In a recent ruling addressing various issues raised in a lawsuit filed by apparent victims of an alleged deed ripoff, a California appeals court said, among other things, that there was nothing disqualifying, as one Defendant asserted, for the Plaintiffs to plead alternative facts in an attempt to undo both the deed ripoff itself, and the mortgage that was placed on the subject properties subsequent thereto. (This appeal involved a reversal of a trial court's judgment of dismissal after sustaining one defendant's demurrer. The ruling, although unpublished, may nevertheless be instructive for those in the legal profession looking to unwind or undo a wide variety of deed ripoffs, particularly, as in this case, the attorney representing one of the defendants attempts to trip up his/her adversary on a "pleading technicality.")
In addressing what the court referred to as one defendant's mischaracterization of the rules of pleading, the court stated that "where the exact nature of the facts is in doubt, or where the exact legal nature of plaintiff's right and defendant's liability depend on facts not well known to the plaintiff, the pleading may properly set forth alternative theories in varied and inconsistent counts." It went on to make this observation (all citations, internal quotations, etc. omitted for ease of reading, bold text is my emphasis, not in the original text):
- In such situations, the facts are inconsistently alleged because the plaintiff does not know which of the alternatives is true or can be established by the evidence. Tolerance for such pleading rests on the principle that uncertainty as to factual details or their legal significance should not force a pleader to gamble on a single formulation of his claim if the facts ultimately found by the court, though diverging from those the pleader might have considered most likely, still entitle him to relief.
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- At this early stage of the proceedings, Plaintiffs cannot be faulted for failing to know exactly what occurred in this case.
In addition to the foregoing point,(1) the balance of the ruling may contain some valuable insight to anyone (primarily those in the legal profession or real estate business) seeking a starting point in commencing the arduous process of undoing or unwinding a deed ripoff (ie. whether it be through forged deeds & other land documents, forged or improper use of powers of attorney, sale leaseback foreclosure rescue scams, or the otherwise duping of a property owner into signing over deeds and other land documents), including the voiding of any mortgage or other encumbrance placed on the property simultaneously with, or subsequent to, the deed ripoff.
For the ruling, see Casonhua v. Wash. Mut. Bank, B218606, B218608, 2010 Cal. App. Unpub. LEXIS 8486 (Cal. App. 2nd Dist. Div. 7, October 26, 2010) (when link expires, TRY HERE).
(1) The portion of the court's ruling on this point follows (omitting the court's footnote 7; bold text is my emphasis, not in the original text):
- 2. The Plaintiffs Were Entitled to Plead Alternative Facts
Washington Mutual argues that, even if the trial court's ruling was erroneous, the demurrers should be sustained on the ground that the Plaintiffs' verified complaints contain inconsistent factual assertions that preclude them from alleging that Berry procured her deed through fraud. Specifically, Washington Mutual contends that because the fourth cause of action in the Florence Sims Complaint (which is pleaded against Berry only) alleges that Berry induced Florence to sign the grant deed through undue influence, Plaintiffs may not allege in the alternative that the deed was forged or that Florence lacked the mental capacity to sign the deed.7 Stated more simply, Washington Mutual argues that because Plaintiffs assert in one claim that the deed was procured through undue influence, which would render the deed voidable, we must ignore Plaintiffs' alternative claim that the deed was procured through fraud, which would render the deed wholly void.
Washington Mutual's argument mischaracterizes the rules of pleading. The traditional rule is that "[w]here the exact nature of the facts is in doubt, or where the exact legal nature of plaintiff's right and defendant's liability depend on facts not well known to the plaintiff, the pleading may properly set forth alternative theories in varied and inconsistent counts." (Rader Co. v. Stone (1986) 178 Cal.App.3d 10, 29.) In such situations, "[t]he facts are inconsistently alleged because the plaintiff does not know which of the alternatives is true or can be established by the evidence." (4 Witkin, Cal. Procedure (4th ed. 1997) Pleading, § 364, p. 467.) "Tolerance for such pleading rests on the principle that uncertainty as to factual details or their legal significance should not force a pleader to gamble on a single formulation of his claim if the facts ultimately found by the court, though diverging from those the pleader might have considered most likely, still entitle him to relief." (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 886.)
In this case, the complaints plainly acknowledge that Plaintiffs pleaded alternative factual theories because they were not present when Berry's grant deed was executed, and, as a result, are uncertain what occurred. The Plaintiffs' first claim alleges that Berry forged the deed and describes circumstantial evidence that, in Plaintiffs' view, support their contention.8 Plaintiffs' additional claims, which allege that Berry procured the deed through other fraudulent means or undue influence, were pleaded "in the event the Court determines that Florence signed the [grant deeds."]. At this early stage of the proceedings, Plaintiffs cannot be faulted for failing to know exactly what occurred in this case. It would therefore be improper to limit Plaintiffs' factual allegations in the manner Washington Mutual proposes.
Washington Mutual correctly asserts that if a party verifies a specific factual allegation in a complaint, it cannot simultaneously plead an inconsistent fact in the same pleading. (Alfaro v. Community Housing Imp. System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1381 (Alfaro) ["[a] plaintiff may plead inconsistent counts or causes of action in a verified complaint, but this rule does not entitle a party to describe the same transaction as including contradictory or antagonistic facts"]; see also Beatty v. Pacific States S. & L. Co. (1935) 4 Cal.App.2d 692, 697 (Beatty).) The rules of pleading do "not permit the pleader to blow both hot and cold in the same complaint on the subject of facts of which he purports to speak with knowledge under oath." (Beatty, supra, 4 Cal.App.2d at p. 697; see also Manti v. Gunari (1970) 5 Cal.App.3d 442, 449["[t]o verify inconsistent facts alleged in a complaint indicates perjury in the matter"].) In this case, however, the operative complaints are verified only on information and belief. Therefore, although the Plaintiffs have verified that they believe the alleged information to be true, they have not claimed personal knowledge of the truth of the matters asserted. (See Black's Law Dictionary 795 (8th ed. 2004) [defining information and belief allegations as being "based on secondhand information that the declarant believes to be true"].) Moreover, as discussed above, the complaints repeatedly emphasize that because the Plaintiffs are unsure exactly what occurred when the deed was executed, they have pleaded alternative facts to encompass all possible theories of liability. As a result, the rule barring plaintiffs from pleading inconsistent facts that are based personal knowledge is inapplicable here.
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footnote 8: The complaints contend that there is "strong circumstantial evidence" indicating that Berry forged the deeds, including the fact that: (1) Berry recorded the deeds two years after Florence purportedly signed them and seven months after Florence died; (2) the notary's journal does not contain Florence's thumbprint, as required under California law; (3) the notary's journal has an entry dated January 2, 2002, for a "Power of Attorney for Decedent," which is crossed out and interlineated with "Grant Deed" in a different type of ink; (4) during deposition testimony, the notary stated that he notarized a power of attorney and the two grant deeds on January 2, 2002, but his journal only shows that one document was notarized on that date.
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