RLI Ins.
v. Bank of America>























Filed 3/7/13
RLI Ins. v. Bank of America CA3











NOT TO
BE PUBLISHED





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opinion has not been certified for publication or ordered published for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

THIRD APPELLATE DISTRICT

(Placer)

----






>

RLI INSURANCE COMPANY, Cross-complainant and Appellant, v. BANK OF AMERICA, N.A., Cross-defendant and Respondent.

C069751 (Super. Ct. No. SCV27567)

A developer obtains a large
construction loan to build a luxury vacation resort and enters into contracts
to sell several penthouse condominiums at the resort. The purchasers deposit earnest money which,
in accordance with state law, is covered by surety bonds. The developer defaults on the construction
loan and the lender bank forecloses. The
condominium purchasers sue the developer and the sureties for the return of
their earnest money deposits. One surety
cross-complains, claiming the bank is responsible “in some manner.” Thus begins the surety’s unsuccessful search
for a cause of action under which the bank may properly be held liable for the
return of the earnest money deposits.

The surety, RLI Insurance Company
(RLI), appeals from a judgment of
dismissal after the trial court sustained, without leave to amend, the
demurrer of the lender, Bank of America (the Bank), to RLI’s first amended
complaint. RLI contends the trial court
abused its discretion in sustaining the demurrer without leave to amend. RLI asserts it can amend its cross-complaint
to state that the RLI surety bonds were assigned to the Bank and under that
assignment the Bank assumed the obligations under the surety bonds, including
the obligation to reimburse RLI.

As we will explain, the trial court
properly sustained the demurrer without leave to amend. RLI’s theory of assignment is based on the
loan documents. The allegations of RLI’s
proposed second amended cross-complaint show that according to the loan
agreement, the assignment of the surety bonds was “as further security for the
Loan.” “It has long been the law in
California, reaffirmed by the Uniform Commercial Code, that an assignment for
security transfers the rights but not the obligations inherent in the assigned
contract.” (Black v. Sullivan (1975) 48 Cal.App.3d 557, 564 (>Black).)
Because RLI’s proposed amendment does not, and cannot, allege that the
Bank assumed the obligations of the
surety bonds, its proposed causes of action for href="http://www.fearnotlaw.com/">statutory reimbursement, equitable subrogation,
restitution, equitable indemnity, and implied contractual indemnity must
fail. We shall affirm the judgment.

FACTUAL
AND PROCEDURAL BACKGROUND

In reviewing an order sustaining a
demurrer, we assume the factual allegations pleaded to be true and consider
matters that may be judicially noticed.
(Committee for Green Foothills v.
Santa Clara County Bd. of Supervisors (2010) 48 Cal.4th 32, 42.) The following facts are alleged or are
cognizable by judicial notice.

Background
to RLI’s Cross-Complaint

The Bank made a $147,000,000
construction loan to Highlands Hotel Company, LLC (Highlands) for the
acquisition, development and construction of a resort hotel, including 23
condominium residences, at Truckee, California, and recorded a deed of trust on
the property. Highlands entered into
sales contracts with various individuals to purchase residential units at the
project (purchasers). These purchasers
deposited earnest money in escrow. RLI
issued a surety bond in favor of the purchasers in the amount of $5,000,000. A second surety, International Fidelity
Insurance Company, issued a surety bond in favor of the purchasers in the
amount of $3,000,000.href="#_ftn1"
name="_ftnref1" title="">[1] Highlands defaulted on the construction loan
and the Bank initiated foreclosure proceedings.
Highlands declared bankruptcy and a receiver was appointed.

Several purchasers (plaintiffs) who
had deposited earnest money for the purchase of condominiums brought suit
against Highlands and the sureties for return of their earnest money
deposits. They subsequently filed a
first amended complaint.

RLI’s
Cross-Complaint

RLI filed a cross-complaint against
the receiver, the other surety, and the Bank.
As to the receiver and the Bank, RLI sought equitable indemnity. RLI alleged “that the Receivership Estate and
Bank of America are responsible in some manner for the occurrences alleged in
Plaintiffs’ First Amended Complaint, and that their breaches, and/or failures
or refusal to perform or consummate, or to prevent the performance of the Sales
Contracts is the direct cause of the claims, including, but not limited to, the
return of earnest money deposits and damages alleged by Plaintiffs, if any,
which Plaintiffs may prove at trial.”

The Bank demurred to this
cross-complaint.

The trial court sustained the
demurrer with leave to amend. The court
found the allegation that the Bank was “responsible in some manner” was
insufficient to show the Bank and RLI were jointly and severally liable to
plaintiffs as required for equitable indemnity.
Even if the cause of action was construed as one for implied contractual
indemnity, there was no allegation of a contract between RLI and the Bank.

RLI’s
First Amended Cross-Complaint

RLI’s first amended cross-complaint
(FACC) alleged that the earnest money deposits were used to pay for
construction and development of the project for the benefit of the Bank. The FACC purported to state three causes of
action against the Bank. The first was
titled “Unjust Enrichment.” It alleged
that after the condominiums were completed “and despite the fact that the
condominium units were available for close of escrow, Bank of America refused
to withdraw the lien against the condominium units created by its recorded deed
of trust. By refusing to withdraw the
subject lien, [RLI] is informed and believes that Bank of America prevented
escrows to close on the Sales Contracts and prevented condominium units from
being sold to Plaintiffs and Diner.” The
FACC alleged the Bank’s refusal or failure to permit close of escrow on the
condominium units “resulted in unjust enrichment” of the Bank because the Bank
benefited from the use of the earnest money deposits.

The fourth cause of action was a
common count for “Money Paid.” It
alleged that the Bank “became indebted to [RLI] for money paid, laid out, and
expended, or to be paid, laid out or expended on behalf of Highlands Hotel
under the RLI Surety Bond.”

The fifth cause of action sought
declaratory relief. It alleged there was
an actual controversy regarding the Bank’s obligations to RLI under the surety
bonds. RLI contended that by virtue of
the Bank’s receipt of or benefit by the earnest money deposits and the Bank’s
refusal to release its lien when the condominium units were ready for sale, the
Bank was unjustly enriched, was obligated to pay RLI for sums expended on
account of the surety bonds, and that RLI should be subrogated to the
interests, including security, held by the Bank. RLI sought a judicial determination of its
rights with respect to the Bank to the extent RLI was required to perform under
the surety bonds.

The
Bank’s Demurrer

The Bank again demurred, contending
the FACC failed to state facts sufficient to constitute a cause of action.

At the hearing on the demurrer, RLI
argued it should be granted leave to amend.
RLI asserted it could allege new causes of action “based upon written
contracts whereby Bank of America may be joint and severally obligated with RLI
Insurance Company to the plaintiffs in this action to fulfill the obligations
to either close the escrows that are pending or return those deposits.” RLI claimed it could allege causes of action
based on those contracts for implied merchant indemnity and statutory
indemnity.

The Bank responded that RLI had
already made numerous attempts to state a cause of action. It noted there were two identical actions
pending. The Bank requested judicial
notice of RLI’s first amended complaint in intervention in the Bank’s
foreclosure case against Highlands. The
Bank asserted it was undisputed that RLI’s FACC and RLI’s first amended complaint
in intervention sought “the same redress from the Bank based on identical
claims for Unjust Enrichment, Money Paid, and Declaratory Relief.”

The trial court declined to rule on
the abatement issue because it was not raised until the Bank’s reply to RLI’s
opposition to the demurrer.href="#_ftn2"
name="_ftnref2" title="">[2] The court sustained the Bank’s demurrer
without leave to amend.



Motion
for Reconsideration

RLI moved for reconsideration. RLI offered a proposed second amended
cross-complaint (SACC) based on “new and different facts.” RLI asserted that the SACC alleged that
Highlands had assigned to the Bank all its right, title, and interest in the
RLI blanket surety bond, the Bank accepted and approved of the form of the
bond, and the Bank accepted the benefits of the bond, including the receipt of
earnest money deposits.

The proposed SACC alleged, “[i]n
connection with the Construction Loan Agreement, Highlands Hotel pledged the
earnest money deposits as security to Bank of America.” The Bank controlled the use of the earnest
money deposits through the Construction Loan Agreement. That agreement provided that the borrower
could not withdraw any earnest money deposits from escrow unless three
conditions were satisfied: (1) there was no default or material adverse change;
(2) the earnest money deposits were insured by a statutory bond, the form and
content of which were approved by the Bank; and (3) “Borrower has assigned all
its right, title, and interest in such bond to [the Bank] as further security
for the Loan.” The loan agreement
further provided that earnest money deposits were either to be paid to the Bank
as a principal payment or put into an account controlled by the Bank.

The proposed SACC alleged that Highlands had satisfied these
conditions for withdrawal of the earnest money deposits. It further alleged that the Bank voluntarily
accepted and received benefits of the surety bond and that by voluntarily
accepting and receiving these benefits, the Bank “consented to and assumed all
the obligations arising under the RLI Surety Bond, including but not limited to
any obligations owed by Highlands Hotel to Plaintiffs or to RLI.”

The only cause of action in the
proposed SACC against the Bank was for declaratory relief. RLI sought a judicial determination that
Highlands had assigned all its right, title, and interest in the RLI surety
bond to the Bank; the Bank voluntarily accepted and received the benefits of
the bond; by accepting and receiving these benefits, the Bank consented to and
assumed the obligations of the surety bond, including any obligations Highlands
owes to plaintiffs; the Bank is joint and severally obligated with RLI to
plaintiffs to fulfill the obligation of the RLI bond, including the obligations
to close escrow or return earnest money deposits; if RLI fulfills these
obligations, RLI is entitled to reimbursement from the Bank; and RLI is
entitled to equitable indemnity from the Bank for all losses incurred as a
result of the RLI surety bond.

The trial court denied the motion
for reconsideration. It found RLI failed
to allege new or different facts that were not previously known to it. Further, the court noted these facts had been
presented and considered at the hearing on the demurrer.

DISCUSSION

I

Standard
of Review

“A demurrer tests the sufficiency of
the complaint as a matter of law; as such, it raises only a question of
law. [Citations.]” (Osornio
v. Weingarten (2004) 124 Cal.App.4th 304, 316 (Osornio).) Thus, the
standard of review on appeal is de novo.
(Osornio, supra, 124
Cal.App.4th at p. 316.)

“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.’ [Citation.] Further, we give the complaint a reasonable
interpretation, reading it as a whole and its parts in their context. [Citation.]
When a demurrer is sustained, we determine whether the complaint states
facts sufficient to constitute a cause of action. [Citation.]
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.
[Citations.] The burden of
proving such reasonable possibility is squarely on the plaintiff. [Citation.]”
(Blank v. Kirwan (1985) 39
Cal.3d 311, 318 (Blank).)

“To satisfy that burden on appeal, a
plaintiff ‘must show in what manner he can amend his complaint and how that
amendment will change the legal effect of his pleading.’ [Citation.]
The assertion of an abstract right to amend does not satisfy this
burden. [Citation.] The plaintiff must clearly and specifically
set forth the ‘applicable substantive law’ [citation] and the legal basis for
amendment, i.e., the elements of the cause of action and authority for it. Further, plaintiff must set forth factual
allegations that sufficiently state all required elements of that cause of
action. [Citations.] Allegations must be factual and specific, not
vague or conclusionary.
[Citation.]” (>Rakestraw v. California Physicians’ Service
(2000) 81 Cal.App.4th 39, 43-44.)

II

Assignment
of RLI Surety Bond

RLI’s principle contention is that
it is able to amend its cross-complaint to allege that Highlands assigned all
its right, title, and interest in the RLI surety bond to the Bank and, as a
result of that assignment, the Bank has assumed the obligations of the
principal (Highlands) under the surety bond.
RLI contends that factual amendment will permit it to allege causes of
action against the Bank for statutory reimbursement and equitable subrogation,
as well as cure defects in earlier pleadings and state causes of action for
restitution, equitable indemnity and implied contractual indemnity.

We first consider whether RLI is
able to amend the FACC to allege that due to the assignment of the RLI surety
bond, the Bank assumed the obligations of the principal under that bond.

As recounted ante, the proposed SACC alleges that, in connection with the
construction loan agreement, Highlands pledged the earnest money deposits to
the Bank, the Bank controlled these deposits, and Highlands could only withdraw
these deposits if it met certain conditions, including insuring the deposits by
a statutory bond and assigning “all its right, title and interest in such bond”
to the Bank “as further security for the Loan;” Highlands had satisfied these
conditions; the Bank had accepted and received benefits of the surety bonds,
and by doing so, the Bank assumed the obligations of Highlands to plaintiffs or
RLI under the bonds.

For purposes of reviewing the trial court’s
ruling on the Bank’s demurrer, we accept as true factual allegations. (Blank,
supra, 39 Cal.3d at p. 318.) Thus, we accept as true the allegation that
Highlands assigned the surety bond to the Bank.
The legal effect of that assignment--whether it transferred obligations
as well as benefits--is, however, a legal conclusion. A demurrer does not admit the truth of
“contentions, deductions or conclusions of fact or law.” (Blank,
supra, at p. 18.) We independently
determine the legal effect of the assignment.

RLI contends that by accepting the
benefits of the surety bond, the Bank also accepted its obligations. These obligations include reimbursing the
surety if the surety satisfies the principal obligation. (Civ. Code, § 2847.) To establish the Bank’s assumption of the
obligations, RLI relies on two provisions of the Civil Code. Civil Code section 1589 provides: “A voluntary acceptance of the benefit of a
transaction is equivalent to a consent to all the obligations arising from it,
so far as the facts are known, or ought to be known, to the person
accepting.” Civil Code section 3521
provides: “He who takes the benefit
must bear the burden.”

The Bank contends these provisions
of the Civil Code are inapplicable because the assignment here was an
assignment for security. (See >St. Paul Fire & Marine Ins. Co. v. James
I. Barnes Constr. Co. (1963) 59 Cal.2d 691 (St. Paul Fire) [distinguishing between an absolute assignment and a
conditional assignment for security].)
This distinction is recognized in the comment to section 10303 of the
Commercial Code, dealing with the assignment of leases. The comment states: “The subsection states a rule of construction
that distinguishes a commercial assignment, which substitutes the assignee for
the assignor as to rights and duties, and an assignment for security or
financing assignment, which substitutes the assignee for the assignor only as
to rights. . . . Whether a buyer of leases is the holder of a
commercial assignment, or an assignment for security or financing assignment
should be determined by the language of the assignment or the circumstances of
the assignment.” (U. Com. Code com.,
reprinted at 23C West’s Ann. Cal. Com. Code (2002 ed.) foll. § 10303, p. 403.) An assignment for security transfers the
rights, but not the obligations, of the assigned contract. (Black,
supra, 48 Cal.App.3d at p. 564.)

In St. Paul Fire, the appellate court found a conditional assignment
for security where the language of the assignment stated the assignment was “for
better protection of” the assignee. (>St. Paul Fire, supra, 59 Cal.2d at p.
699.) In Black, supra, 48 Cal.App.3d 557, 561, the assignment of a note and
deed of trust was “solely for the purpose of securing legal and/or attorney’s
fees.” The assignment was found to be an
assignment for security which did not obligate the assignees to comply with a
statutory requirement to provide a beneficiary statement. (Black,
supra, at pp. 563-564.) Here, the
provisions of the loan agreement, upon which RLI relies for the allegation of
the assignment and the provisions of which RLI quotes in the proposed SACC,
provide for the assignment of the surety bond to the Bank “as >further security for the Loan.” This clear language indicates the assignment
of the RLI surety bond was for security only.

Despite this clear language--”as
further security”--RLI contends the assignment of the surety bond was >not for security because, it argues, the
bond did not secure performance of the loan agreement. We reject this argument. First, the proposed SACC alleges the
assignment was “for security.” RLI
offers no explanation for its change of position on appeal. Second, the assignment of the benefits of the
surety bond did serve to protect the Bank’s collateral. The purchasers’ earnest money deposits gave
them a purchaser’s lien against the condominiums. (Civ. Code, § 3050.) The lien, created by Civil Code section 3050,
may compete for priority with other encumbrances such as a mortgage or deed of
trust. (Garcia v. Atmajian (1980) 113 Cal.App.3d 516, 520-521.) Thus, by assuring that it received the
benefit of the RLI surety bond, the Bank assured the priority of its lien.

We conclude that the amendment to
the FACC proposed by RLI regarding the assignment to the Bank of the RLI surety
bond does not allow the legal conclusion that the Bank assumed the obligations
of the bond. We now consider whether,
with an amendment that pleads only that the Bank assumed the benefits of the
RLI surety bond, RLI can state a cause of action against the Bank. We conclude the answer is no.

III

Statutory
Reimbursement

RLI contends it is able to state a
cause of action for statutory reimbursement under Civil Code section 2847,
which provides: “If a surety satisfies
the principal obligation, or any part thereof, whether with or without legal
proceedings, the principal is bound to reimburse what he has disbursed,
including necessary costs and expenses; but the surety has no claim for
reimbursement against other persons, though they may have been benefited by his
act, except as prescribed by the next section.”

RLI’s argument in support of this
cause of action is premised upon the assertion that the Bank assumed
Highlands’s obligations under the RLI surety bond. Since this premise is incorrect, RLI cannot
state a cause of action for statutory reimbursement because the Bank is not a
principal under the surety bond.

IV

Equitable
Subrogation

RLI next contends that it can state
a cause of action for equitable subrogation.
“Payment of a principal’s debt by a surety is the prototypical situation
in which the equitable right to subrogation arises. ‘Subrogation is the right to recover from the
debtor-obligor. A surety, e.g., pays the principal debtor’s
obligation to the creditor, and in equity is substituted for the creditor, or >subrogated to his rights against the
debtor.’ [Citation.]” (Golden
Eagle Ins. Co. v. First Nationwide Financial Corp. (1994) 26 Cal.App.4th
160, 169, original italics.)

RLI contends the Bank is in the role
of debtor-obligor because it assumed Highlands’ obligations under the RLI
surety bond. As we have found the
assignment of the surety bond, as alleged by RLI, did not transfer the
obligations of the bond to the Bank, RLI cannot state a cause of action against
the Bank for equitable subrogation.

V

Unjust
Enrichment

The FACC alleged a cause of action
against the Bank for unjust enrichment.
RLI contends it is able to amend the FACC to state a cause of action for
restitution.

“There is no cause of action for
unjust enrichment. Rather, unjust
enrichment is a basis for obtaining restitution based on quasi-contract or
imposition of a constructive trust.
[Citation.]” (>McKell v. Washington Mutual, Inc. (2006)
142 Cal.App.4th 1457, 1490.) In
reviewing a judgment of dismissal following the sustaining of a general
demurrer, we ignore “‘[e]rroneous or confusing labels’” and can construe a
“purported cause of action for unjust enrichment as an attempt to plead a cause
of action giving rise to a right to restitution.” (McBride
v. Boughten (2004) 123 Cal.App.4th 379, 387-388.)

“Under the law of restitution, an
individual may be required to make restitution if he is unjustly enriched at
the expense of another. [Citation.] A person is enriched if he receives a
benefit at another’s expense. [Citation.] The term ‘benefit’ ‘denotes any form of
advantage.’ [Citation.] Thus, a benefit is conferred not only when
one adds to the property of another, but also when one saves the other from
expense or loss. Even when a person has
received a benefit from another, he is required to make restitution ‘>only if the circumstances of its receipt or
retention are such that, as between the two persons, it is unjust for him to
retain it.’ [Citation.]” (Ghirardo
v. Antonioli (1996) 14 Cal.4th 39, 51, italics added.)

RLI contends the Bank received the
benefit of the use of the earnest money deposits at RLI’s expense. To state a valid cause of action for
restitution, however, RLI must be able to allege that the Bank received this
benefit unjustly.

RLI contends it is entitled to
restitution under principles of equity.
It argues that the Bank was able to use the earnest money deposits only
due to the RLI surety bond, which the Bank demanded and approved.href="#_ftn3" name="_ftnref3" title="">[3] RLI’s only argument that the benefit of the
surety bond to the Bank was unjust is the erroneous assertion that the Bank
assumed the obligations of the surety bond.

RLI next contends it is entitled to
restitution under Civil Code section 2849.
That provision provides: “A
surety is entitled to the benefit of every security for the performance of the
principal obligation held by the creditor, or by a co-surety at the time of
entering into the contract of suretyship, or acquired by him afterwards,
whether the surety was aware of the security or not.” RLI claims it is entitled to the benefit of
the security held by the Bank, including Highlands’s pledge of the earnest
money deposits to the Bank, for the performance of the obligations of under the
RLI surety bond.

RLI misunderstands Civil Code
section 2849. The term “creditor” in
that section refers to the creditor in the surety relationship. “All surety bonds involve a tripartite
relationship: 1) a principal (promisor, debtor, or obligor), 2) an obligee
(promisee, creditor, or beneficiary), and 3) a surety. [Citations.]”
(State Farm General Ins. Co. v.
Wells Fargo Bank, N.A. (2006) 143 Cal.App.4th 1098, 1108, fn. 6; see also
Civ. Code, § 2819 [allowing exoneration of a surety “if by any act of the
creditor, without the consent of the surety the original obligation of the
principal is altered in any respect”].)
In this context, the Bank is not a “creditor”; those who contracted to
purchase condominium units and gave earnest deposits are the creditors under
the RLI surety bond.

Civil
Code section 2849 does not give RLI a right to recover restitution from the
Bank.

RLI has failed to show how it can
amend the FACC to state a cause of action for restitution.

VI

Equitable
Indemnity and Implied Contractual Indemnity

RLI cannot state a cause of action
for equitable indemnity or implied contractual indemnity because both require
that the Bank assumed Highlands’s obligations under the RLI surety bond and, as
we have discussed, the Bank did not.

“Unlike express indemnity,
traditional equitable indemnity requires no contractual relationship between an
indemnitor and an indemnitee. Such
indemnity ‘is premised on a joint legal obligation to another for damages,’ but
it ‘does not invariably follow fault.’
[Citation.]” (>Prince v. Pacific Gas & Elec. Co.
(2009) 45 Cal.4th 1151, 1158.) RLI
proposes to establish the joint legal obligation of RLI and the Bank to
plaintiffs by Highlands’s assignment of the surety bond to the Bank. The assignment for security of the bond did
not impose any obligations on the Bank.

“‘An action for implied contractual
indemnity is not a claim for contribution from a joint tortfeasor; it is not
founded upon a tort or upon any duty which the indemnitor owes to the injured
third party. It is grounded upon the
indemnitor’s breach of duty owing to the
indemnitee to properly perform its contractual duties.’ [Citation.]”
(Bay Development, Ltd. v. Superior
Court of San Diego (1990) 50
Cal.3d 1012, 1039-1040.) The Bank would
be an indemnitor owing the duty of reimbursement to RLI under the surety bond >only if the Bank had assumed Highlands’
obligations as principal under the bond.
Since the assignment of the RLI bond did not transfer to the Bank any of
Highlands’s obligations to RLI, there is no basis for implied contractual
indemnity.



VII

Intentional
Interference with Contract

For the first time in its href="http://www.fearnotlaw.com/">reply brief, RLI contends it can allege a
cause of action against the Bank for intentional interference with
contract. RLI contends the Bank
interfered with the surety contract between RLI and Highlands by directing that
the earnest money deposits be placed in an account controlled by the Bank, thus
creating a risk of loss of those funds if escrow did not close, and then
refusing to withdraw its lien on the condominiums, thus preventing escrow from
closing.

“Points raised for the first time in
a reply brief will ordinarily not be considered, because such consideration
would deprive the respondent of an opportunity to counter the argument. [Citation.]” (American
Drug Stores, Inc. v. Stroh (1992) 10 Cal.App.4th 1446, 1453.) Here, RLI’s failure to raise this claim in
its opening brief precluded the Bank from raising any arguments in opposition
thereto. Accordingly, we will not
consider the point.href="#_ftn4"
name="_ftnref4" title="">[4]

Since RLI has not shown it can amend
the FACC to state a cause of action against the Bank, the trial court did not
abuse its discretion in sustaining the Bank’s demurrer to the SACC without
leave to amend.href="#_ftn5"
name="_ftnref5" title="">[5]





DISPOSITION

The judgment is affirmed. The Bank shall recover costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1).)







DUARTE , J.







We concur:







NICHOLSON , Acting P. J.







HULL , J.

---

id=ftn1>

href="#_ftnref1"
name="_ftn1" title="">[1] Both surety bonds provided: “Whereas, Principal [Highlands] has elected,
in lieu of individual tract bonds, to give this surety bond to the State of
California in compliance with Section 11013.2(c) and/or Section 11013.4(b) of
the Business and Professions Code of the State of California, as applicable, as
a blanket and continuing obligation for the benefit and protection of each and
every purchaser of any lot or lots within each and every subdivision now or
hereafter offered for sale or lease, or sold or leased by Principal directly
or through his agents in the State
of California.”

id=ftn2>

href="#_ftnref2"
name="_ftn2" title="">[2] A plea in abatement may be made by
demurrer. Under Code of Civil Procedure
section 430.10, subdivision (c) a party against whom a complaint or cross-complaint
has been filed may object, by demurrer or answer, on the ground that “[t]here
is another action pending between the same parties on the same cause of
action.” Because we, like the trial
court, do not decide this case on the issue of abatement, we deny the Bank’s
request for judicial
notice of the pleadings related to RLI’s complaint in intervention.