Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Kern County No. CV-256090, Sidney P. Chapin, Judge.
Timothy L. Orr for Plaintiff and Appellant.
Best Best & Krieger and D. Brian Reider for Defendants and Respondents.
OPINION
HILL, J.
Plaintiff appeals from a judgment entered in favor of defendants, Gilbert Montano, M. Esther Montano (the Montanos), and Glasskite, Inc., after their motion for judgment on the pleadings was granted. The motion was granted after the trial court found the decision in a prior appeal of the judgment in favor of another defendant was the “law of the case” and precluded plaintiff from prevailing on his claims against the Montanos and Glasskite. Plaintiff asserts his claims survive the prior decision. Alternatively, he asserts he should have been permitted to amend his complaint to properly allege claims not barred by the law of the case. We conclude plaintiff has demonstrated a reasonable possibility he can plead a cause of action against the Montanos that is not barred by the prior decision and reverse the judgment in their favor.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff’s November 14, 2008, request for judicial notice of the clerk’s transcript from the prior appeal, Khatibi v. Rosamond Community Services District (Nov. 30, 2007, F052026) [nonpub. opn.], is granted. Both plaintiff and defendants rely upon that transcript in setting out the pertinent facts in their briefs. Plaintiff’s request for judicial notice of the first amended complaint in Rosamond Community Services District v. Protective Land Investment Corp, et al., Kern County Superior Court case No. 229961-AEW, which he submitted both with plaintiff’s request for judicial notice to the Supreme Court in the prior appeal, and with his request for judicial notice in opposition to the Montanos’ motion for judgment on the pleadings is also granted. The remainder of plaintiff’s November 14, 2008, request for judicial notice is denied.
Plaintiff’s operative pleading is the first amended complaint, which contains two causes of action: declaratory relief and quiet title. It alleges plaintiff purchased two parcels of real property at a Kern County tax sale on November 26, 2002. On October 21, 2003, Rosamond Community Services District (District) took title to the same parcels by sheriff’s deed, which plaintiff alleges was invalid because of defects in the sale procedure. The District later conveyed the property to Glasskite, Inc. (Glasskite), which conveyed it to the Montanos. Plaintiff alleges the Montanos claim to hold title superior to plaintiff’s title, but their title is invalid and should be declared void by the court. Thus, there is an actual controversy between the parties that requires a declaration by the court of the rights and obligations of the parties. Plaintiff also requests an order quieting title in plaintiff as against all defendants.
The District, which was named as a defendant, moved for summary judgment. It presented the following as undisputed facts: On October 25, 1996, the District obtained a judgment of foreclosure against a number of parcels of property, including the two plaintiff subsequently acquired; on November 8, 2001, the court issued a writ of sale for the subject parcels and a notice of levy was recorded on April 12, 2002; on November 26, 2002, plaintiff purchased the parcels at a tax sale; when plaintiff failed to satisfy the District’s judgment, the District exercised its right to foreclose on the property; on October 14, 2003, the District purchased the parcels at the sheriff’s foreclosure sale. The District argued, among other things, that the statutory time for bringing suit to challenge the sale to the District expired prior to the filing of plaintiff’s action. The trial court granted the motion for summary judgment on that ground and entered judgment in favor of the District.
Plaintiff appealed. This court affirmed, finding plaintiff did not file his action challenging the validity of the sale within the time permitted by Code of Civil Procedure section 701.680, and his action against the District was therefore barred.
Plaintiff then moved in the trial court for leave to file a second amended complaint, attempting to add allegations of matters plaintiff argued during the appeal, which the appellate decision noted were not contained in the first amended complaint. The trial court denied the motion, concluding the appellate decision established as “law of the case” that the “District obtained title, acquiring any interest of plaintiff” and the “sale could not be set aside pursuant to CCP § 701.680.”
The Montanos subsequently moved for judgment on the pleadings, asking the court to take judicial notice of the appellate decision and the trial court’s order denying plaintiff leave to amend. They argued that, in light of the appellate decision, plaintiff could not relitigate his challenge to the validity of the sale to the District, so he could not challenge the Montanos’ title by challenging the validity of the sale to the District. Therefore, the first amended complaint failed to state a cause of action against them. Because the trial court had already denied plaintiff’s motion for leave to amend, they [the Montanos] contended no amendment could cure the defects in the first amended complaint, and the motion for judgment on the pleadings should be granted without leave to amend.
The court granted the Montanos’ motion for judgment on the pleadings without leave to amend. On its own motion, it also granted judgment on the pleadings without leave to amend in favor of Glasskite. Judgment was entered, declaring that plaintiff owned “no right, title, estate, interest, or lien” in the two parcels of real property in issue. Plaintiff appeals that judgment, contending the prior appellate decision did not preclude his action against the Montanos, and, even assuming the validity of the sale to the District, he may still litigate the effect of his prior tax deed on the Montanos’ deed and the extent of the Montanos’ and plaintiff’s respective interests in the property.
DISCUSSION
I. Law of the Case
“Where an appellate court states in its opinion a principle or rule of law necessary to its decision, that principle or rule becomes the law of the case,” which must be “adhered to both in the lower court and upon subsequent appeal.” (Santa Clarita Organization for Planning the Environment v. County of Los Angeles (2007) 157 Cal.App.4th 149, 156.) The doctrine applies even if the court that issued the opinion becomes convinced on subsequent consideration that the former opinion is erroneous. (Ibid.) It applies only if the point of law involved was necessary to the prior decision, and actually presented and determined by the court. (Roden v. Amerisource Bergen Corp. (2007) 155 Cal.App.4th 1548, 1576.) The court may decline to adhere to the doctrine when its application would result in an unjust decision, such as when there has been an intervening or contemporaneous change in the law. (Clemente v. State of California (1985) 40 Cal.3d 202, 212.)
This court’s opinion in the appeal from the judgment in favor of the District stated that plaintiff’s action was based on allegations of irregularities in the sale to the District, and the effect of quieting title in plaintiff would be to invalidate or set aside the sale to the District. We determined an action to set aside that sale was required by Code of Civil Procedure section 701.680, to be filed within 90 days after the date of sale. Because plaintiff filed his action more than two years after the date of sale, we concluded plaintiff’s action was untimely, and the trial court correctly granted summary judgment in favor of the District.
Under the doctrine of law of the case, the prior appellate decision established that the 90-day period for filing suit found in Code of Civil Procedure section 701.680 applied to plaintiff’s claims challenging the validity of the sale to the District based on alleged irregularities in the sale proceedings. Because plaintiff did not meet that time requirement, his claims against the District, which were all based on alleged irregularities in the judicial foreclosure sale proceedings, were time barred. Applying the doctrine of the law of the case, any challenge in plaintiff’s first amended complaint to the validity of the sale to the District based on alleged irregularities in the sale proceedings is time barred. Accordingly, any challenge to the validity of the title acquired by successors of the District is also time barred, to the extent it is based on alleged irregularities in the proceedings through which the properties were sold to the District.
II. Judgment on the Pleadings
An appellate court independently reviews the trial court’s ruling on a motion for judgment on the pleadings, because the trial court’s “determination involves a purely legal question or a predominantly legal mixed question.” (Smiley v. Citibank (1995) 11 Cal.4th 138, 146.) The trial court may grant a defendant’s motion for judgment on the pleadings, or may grant judgment on the pleadings in favor of a defendant on its own motion, if “[t]he complaint does not state facts sufficient to constitute a cause of action against that defendant.” (Code Civ. Proc., § 438, subd. (c)(1)(B)(ii), (3)(B)(ii).) In considering the motion, the court deems all properly pleaded facts to be true; it may also consider matters which may be judicially noticed, including court records. (Mack v. State Bar (2001) 92 Cal.App.4th 957, 961 (Mack); Evid. Code, § 452, subd. (d).)
The first amended complaint alleges plaintiff’s ownership of the two parcels. It alleges the District’s title to the parcels, taken by sheriff’s deed, was invalid based on allegedly unlawful actions the District took during the sale proceedings; the District transferred the parcels to Glasskite, who transferred them to the Montanos. The Montanos’ title “is invalid and based upon illegal and invalid transactions.” Thus, the claims against the Montanos alleged in plaintiff’s first amended complaint are based upon alleged irregularities in the sale of the property to the District – the same irregularities alleged in plaintiff’s claims against the District. Reliance on alleged irregularities in the judicial foreclosure sale of the property to the District is barred by law of the case. Accordingly, the trial court properly granted the Montanos’ motion for judgment on the pleadings.
III. Denial of Leave to Amend
If a motion for judgment on the pleadings was granted without leave to amend, the appellate court must determine whether the complaint states a cause of action and, if not, whether the defect can reasonably be cured by amendment. (Mack, supra, 92 Cal.App.4th at p. 961.) “[I]t is an abuse of discretion to grant a motion for judgment on the pleadings without leave to amend ‘“if there is any reasonable possibility that the plaintiff can state a good cause of action.”’ [Citations.]” (Dudley v. Department of Transportation (2001) 90 Cal.App.4th 255, 260 (Dudley).) If there is such a reasonable possibility and the opportunity to amend has been denied, the judgment must be reversed. (Mack, supra, at p. 961.) Plaintiff bears the burden of demonstrating the defect can be cured by amendment. (Ibid.) Such a showing need not be made in the trial court, but may be made to the reviewing court. (Dudley, supra, at p. 260.)
Plaintiff asserts that judgment on the pleadings should not have been granted without leave to amend. He asserts that, without seeking to set aside the sale to the District, he may seek a determination of the legal effect of the Montanos’ subsequent deed on his own tax deed. We agree that an action to determine the extent of the Montanos’ interest in the parcels, as acquired by them through the sale to the District and the subsequent conveyances, is not foreclosed by the law of the case. The prior appeal determined that plaintiff could not seek to set aside or invalidate the sale to the District; it did not preclude him from seeking a determination of plaintiff’s and the Montanos’ respective rights and interests in the property, without challenging the validity of the sale to the District. The question we must address is whether plaintiff has demonstrated that he can amend his pleading to allege such a cause of action.
A. Defects in the sale documentation
Plaintiff asserts he can state a quiet title or declaratory relief cause of action based on allegations that the judicial foreclosure sale to the District conveyed no interest in his parcels because the judgment debtors named in the sale documents held no interest in the parcels. Plaintiff asserts he acquired his interest in the parcels from a tax sale of the property of the owner of the parcels, Protective Land Investment Corporation (PLIC). He contends the documents for the judicial foreclosure sale at which the District purchased its interest, including the writ of sale and notice of levy, listed George Hood, Jr., and Lillian Hood as the judgment debtors, even though they held no interest in those parcels. Plaintiff asserts the sheriff sold only the interest of the Hoods in the property and, since the Hoods held no interest in plaintiff’s parcels, the sale conveyed no interest to the District. Therefore, plaintiff asserts he may seek a judicial declaration that the deed to the District and the subsequent deed to the Montanos conveyed no interest in his parcels, and he may have title quieted in him on that basis.
Plaintiff made a similar argument in the prior appeal, but because these facts were not alleged in the first amended complaint, we did not consider the argument on the merits, concluding only that the District was not required to address them in its summary judgment motion, and plaintiff could not defeat the District’s summary judgment motion by asserting new claims not alleged in his pleading.
The first amended complaint in the District’s action against PLIC and the Hoods alleged the District levied assessments as security for improvement bonds issued under the Improvement Bond Act of 1915 (Sts. & Hy. Code, § 8500 et seq.). Assessments under the Improvement Bond Act of 1915 constitute a lien against the parcels of land on which they are made. (Sts. & Hy. Code, § 8701.) If the assessments are not paid, an action to foreclose the lien may be brought. (Sts. & Hy. Code, § 8830, subd. (a).) The court may decree a lien against the property covered by the assessment for the amount of the judgment and order the property to be sold on execution as in other cases of the sale of real property by the process of the court. (Sts. & Hy. Code, § 8832, subd. (a).) An execution sale of real property is absolute and may not be set aside for any reason, except that if the judgment creditor is the purchaser and “[i]f the sale was improper because of irregularities in the proceedings, because the property sold was not subject to execution, or for any other reason,” the judgment debtor or its successor “may commence an action within 90 days after the date of sale to set aside the sale.” (Code Civ. Proc., § 701.680, subds. (a), (c)(1).) The prior appeal in this case established that plaintiff’s action was not timely as a challenge to any irregularities in the judicial foreclosure sale proceedings.
Plaintiff does not seek to allege a jurisdictional challenge to the sale. He does not contend PLIC was denied proper notice or an opportunity to appear and be heard in the District’s action against it. He has not asserted the court lacked jurisdiction to enter judgment against PLIC or to order sale of the parcels. Plaintiff does not argue the wrong property was sold; that is, he does not assert that his parcels were not among those liable for the assessments and described in the District’s judgment, or that his parcels were included in the judgment as a result of an erroneous description of the property to be sold.
Consequently, to the extent plaintiff’s theory relies on a contention that the writ of sale and notice of levy listed the Hoods as judgment debtors instead of PLIC, any such defects constitute mere irregularities in the sale proceedings, which plaintiff was required to challenge, if at all, within the 90-day period provided by Code of Civil Procedure section 701.680, subdivision (c)(1). Accordingly, even if plaintiff were permitted to amend his pleading to allege there were defects in the documentation of the sale proceedings, his claims would be barred by Code of Civil Procedure section 701.680, subdivision (c)(1) and the law of the case. Plaintiff has not demonstrated he can amend his pleading to allege a viable cause of action on this theory.
B. Interest conveyed by the deed to the District
Plaintiff asserts two other grounds on which he contends he is entitled to a determination of the extent of the interest in the parcels that was conveyed to the District, and subsequently to the Montanos: (1) The District’s deed itself states that it conveyed only the interest of the Hoods, which was nonexistent, or (2) if the deed to the District and the subsequent deeds conveyed any interest in the property, the Montanos’ deed and plaintiff’s tax deed are on a parity with each other, and plaintiff may seek a declaration that he and the Montanos now own the property as tenants in common.
Plaintiff bases his parity argument on Revenue and Taxation Code section 3713, which provides:
“It is hereby declared to be the policy of the state and the intent of the provisions of this code, that the final tax deed or deeds of all taxing agencies, including counties, cities and counties, cities, irrigation districts, reclamation districts, and other taxing agencies that annually levy, assess, and collect, or cause to be collected, taxes or assessments upon real property within the state, should be, and are hereby declared to be, upon a parity with each other, and that regardless of when the levy of those taxes or assessments is or has been made, and regardless of when the final tax deed or assessment deed is or has been taken by the taxing agency, that the rights of all taxing agencies and all those deeds shall be equal and upon a parity with each other.”
In Monheit v. Cigna (1946) 28 Cal.2d 19 (Monheit), the court considered the operation of the parity doctrine under former Revenue and Taxation Code section 3900, which contained provisions nearly identical to those of current Revenue and Taxation Code section 3713. In Monheit, the plaintiff obtained a tax deed to certain property from the state after a tax sale arising from delinquent county taxes. Years later, the defendant bought the same property at another sale arising from delinquent special assessments levied by the city. The court concluded that liens for city and county taxes and liens for special assessments imposed by state agencies are equal, and “‘in case of delinquency a deed to any one of these agencies for such taxes will not obliterate the existing liens on the property in favor of any or all of the others.’” (Monheit, supra, at p. 24.) The court concluded “that the defendant-holder of title by deed after sale for delinquent special assessments does not have a right superior to that of the plaintiff-holder of a deed from the state based upon a sale for delinquent general taxes, and the reverse is also true.” (Id. at p. 25.) Further, “in order that that parity and equality be made real and fully significant, it must follow that the time such liens arose or the deeds were executed with reference to each other, is immaterial.” (Id. at p. 26.) Subsequently, the court clarified that the timing of the liens does matter to some extent because the parity doctrine only applies where “coexisting liens or tax deeds based on coexisting liens” are involved. (Elbert, Ltd. v. Barnes (1951) 107 Cal.App.2d 659, 661.)
“‘It is hereby declared to be the policy of the State and the intent of the provisions in this code contained, that the final tax deed or deeds of all taxing agencies, including counties, cities and counties, cities, irrigation districts, reclamation districts, and other taxing agencies that annually levy, assess and collect taxes or assessments upon real property within the State, should be and they are hereby declared to be upon a parity with each other, and that regardless of when the levy of such taxes or assessments is or has been made, and regardless of when the final tax deed or assessment deed is or has been taken by such taxing agency, that the rights of all taxing agencies and all such deeds shall be equal and upon a parity with each other.’” (Monheit, supra, 28 Cal. 2d at p. 23, quoting former Rev. & Tax. Code, § 3900.)
Addressing “the difficult question of the character and extent of the interest and the nature of the estate in the property of the holders of deeds from the respective taxing agencies,” the court held that, to preserve the equality and parity of the deeds, where there was no priority between the tax and assessment liens, the respective purchasers became tenants in common, each with a lien on the property to the extent of the purchase price that purchaser paid. (Monheit, supra, 28 Cal. 2d at p. 27.) Accordingly, “each tax purchaser is entitled upon sale to receive the price paid for his interest plus half of the excess proceeds consistent with ownership of an undivided one-half interest in the property as a tenant in common.” (Anger v. Borden (1951) 38 Cal.2d 136, 139.)
Parity applies not only to tax and assessment deeds, but also to tax and assessment liens. The lien of a special assessment is equal to the lien for general taxes and is generally “not subject to extinguishment by the sale of the property on account of the nonpayment of any taxes. [Citations.]” (Gov. Code, § 53935.)
The parity rule of Revenue and Taxation Code section 3713, by its terms, applies to tax and assessment deeds of taxing agencies; that is, it applies to deeds issued as a result of nonjudicial foreclosure sales. It does not mention deeds acquired as a result of a judicial foreclosure sale of tax delinquent or assessment delinquent properties. Under the statutes governing execution sales, “[t]he purchaser of property at an execution sale acquires any interest of the judgment debtor in the property sold (1) that is held on the effective date of the lien under which the property was sold or (2) that is acquired between such effective date and the date of sale.” (Code Civ. Proc., § 701.640.) That section does not discuss what interest of the judgment debtor passes to the purchaser when the property has been deeded to another as a result of a tax sale prior to the execution sale. The Montanos seem to assume that, under Code of Civil Procedure section 701.640, the District acquired the entire fee title to both parcels as a result of the execution sale, regardless of the existence of plaintiff’s prior tax deed, and the Montanos acquired that interest from the District.
Revenue and Taxation Code section 3713 and Government Code section 53935 reflect a legislative intent that special assessment liens and deeds should stand on an equal footing with general tax liens and deeds. It is doubtful the Legislature intended that the parity of tax and assessment deeds be abrogated simply because one of the taxing agencies chose to foreclose through judicial proceedings rather than by nonjudicial sale.
Additionally, in this case, the sheriff’s deed to the District recites that the sheriff “do[es] grant, sell, convey unto the purchaser(s)... all right, title and interest of the herein named judgment debtor in the real property described in this deed.” The judgment debtors are identified as Lillian Hood and George Hood, Jr. The sheriff’s deed that purports to convey to the District only the interest of the Hoods raises questions concerning the scope of the interest conveyed by that deed and its legal effect on plaintiff’s prior tax deed.
We express no opinion regarding how the statutes discussed above may apply in this case. We conclude, however, that they raise issues concerning the nature and extent of the interest conveyed to plaintiff by his tax deed and the interest acquired by the Montanos through conveyances subsequent to the sheriff’s deed to the District, which do not implicate the validity of the judicial foreclosure sale proceedings. An action for a declaration that plaintiff’s tax deed either survived the sale to the District or was extinguished by it does not constitute an action to set aside the judicial foreclosure sale, and would not be barred by the law of the case. Plaintiff should not be precluded from presenting these issues to the court for resolution.
As previously discussed, the only basis for declaratory relief and quiet title alleged in the first amended complaint is the alleged invalidity of the Montanos’ title resulting from irregularities in the sheriff’s sale to the District, which plaintiff may not pursue due to law of the case. The first amended complaint does not allege the existence of an actual controversy between the parties concerning the extent of their respective interests in the parcels as a result of the deeds by which they acquired title, nor does it seek a declaration of the parties’ respective rights, obligations, and interests in the property in order to resolve such a controversy. Plaintiff, however, has shown a reasonable possibility that he can state a viable cause of action against the Montanos for declaratory relief at the least. Consequently, it was an abuse of discretion for the trial court to grant the Montanos’ motion for judgment on the pleadings without also granting plaintiff leave to amend his complaint.
As to the judgment on the pleadings granted in favor of Glasskite, plaintiff has not shown that he can amend his pleading to allege a viable cause of action against Glasskite. He has not shown that Glasskite currently claims any interest in the property adverse to plaintiff’s. He has not shown there is an actual controversy between plaintiff and Glasskite concerning their respective rights, obligations, and interests in the property that requires resolution by the court. Consequently, the judgment in favor of Glasskite should be affirmed.
DISPOSITION
The judgment in favor of Glasskite is affirmed. The judgment in favor of the Montanos is reversed. The trial court is directed to vacate its order granting the Montanos’ motion for judgment on the pleadings without leave to amend and to enter a new order granting that motion with leave to amend. The parties will bear their own costs on appeal.
WE CONCUR: DAWSON, Acting P.J., KANE, J.