hands, and negligence.

First American moved for summary judgment on the complaint (at that point the later dismissed causes of action were still in issue) or, in the alternative, summary adjudication on the breach of warranty cause of action. On the latter issue, First American argued Ramsundar could not rely on its decision to insure over the Best deed of trust to show the trust deed was invalid, and negligence was not a defense to a breach of warranty claim. First Americans separate statement of undisputed facts tracked the allegations of the complaint.

In opposition, Ramsundar offered evidence to support his affirmative defense of estoppel, and argued it raised triable issues of fact. Ramsundar stated he had disclosed the Best and SBA trust deeds to the broker, and gave the broker copies of the bankruptcy court order and Chapter 7 discharge, saying he thought they relieved him of the two debts. The broker obtained a preliminary title report from First American, which offered to issue a title policy subject to the trust deeds. Ramsundar claimed that a First American title officer (Jimmy Morada) initially told him the company would not insure title unless the bankruptcy court order was amended. First American wanted the order to go beyond the statement that the trust deeds were unsecured and state they were void. Ramsundar retained his former bankruptcy lawyer, who filed a motion to amend the order. Several weeks later, the title officer called Ramsundar to say First American had reviewed his bankruptcy file, Senior Counsel had concluded the order need not be amended, and the sale could close without pay off of the Best and SBA liens.

The trial court found there were disputed fact issues and denied the summary judgment/summary adjudication motion. The case was set for a jury trial.

The first motion in limine was to exclude evidence that Ramsundar had relied on First Americans preliminary title report, communications, and title policy, on the ground that a seller has no claim against a title company based on these documents or communications. The second motion in limine sought to exclude evidence of comparative negligence, because it was not a defense to an action for breach of the implied covenant against encumbrances.

After the trial court granted the motions in limine, Ramsundar acknowledged he could not offer any defense to the breach of covenant claim. Judgment was entered for First American.

I

Ramsundar argues the motions in limine should have been denied on both substantive and procedural grounds. We consider the substance first because it is dispositive.

The substantive argument is that the first motion (reliance evidence) should have been denied because Ramsundar had an estoppel defense based on First Americans statements, which amounted to an oral abstract of title. Ramsundar contends he relied on those statements in closing escrow without paying off the Best trust deed. He is mistaken on the law.

Abstract of titleis awritten representation, provided pursuant to a contract, whether written or oral, intended to be relied upon by the person who has contracted for the receipt of such representation, listing all recorded conveyances, instruments or documents which, under the laws of this state, impart constructive notice with respect to the chain of title to the real property described therein. An abstract of title is not a title policy . . . . (Italics added.) (Ins. Code,  12340.10.)

Preliminary report, commitment, or binder are reports furnished in connection with an application for title insurance and are offers to issue a title policy

. . . . The reports arenot abstracts of title, nor are any of the rights, duties, or responsibilities applicable to the preparation and issuance of an abstract of title applicable to the issuance of any report. Any such reportshall not be construed as, nor constitute, a representation as to the condition of title to real property, but shall constitute a statement of the terms and conditions upon which the issuer is willing to issue its title policy, if such offer is accepted. (Italics added.) (Ins. Code,  12340.11.)

The theory that First Americans oral statements were an abstract of title is not viable, so evidence of reliance on those statements was properly excluded. An abstract of title cannot be oral. It is defined as a written representation of recorded documents that puts one on constructive notice regarding the chain of title to a parcel. (Ins. Code,  12340.10.) Nor is there any suggestion Ramsundar requested, or paid for, an abstract of title, something title companies offer for an additional fee. (See Southland Title Corp. v. Superior Court (1991) 231 Cal.App.3d 530, 536 [If a current representation as to the status of title is required then an abstract can be ordered and separately purchased.].) Ramsundar forthrightly acknowledges his defense is not based on the preliminary report, and he makes no claim that it can be based on the title policy issued to the buyers. So the trial court was right to grant the motion in limine to exclude evidence that Ramsundar relied on First Americans statements.

Ramsundar argues the statutes quoted above do not bar his reliance theory because they are intended to protect title companies from damage claims, and he is raising a defense. But that is a distinction without a difference. In any event, it overlooks the requirement that an abstract of title must be written, which is dispositive here.

Nor does Fidelity National Title Ins. Co. v. Miller (1989) 215 Cal.App.3d 1163 help Ramsundar. There, a title company sued a seller for breach of warranty, after the title company paid the insured buyer for diminution in value due to an easement it had missed. The court reversed summary judgment for the seller, finding there were disputed fact issues. In remanding, it said the sellers chances of establishing his affirmative defenses depended on the evidence, suggesting he might be able to prove reliance on an abstract of title or some other theory. (Id. at p. 1176.) But here, no abstract of title was purchased, and no other theory is advanced, so the case does not help Ramsundar.

Ramsundar does not argue the second motion (comparative negligence) was wrongly decided, so that point is waived. No error is shown in granting the motions in limine.

II

We briefly address Ramsundars procedural point. He contends the motions in limine together excluded all evidence of his defense, they were in effect a motion for summary judgment, and a summary judgment motion disguised as a motion in limine must be denied. Several courts have made that point, this one included. (See, e.g., R & B Auto Center, Inc. v. Farmers Group, Inc. (2006) 140 Cal.App.4th 327, 371-372 (Rylaarsdam, J., concurring).) But if there was error in this case (a point we need not decide), it was harmless. First American would have been entitled to a directed verdict on the breach of covenant claim, since the defense was insufficient as a matter of law. It would be a waste of the parties time and expense, not to mention judicial resources, to send the case back for a trial in which there could be but one outcome.

One final thought may be offered. Ramsundar ended up having to pay off a lien he never denied incurring, so it is hard to see how he has been harmed. Given the concerns about the validity of the lien after the bankruptcy, he might have purchased an abstract of title to see if Fidelity was willing to underwrite the risk that he remained liable. Having chosen not to do so, Ramsundar must abide the consequences.

Since no error is shown in granting the motions in limine, the judgment appealed from must be affirmed. Respondent is entitled to costs on appeal.

BEDSWORTH, ACTING P. J.

WE CONCUR:

OLEARY, J.

ARONSON, J.

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Analysis and review provided by El Cajon Property line attorney.

[1] The facts are drawn from the parties joint statement of stipulated facts and the evidence submitted on First Americans unsuccessful motion for summary judgment.

[2] Additional causes of action for unjust enrichment, money paid, and breach of a written contract were dismissed by First American at trial.