Taub v. Snider
Filed 9/13/06 Taub v. Snider CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
| BARRY L. TAUB, Plaintiff and Appellant, v. BEATRICE L. SNIDER et al., Defendants and Respondents. | D047618 (Super. Ct. No. GIC 827793) |
APPEAL from a judgment of the Superior Court of San Diego County, Linda B. Quinn, Judge. Affirmed.
Plaintiff Barry L. Taub appeals a judgment dismissing his action against defendants Beatrice Larsson Snider, a professional corporation, Beatrice L. Snider, and Christine H. Sickler (collectively Snider), entered after the trial court sustained Snider's demurrer to Taub's second amended complaint without leave to amend. Taub contends the trial court erred by finding: (1) the action was barred by the applicable statute of limitations; and (2) the second amended complaint failed to state facts sufficient to constitute a cause of action. We affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
The Second Amended Complaint alleges the following facts. In July 1991, Taub and his mother, Rita Rogin, retained Snider for legal representation. They informed Snider that Rogin could no longer afford to make payments on her home loan with Glendale Federal Savings and Loan Association (Glendale) and Taub would assume the loan payments for his mother. They asked Snider to draft documents so that on the death of either Taub or Rogin, or the sale of Rogin's home, Rogin or her estate would repay Taub for the loan made to Rogin by paying the principal balance on the Glendale home loan existing in July, 1991, in the amount of $91,939.00, together with the same interest rate specified in the Glendale loan. No payments would be required until the death of Taub or Rogin or the sale of Rogin's home. In response, Snider prepared a promissory note (repayment note) and deed of trust encumbering the Rogin home to secure payment of the repayment note. The principal amount of the repayment note was $91,939.62 and the interest rate on the repayment note was 12 percent per annum, the same principal balance and interest rate specified in the Glendale home loan as of July 1991.
On July 31, 2001, Taub and Rogin signed an agreement modifying several terms of the repayment note. The modification changed the interest computation so the accrued interest on the repayment note would bear interest at the same rate as the principal, even though the interest was not yet payable. The modification also provided $50,000 from the sale of the home for payment to Taub's sister, Heidi. The modification purported to reflect the original intent of the parties and leave the original repayment note otherwise unaltered. Snider was not involved with the modification to the repayment note.
On September 18, 2002, Rogin died. At that time, Taub had not received any payment on the repayment note. On December 4, 2002, Heidi objected to Taub's appointment as executor of Rogin's estate, alleging he loaned money to Rogin at a usurious interest rate. Rogin's will was then admitted to probate with Taub's brother, Abner, serving as executor. Rogin's estate sought probate court approval for the sale of Rogin's home. Heidi objected to the sale because of the amount of interest payable to Taub under the modified repayment note.
Taub, Heidi and Abner entered into a settlement agreement to resolve Heidi's objections to the sale of Rogin's home. Under the settlement agreement, Heidi received $35,000 from the net proceeds of the sale of Rogin's home, which presumably would otherwise have been dispersed to Taub in payment of the repayment note. Taub received $330,849.12. The settlement agreement was approved by order of the court on October 30, 2003.
On March 29, 2004, Taub filed a complaint for damages against Snider for legal malpractice. He alleged $35,000 in damages as a direct result of Snider's negligence in drafting the original repayment note in violation of usury laws; no other negligence was alleged. The court sustained demurrers to Taub's original and First Amended complaints with leave to amend.
The court then sustained Snider's demurrer to Taub's Second Amended Complaint without leave to amend. It found the complaint did not state facts sufficient to constitute a cause of action, was uncertain, and the asserted negligence claim was barred by the statute of limitations. The court found Taub's damages resulted from the July 2001 modified repayment note and the Second Amended Complaint did not allege Snider had any involvement in preparing the modified repayment note. The court then dismissed the action with prejudice. Taub timely filed a notice of appeal.
DISCUSSION
"A demurrer tests the sufficiency of the allegations in a complaint as a matter of law." (Cundiff v. GTE California Inc. (2002) 101 Cal.App.4th 1395, 1404.) We review the complaint de novo to determine whether it alleges sufficient facts to state a cause of action under any legal theory. (Walker v. Allstate Indemnity Co. (2000) 77 Cal.App.4th 750, 754.) " ' "We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions, or conclusions of fact or law. [Citation]." ' " (Ibid.) When a demurrer is sustained without leave to amend, we determine whether there is a reasonable possibility the defect can be cured by amendment. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) If so, it is an abuse of discretion to sustain the demurrer without leave to amend. (Ibid.)
I
Taub contends Snider negligently drafted the original repayment note in violation of usury laws. Article XV, section 1 of the California Constitution specifies a maximum interest rate of 10 percent. It states:
The rate of interest upon the loan or forbearance of any money, goods, or things in action, or on accounts after demand, shall be 7 percent per annum but it shall be competent for the parties to any loan or forbearance of any money, goods or things in action to contract in writing for a rate of interest:
(1) For any loan or forbearance of any money, goods, or things in action, if the money, goods, or things in action are for use primarily for personal, family, or household purposes, at a rate not exceeding 10 percent per annum . . . .
"Whether a transaction is usurious is generally a question of fact . . . ." (Domarad v. Fisher & Burke, Inc. (1969) 270 Cal.App.2d 543, 560.)
Here, the original repayment note stated Rogin or her estate would pay Taub $91,939, together with interest at the rate of 12 percent per annum, principal and accrued interest payable on the death of Rogin or Taub, or the sale of Rogin's home. These terms are the same as the terms in the Glendale home loan that Taub assumed for Rogin, except the Glendale home loan provided for payment of the then outstanding principal balance of $91,939 and accrued interest in monthly installments of $987.00 rather than a lump sum payment on one of three alternative dates. The purpose of the repayment note presumably was to document the obligation of Rogin or her estate to repay Taub for the payments Taub made on the Glendale home loan he assumed. However, the repayment note was inartfully drafted to accomplish this purpose. Were the repayment note read literally, then if Rogin died after Taub had made one payment on the Glendale loan ($987.00) he would be repaid $91,939 plus one month's interest at 12 percent per annum on that amount ($919.39). We find nothing in the record or appellate briefs suggesting this was the intended result. Rather, we conclude that the repayment note, by parroting the principal balance amount and interest rate of the Glendale home loan, was intended to reflect a repayment of exactly the amount Taub paid on the Glendale home loan on a monthly basis ($987.00) at the time repayment became due on the repayment note (e.g. death of Rogin). Taub's monthly payments on the Glendale home loan included some principal and accrued interest on the unpaid principal balance of the loan at the rate of 12 percent per annum. The combined payments on the Glendale home loan were to be reimbursed to Taub by payment of the repayment note, which mirrored the principal amount and interest rate of the Glendale home loan. Thus, the repayment note provided for repayment of the precise amount Taub paid in principal and interest on the Glendale loan. Under this arrangement Taub would not have earned any interest on his loan to Rogin and the original repayment note did not violate the usury laws.
It was not until Taub and Rogin modified the repayment note in 2001 that the loan represented by the repayment note became potentially usurious.[1] The modification provided for interest on interest, thereby accruing interest at the rate of 12 percent per annum on the interest Taub paid Glendale on his loan to Rogin rather than simply reimbursing the sum total of his monthly payments to Glendale. If the loan was usurious, it was a result of this modification, and Taub's damages necessarily stemmed from the modified repayment note. The Second Amended Complaint did not allege Snider was involved in the modification of the repayment note. Thus, we conclude the Second Amended Complaint did not allege facts sufficient to constitute a cause of action against Snider and the demurrer was correctly sustained.
II
Because Taub did not challenge the court's order denying leave to amend, that issue is waived on appeal. (Rose v. County of Plumas (1984) 152 Cal.App.3d 999, 1008.)
DISPOSITION
The judgment is affirmed.
McDONALD, J.
WE CONCUR:
NARES, Acting P. J.
AARON, J.
Publication Courtesy of California attorney directory.
Analysis and review provided by Oceanside Property line attorney.
[1] We do not determine whether the modified promissory note is in fact usurious because it is not relevant to the outcome of these proceedings.
