Jaisinghani v. U.S. Bank Nat'Lass'N

GUL JAISINGHANI, Plaintiff and Appellant, v. U.S. BANK NATIONAL ASSOCIATION et al., Defendants and Respondents.

B283553

COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION THREE

August 6, 2018

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

Los Angeles County Super. Ct. No. SC125165

APPEALS from a judgment and order of the Superior Court of Los Angeles County, Lisa Hart Cole, Judge. Affirmed.

Gallet Dreyer & Berkey, David T. Azrin; George M. Halimi for Plaintiff and Appellant.

Locke Lord, Regina McClendon and James C. Magid for Defendant and Respondent U.S. Bank National Association.

Early Sullivan Wright Gizer & McRae, Eric P. Early and William A. Wright for Defendant and Respondent First American Title Insurance Company.

Baker Marquart, Christian A. Anstett; Bennett Tueller Johnson & Deere and Jeremy C. Reutzel for Defendant and Respondent National Title Agency, LLC.

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Gul Jaisinghani appeals from the trial court's dismissal of his complaint and its order granting a motion to quash, following a dispute with his former partner over the development of real estate in Malibu and an eventual foreclosure on the property. Jaisinghani sued the bank that made the construction loan, the title insurance company, and the escrow and title agent. The trial court sustained demurrers to Jaisinghani's claims against the bank and the title insurance company, and granted the escrow and title agent's motion to quash. We affirm.

BACKGROUND

Jaisinghani's business partner Akil Sharma purchased undeveloped land in Malibu in 2008, and transferred the title to one of Sharma's companies, Malibu Knoll LLC (Malibu Knoll). In June 2009, Malibu Knoll grant deeded the property to a third party, Bagrat Ogannes. On June 15, Ogannes obtained a loan for $540,000 from California Bank and Trust (the California Bank loan) secured by a deed of trust Ogannes recorded on July 1, 2009. The day before, June 30, 2009, Ogannes had transferred the property to another company Sharma owned, Malibu Knoll Green Development, LLC (Malibu Knoll Green). On July 1, Ogannes obtained a loan for $723,500 from Malibu Knoll (the Malibu Knoll loan), secured by a short form deed of trust andassignment of rents on the Malibu property, recorded on August 3, 2009.

In 2010, Sharma approached Jaisinghani about developing the property together, with Sharma as project manager. Jaisinghani alleged he paid off the California Bank loan in June 2010 to purchase the property outright. On November 8, 2010, Jaisinghani recorded a grant deed showing a transfer of the property on that date from Malibu Knoll Green to Jaisinghani. Jaisinghani alleged he was unaware of the Malibu Knoll loan, and believed the property was free of any encumbrances.

In March 2011, Jaisinghani obtained a construction loan of $1,888,510 from U.S. Bank (the U.S. Bank loan or the construction loan), secured by a deed of trust. U.S. Bank obtained a lender's title insurance policy issued by First American Title Insurance Corporation (First American). Jaisinghani alleged U.S. Bank and First American knew of the Malibu Knoll loan but did not inform him, and he first learned of the Malibu Knoll loan when Sharma and Malibu Knoll sued him in November 2014.

Malibu Knoll began nonjudicial foreclosure proceedings in November 2015, recording a notice of default stating that Ogannes owed $932,105.95 on the Malibu Knoll loan. Jaisinghani demanded that First American defend Jaisinghani's claim arising out of the foreclosure. First American denied coverage, explaining it had issued a lender's policy to U.S. Bank, not an owner's policy to Jaisinghani, whom it therefore had no duty to defend.

1. The Sharma lawsuit

In late 2014, Sharma, his wife, and his companies sued Jaisinghani (the Sharma lawsuit), alleging Jaisinghani violatedtheir joint venture agreement by claiming sole ownership of the property. Jaisinghani filed a complaint (later consolidated with Sharma's complaint), asserting he purchased the property in reliance on Sharma's assurances that the only lien on the title at that time was the California Bank loan (an allegation he repeats in his second and third amended complaints in this case). In February 2016, a jury found Jaisinghani breached a joint venture agreement with Malibu Knoll Green, under which Malibu Knoll Green and Jaisinghani agreed to share equally the profits and losses from development of the property. The jury awarded Malibu Knoll Green damages of $1 million and an additional $100,000 in damages for negligent misrepresentation, and in a supplemental verdict stated Malibu Knoll Green would not receive a half-share of the profits on the sale of the property. Jaisinghani appealed, and Division Five of this district affirmed the judgment. (Sharma et al. v. Jaisinghani (Jan. 12, 2018, B275607) [nonpub. opn.].)

2. Jaisinghani's lawsuit

In December 2015, Jaisinghani filed a complaint against U.S. Bank, First American, and National Title Agency, LLC (National Title), the escrow and title agency that closed the construction loan between Jaisinghani and U.S. Bank. A first amended complaint filed in February 2016 alleged that all three defendants aided and abetted Sharma's fraud and breach of fiduciary duty, and were negligent; First American had a duty to defend Jaisinghani in the Sharma lawsuit; U.S. Bank breached its duty of good faith and fair dealing when it approved the construction loan without discovering the Malibu Knoll loan and notifying Jaisinghani; and Jaisinghani was entitled to an award against all three defendants for restitution and unjustenrichment. On August 8, 2016, Judge H. Jay Ford III granted National Title's motion to quash for lack of jurisdiction without prejudice, finding there was no evidence National Title (a Utah corporation) conducted or solicited business in California, or purposefully availed itself of the benefits of California. Judge Ford dismissed National Title without prejudice and ordered the clerk to give notice. Judge Ford also sustained First American's and U.S. Bank's demurrers with leave to amend.

Jaisinghani filed a second amended complaint against all three defendants in September 2016, alleging against U.S. Bank and First American, "Negligence in Undertaking Voluntarily Assumed Duty" (clearing the title of the lien created by the Malibu Knoll loan) and negligence in selecting National Title as the closing agent on the construction loan; against U.S. Bank, breach of the implied covenant of good faith and fair dealing; against First American, breach of title insurance policy (Third Party Beneficiary) and breach of agency agreement; and against "the defendants," an award for restitution and unjust enrichment. The second amended complaint requested damages, declaratory relief, punitive damages, and attorney fees.

On October 11, 2016, Jaisinghani filed a notice of motion and motion to reconsider the August 8, 2016 order granting National Title's motion to quash.

U.S. Bank and First American again filed demurrers. On February 22, 2017, Judge Lisa Hart Cole (hereinafter, Judge Cole or the trial court) sustained U.S. Bank's and First American's demurrers to the cause of action for negligence in undertaking a voluntary duty and the claim for restitution and unjust enrichment, all without leave to amend. The court sustained U.S. Bank's demurrer to the cause of action for breach of theimplied covenant of good faith and fair dealing without leave to amend, and also sustained without leave to amend First American's demurrer to the causes of action for breach of title insurance policy and breach of agency agreement. The trial court sustained U.S. Bank's and First American's demurrers to the cause of action for negligence in selecting an agent (National Title) with leave to amend. Judge Cole ordered Jaisinghani not to add any new causes of action, and to limit any amendment to his cause of action alleging negligence in selecting National Title as an agent.

Also on February 22, 2017, the trial court issued a tentative decision, declining to rule on Jaisinghani's motion to reconsider the order granting National Title's motion to quash. Judge Cole ruled the motion to reconsider must be heard by Judge Ford, who had issued the order and was available to hear the motion to reconsider two days later. Judge Cole also noted the motion was untimely. At the hearing that same date, counsel for Jaisinghani stated "we're not going to request a hearing," and agreed to taking the motion off calendar. The court declined Jaisinghani's suggestion that it treat the motion to reconsider as a response to a renewed motion to quash.

Jaisinghani filed a third amended complaint on March 6, 2017. The third amended complaint included a negligence cause of action against U.S. Bank and First American, alleging they negligently selected and supervised National Title; a negligence cause of action against National Title; and a claim against National Title for restitution and unjust enrichment.

U.S. Bank filed its third demurrer, arguing it had no duty of care to Jaisinghani, and a negligent hiring theory applied only in the employment context. First American also filed a thirddemurrer, arguing that only an employer could be held liable for negligent hiring and supervision, and First American did not have an employment or agency relationship with National Title for escrow and closing services. National Title made a special appearance and filed a second motion to quash, arguing the August 2016 order was res judicata on the issue of personal jurisdiction over National Title in California.

At a hearing on May 2, 2017, the trial court found no California authority established a duty...