Opinion
A128870
11-18-2011
DELLIA LEYVA, as Administrator, etc., Plaintiff and Appellant, v. COMMONWEALTH LAND TITLE CO., Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Alameda County Super. Ct. No. VG06295394)
INTRODUCTION
Plaintiff Dellia Leyva, as administrator of the estate of her late husband James B. Goodno, appeals from a judgment dismissing her third amended complaint with prejudice as to Commonwealth Land Title Co. (Commonwealth) following the court's sustaining of Commonwealth's demurrer to the complaint. Plaintiff contends the court erred in sustaining the demurrer. She maintains that the second cause of action against Commonwealth stated claims against Commonwealth for conspiracy to convert trust assets and for aiding and abetting the conversion of trust assets. We shall affirm.
FACTS
Plaintiff's third amended complaint alleged the following facts:
Ada L. Goodno was the mother of James B. Goodno and William C. Goodno, Jr. Ada was the settlor of a revocable living trust. Her home was an asset of the trust. James and William were the beneficiaries of the trust, in equal shares. The nominated successor trustees were James first and then William. On February 19, 2003, two weeks before her death, Ada executed a typewritten "do-it-yourself will, revoking all prior trust provisions nominating successor trustees of her trust and nominating her brother, defendant Edward H. Holbrook, as the " 'trustee of my estate' " and the " 'executor of my will.' " Plaintiff alleged Ada lacked testamentary capacity on the date of the execution of this will.
The Goodnos are referred to hereafter by their first names. No disrespect is intended.
William and defendant Holbrook had possession of the trust instrument and the will from the time of Ada's death. They concealed their existence and terms from James. William considered himself to be the beneficiary of the home formerly owned by Ada.
In June 2005, Holbrook, Commonwealth and others "knowingly and willfully conspired and agreed" with William that Holbrook would resign as successor trustee and nominate William as successor trustee to enable William to falsely execute and record the Affidavit of Death of Trustee - Succession of Successor Trustee and thereby cause title to the trust property to falsely and fraudulently vest in William's name as trustee. Holbrook's resignation and the appointment of William as trustee was for the "known and intended purposes" of allowing William "to execute and deliver a deed to the . . . property to buyer Julita Alvarez [and] receive the proceeds of sale [($451,599)] as said trustee, and convert those proceeds to his own use and benefit without accounting to [James] or sharing the proceeds equally with him as required by the Trust." William took the sale proceeds, deposited them in his own bank account, and converted them to his own use. He filed for bankruptcy on January 31, 2008.
In connection with an escrow opened by William at Commonwealth for the sale of the home, Holbrook, who had never accepted the role of successor trustee, executed a resignation as trustee of the trust and then executed a nomination of William to serve as the successor trustee in his place. These documents were delivered into the escrow, but never recorded. No provision of the trust or the will authorized Holbook to appoint a successor trustee upon his resignation. The recorded trust reflected the nomination of James as the successor trustee.
Plaintiff alleged on information and belief in paragraph 26 of the second cause of action that Commonwealth and Doe defendants "conceived of, aided and were a part of the conspiracy between [William] and Holbrook in the following manner:
"a) [Commonwealth] knew in or about June 2005 that [William] did not have title to the property, and that such record title was in the name of Ada . . . . It had been transferred out of the name of her revocable living trust in connection with a refinance of that residence.
"b) [Commonwealth] knew in or about June 2005 that [William], purported seller of the property, could sell only if he were appointed as personal representative of Ada . . . in a probate proceeding, or if he were the duly appointed and acting successor trustee of the [Trust].
"c) [Commonwealth] transferred title from Ada . . . to the [Trust], by recording that Trust, attached to which was a schedule of trust assets, including the property. The recording was the alternative to filing a petition with the probate court to confirm the property as an asset of the Trust, a procedure which would have required notice to all heirs and beneficiaries . . . .
"d) The recorded Trust on its face provided that James . . . was the successor trustee, yet [Commonwealth] received the will executed by Ada on February 19, 2003, which revoked prior nomination of successor trustees and substituted Holbrook as such trustee. [Commonwealth] received the will but could not and did not record it as it was not notarized or admitted to probate.
"e) [Commonwealth] drafted a resignation of Holbrook as successor trustee and an appointment of [William] to fill that position, which, at the request of [Commonwealth], Holbrook signed. Neither the Trust, nor the will, nor applicable law allowed unauthorized appointment of a successor trustee by a resigning prior trustee. [Commonwealth] could have recorded this resignation/appointment, or a truthful affidavit of death of trustee explaining the basis for the succession of [William], but it did not.
"f) [Commonwealth], on its standard preprinted form, prepared an affidavit of death of trustee (Ada . . .) and succession of successor trustee ([William]) falsely and fraudulently stating that [William] was the duly appointed and acting successor trustee of the [Trust]. [(Paragraph 10 of the third amended complaint somewhat inconsistently alleged that "on forms provided by the escrow company, Commonwealth . . . , William C. Goodno executed and recorded an Affidavit of Death of Trustee, alleging under penalty of perjury that [he] was the nominated successor trustee and that he accepted that role.")]
"g) The false and fraudulent affidavit of death prepared by [Commonwealth] was the basis for [William] entering into a sales contract for the property on behalf of the [Trust] and the opening of an escrow for the Trust to sell the property to buyer Julita Alvarez. The false and fraudulent conduct of [Commonwealth] occurred prior to and was collateral to the opening of the escrow and the performance by [Commonwealth] of the escrow instructions.
"h) Prior to opening the escrow between the [Trust] and Julita Alvarez, [Commonwealth] was aware of and was an active participant in the collusion and fraud perpetrated by [Commonwealth], [William] and Holbrook to enable [William] to act as the purported successor trustee of the Trust."
The second cause of action further alleged that "[t]he intentional tort of conversion alleged against [Commonwealth] does not arise out of a failure by it to comply with the depositors' escrow instructions but rather out of its complicity in the fraudulent conduct which falsely established [William] as the successor trustee of the [Trust]." Finally, the second cause of action alleged damage in the amount of one-half of the net sales proceeds, $225,799, the amount that should have been distributed to James and also alleged that the acts of [Commonwealth] and Holbrook were "willful, malicious, and in disregard of the rights of the beneficiaries" of the Trust for which they should be liable for twice the value of the converted property. (Prob. Code, § 859.)
PROCEDURAL BACKGROUND
James died on May 2, 2006. On November 30, 2009, plaintiff filed the instant third amended complaint for breach of trust, conspiracy to convert trust property and for recovery of estate property against Holbrook, Commonwealth, and Deutsche National Trust Company (holder of a trustee's deed on the property following its foreclosure action against Alvarez in 2008). Only the second cause of action seeking damages for conspiracy to convert trust assets is directed against Commonwealth. According to the complaint, William was not named as a defendant due to his having filed for bankruptcy.
The court had previously sustained Commonwealth's demurrers to the first and third causes of action of the second amended complaint, and plaintiff did not reallege those causes of action with respect to Commonwealth in the third amended complaint, but only as to other defendants. The court sustained Commonwealth's demurrer to the second amended complaint as well on the ground that plaintiff had failed to allege facts supporting liability on an intentional tort theory. However, the court granted leave to amend, to allow plaintiff "to allege, if possible, that Commonwealth is liable under an intentional tort theory."
Commonwealth demurred to the third amended complaint and the court sustained this demurrer without leave to amend on March 11, 2010. The order dismissing the third amended complaint with prejudice as to Commonwealth was entered on April 28, 2010. This timely appeal followed.
In sustaining the demurrer to the second cause of action, the court reasoned that "[t]he allegations that Commonwealth . . . was part of a conspiracy to convert the proceeds of the sale of property does not state a cause of action because Commonwealth did not owe any duty to Plaintiff to prevent the sale." The court also concluded that allegations that during the escrow Holbrook improperly resigned as trustee and improperly appointed William as trustee were insufficient to hold Commonwealth liable as the escrow holder, where the same conduct could have occurred before the escrow and was unrelated to the escrow instructions. The specific conduct by Commonwealth alleged in paragraph 26 did not support intentional tort liability as "[t]he bulk of the conduct alleged consists of actions taken to facilitate the close of escrow of an existing contract to sell real property." Among such conduct is Commonwealth's recording of the Trust, which did not constitute " 'transferring title.' " The allegation that Commonwealth received the will, but did not record it, appeared to be an attempt to impose duties on Commonwealth to spot suspicious activity by the parties to the escrow, contrary to the rule of no duty. The court concluded that the allegation that Commonwealth, on its preprinted form, prepared an affidavit of death of trustee and succession of successor trustee was irrelevant, because paragraph 10 alleged that Commonwealth merely provided the preprinted forms, which were executed and recorded by William. Similarly, the allegation that Commonwealth drafted a resignation of Holbrook as trustee and appointment of William to fill that position, which Holbrook signed at Commonwealth's request, is conduct that facilitates the sale and is only wrongful if Commonwealth had a duty to prevent improper resignations and appointments of trustees under the trust. Commonwealth was not Holbrook's advisor with respect to his duties as trustee and the circumstances alleged did not show that he could rely on Commonwealth's "request" that he sign the document as a representation that the document was consistent with his duties as trustee.
DISCUSSION
Plaintiff contends the trial court erred in determining that the third amended complaint failed to state claims for conspiracy to convert trust assets. She further argues that the complaint alleged sufficient facts to state a claim for aiding and abetting the conversion of trust assets. A. Standards of Review
" 'Because a demurrer both tests the legal sufficiency of the complaint and involves the trial court's discretion, an appellate court employs two separate standards of review on appeal. [Citation.] . . . Appellate courts first review the complaint de novo to determine whether or not the . . . complaint alleges facts sufficient to state a cause of action under any legal theory, [citation], or in other words, to determine whether or not the trial court erroneously sustained the demurrer as a matter of law. [Citation.]' [Citation.] 'Second, if a trial court sustains a demurrer without leave to amend, appellate courts determine whether or not the plaintiff could amend the complaint to state a cause of action. [Citation.]' [Citation.]
"Under the first standard of review, 'we examine the complaint's factual allegations to determine whether they state a cause of action on any available legal theory. [Citation.] We treat the demurrer as admitting all material facts which were properly pleaded. [Citation.] However, we will not assume the truth of contentions, deductions, or conclusions of fact or law [citation], and we may disregard any allegations that are contrary to the law or to a fact of which judicial notice may be taken. [Citation.]' [Citation.] [¶] Under the second standard of review, the burden falls upon the plaintiff to show what facts he or she could plead to cure the existing defects in the complaint. [Citation.] 'To meet this burden, a plaintiff must submit a proposed amended complaint or, on appeal, enumerate the facts and demonstrate how those facts establish a cause of action.' [Citation.]" (Das v. Bank of America, N.A. (2010) 186 Cal.App.4th 727, 734.)
The parties view the allegations very differently. Both acknowledge the basic rule that "[u]nder ordinary circumstances, an escrow holder owes duties only to the parties to the escrow, not to third parties." (3 Miller & Starr, Cal. Real Estate (3d ed. 2010) § 6:18, p. 6-84.) The California Supreme Court outlined the scope of an escrow holders fiduciary and general duties in Summit Financial Holdings, Ltd. v. Continental Lawyers Title Co. (2002) 27 Cal.4th 705, 711-716 (Summit). The court reiterated that "an escrow holder 'has no general duty to police the affairs of its depositors'; rather, an escrow holder's obligations are 'limited to faithful compliance with [the depositors'] instructions.' [Citations.] Absent clear evidence of fraud, an escrow holder's obligations are limited to compliance with the parties' instructions. [Citations.]" (Id. at p. 711.)
Plaintiff argues that her conspiracy cause of action is not based on any breach of a fiduciary duty Commonwealth owed to her or its negligence in its performance of the escrow, but rather upon its knowing and intentional conversion of James's property, in that it conspired with William and Holbrook and also aided and abetted their conversion of the property. Commonwealth views the allegations of the complaint in a different light—as an attempt to impose duties on Commonwealth that California law rejects, under the guise of allegations of an intentional tort. B. Conspiracy
Plaintiff contends that Commonwealth is liable for civil conspiracy. The threshold requirement for a civil conspiracy is the formation of a conspiracy by two or more persons who have agreed on a common plan to commit a tortious act. (Kidron v. Movie Acquisition Corp. (1995) 40 Cal.App.4th 1571, 1582.) The coconspirators must have "actual knowledge that a tort is planned and concur in the tortious scheme with knowledge of its unlawful purpose." (Ibid., citing Wyatt v. Union Mortgage Co. (1979) 24 Cal.3d 773, 784-786.) Civil conspiracy in California depends on pleading and proof of the following elements: (1) the formation and operation of a conspiracy, (2) wrongful conduct by any of the conspirators in furtherance of the conspiracy, and (3) damages arising from the wrongful conduct. (See Kidron v. Movie Acquisition Corp. at p. 1581; 5 Witkin, California Procedure (5th ed. 2008) § 922, p. 336.) Civil conspiracy is not an independent tort. (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 510-511.) Rather, civil conspiracy is a "legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration. [Citation.]" (Id. at pp. 510-511; see Kidron v. Movie Acquisition Corp. at p. 1581.)
In Greenwood v. Mooadian (1955) 137 Cal.App.2d 532, the appellate court held sufficient the averment that " 'the defendants herein have conspired together to appropriate to themselves and convert to their own use and benefit the assets and profits of the aforesaid joint venture . . . .' " (Id. at pp. 535-536.) The court rejected the claim "that acts constituting the conspiracy, as well as those inflicting a wrong pursuant thereto, must be alleged." (Id. at p. 537; see 5 Witkin, supra, § 922, p. 337.)
It is well-established that a civil conspiracy does not arise unless the alleged conspirator owed the victim a duty not to commit the underlying tort. (See Applied Equipment Corp. v. Litton Saudi Arabia Limited, supra, 7 Cal.4th 503, 514 ["Conspiracy is not an independent tort; it cannot create a duty or abrogate an immunity. It allows tort recovery only against a party who already owes the duty and is not immune from liability based on applicable substantive tort law principles."]; Doctors' Co. v. Superior Court (1989) 49 Cal.3d 39, 44 ["A cause of action for civil conspiracy may not arise, however, if the alleged conspirator, though a participant in the agreement underlying the injury, was not personally bound by the duty violated by the wrongdoing and was acting only as the agent or employee of the party who did have that duty."].)
Plaintiff's first cause of action against Holbrook is one for "breach of trust." Commonwealth had no fiduciary duties as to James, a nonparty to the escrow and could not have conspired with either William or with Holbrook, as trustee, to breach a duty of trust. Plaintiff frames her claim as one recognizing that Commonwealth had no duty to James, other than a duty not to convert trust assets. She argues that Commonwealth had the general duty imposed on everyone not to knowingly and intentionally convert property belonging to another. She contends that the conspiracy alleged in the second cause of action of the third amended complaint is not based on breach of a fiduciary duty or breach of trust by William and Holbrook, but upon Commonwealth's knowingly and intentionally conspiring and agreeing to the their plan for the purpose of allowing William to sell the subject property and to convert the proceeds of sale.
We agree with the trial court that Commonwealth had no duty to James to prevent the sale, even if it suspected wrongdoing by a party to the escrow. (Summit, supra, 27 Cal.4th 705, 711-716.) As described in the third amended complaint, the actions it took, including allegations that Commonwealth was an active participant in the "the fraudulent conduct which falsely established [William] as the successor trustee of the [Trust]," are the type that the Supreme Court in Summit, supra, 27 Cal.4th 705, held insufficient to result in imposition of a duty on the escrow holder. That the alleged agreement occurred before the escrow was opened, rather than after, is of no moment. The furnishing and completion of a form affidavit of death of trustee and resignation/succession of successor trustee, is precisely the type of activity escrow companies usually undertake as part of their services to the parties to the escrow.
Plaintiff argues that the crux of her claim was not based on any requirement that Commonwealth police the escrow or that it owes a duty to nonparties to prevent fraud. Rather, she argues that Commonwealth had a general duty not to convert James's property and that in agreeing with William and Holbrook to a scheme by which Holobrook would resign as successor trustee in favor of William, who would then act as the successor trustee for the purpose of selling the trust property and converting the proceeds to his own use, Commonwealth violated that general duty was liable for conspiracy. The problem with this argument is that it in almost all cases it would facilitate an end-run around the well-established rules relating to the duties of an escrow holder by the mere addition of a "conspiracy" allegation to otherwise prohibited theories of liability. (Of course, pleading a conspiracy theory is one thing, proving it is another.)
As we have previously stated, the law recognizes a conspiracy allegation "cannot create a duty or abrogate an immunity. It allows tort recovery only against a party who already owes the duty and is not immune from liability based on applicable substantive tort law principles." (Applied Equipment Corp., supra, 7 Cal.4th at p. 514; see Doctors' Co., supra, 49 Cal.3d at p. 47.) In this case, Commonwealth had no duty to refuse to facilitate or conduct the escrow or to prevent William and Holbrook from perpetrating a fraud on James.
The trial court did not err in sustaining the demurrer as to the conspiracy claim. C. Aiding and abetting.
The third amended complaint did not contain a cause of action for aiding and abetting. However, plaintiff contends that the facts underlying the complaint are sufficient to state such a cause of action. Conspiracy and aiding and abetting are closely allied form of liability. The common basis for both is concerted wrongful action. (Janken v. GM Hughes Electronics (1996) 46 Cal.App.4th 55, 78; Neilson v. Union Bank of California, N.A. (C.D. Cal. 2003) 290 F.Supp.2d 1101, 1133 (Neilson).) However, a conspiracy requires agreement plus an overt act causing damage; whereas, aiding and abetting does not require agreement, but simply substantial assistance. Aiding and abetting "necessarily requires a defendant to reach a conscious decision to participate in tortious activity for the purpose of assisting another in performing a wrongful act." (Howard v. Superior Court (1992) 2 Cal.App.4th 745, 749.)
Moreover, as explained in Neilson, supra, 290 F.Supp.2d 1101, unlike a claim for civil conspiracy, "[n]o California case . . . holds that a party must owe the plaintiff a duty before he or she can be held liable as an aider and abettor. Rather, California cases outlining the elements of aiding and abetting liability have consistently cited the elements of the tort as they are set forth in the Restatement (Second) of Torts, § 876, and have omitted any reference to an independent duty on the part of the aider and abettor. Under this formulation, a liability may properly be imposed on one who knows that another's conduct constitutes a breach of duty and substantially assists or encourages the breach. [Citations.]" (Neilson, supra, 290 F.Supp.2d 1101, 1134.) The Court of Appeals in Casey v. U.S. Bank Nat. Assn. (2005) 127 Cal.App.4th 1138, 1145, fn. 2 (Casey), expressly adopted this distinction between conspiracy and aiding and abetting liability: "For the reasons articulated so well in the Neilson opinion, we reject the banks' attempt to overlay the civil conspiracy 'independent duty' requirement onto an aiding and abetting claim."
The "substantial assistance" element of an aiding and abetting claim may be supplied by the aider and abettor's conduct in "executing ordinary business transactions for a customer." (Casey, supra, 127 Cal.App.4th at p. 1145.) Casey rejected the claim of alleged aider and abettor banks that a bank's conduct in executing ordinary business transactions for a customer, even if the bank knew the customer was engaged in wrongdoing, did not constitute the substantial assistance required to prove aiding and abetting. Recognizing a split of authority in federal courts and a lack of clear authority in California cases, the Casey court concluded that "common sense tells us that even 'ordinary business transactions' a bank performs for a customer can satisfy the substantial assistance element of an aiding and abetting claim if the bank actually knew those transactions were assisting the customer in committing a specific tort. Knowledge is the crucial element." (Ibid.; accord In re First Alliance Mortg. Co. (9th Cir. 2006) 471 F.3d 977, 994-995.) Plaintiffs claim to have alleged facts giving rise to a claim against Commonwealth for aiding and abetting founders on this actual knowledge requirement.
"California courts have long held that liability for aiding and abetting depends on proof the defendant had actual knowledge of the specific primary wrong the defendant substantially assisted. In Lomita Land & Water Co. v. Robinson (1908) 154 Cal. 36, (Lomita), the California Supreme Court explained this requirement in the course of affirming a judgment against two defendants for aiding and abetting a fraudulent land sale scheme engineered by two others. The court stated, 'The words "aid and abet" as thus used have a well understood meaning, and may fairly be construed to imply an intentional participation with knowledge of the object to be attained.' (Id. at p. 47, italics added.) Finding the defendants had 'actual knowledge of all the facts relative to' the scheme and 'knowingly' assisted in its 'consummation,' the court concluded they were rightly held liable for aiding and abetting the fraud. (Id. at p. 48.)" (Casey, supra, 127 Cal.App.4th at pp. 1145-1146.)
In Casey, supra, 127 Cal.App.4th 1138, the Court of Appeal held that the complaint failed to establish that the defendant banks had actual knowledge of the primary violation in which they purportedly participated—the looting of a corporation by a number of the corporation's officers (corporate fiduciaries). (Id. at p. 1153.) As with escrow holders, a bank has no duty to "police" accounts and no duty to prevent wrongdoing by depositors in connection with fiduciary accounts. (Id. at p. 1150-1151.) Although the complaint contained ample details of improper conduct in the banks' business dealings with the unscrupulous corporate fiduciaries, the complaint failed "to establish that the banks had actual knowledge of the primary violation in which they purportedly participated. Absent such knowledge, the banks cannot be held liable on an aiding and abetting theory. [Citations.]" (Id. at p. 1148.) The complaint contained no allegations that the banks knew the corporate fiduciaries were misappropriating funds from the corporation or that the money deposited by the fiduciaries into various fraudulent entities' accounts belonged to the corporation. (Id. at p. 1152.) Allegations that the banks knew the corporate fiduciaries were engaged in wrongful or illegal conduct in breach of their fiduciary duties to the estate were insufficient. "[T]he complaint must allege the defendant's actual knowledge of the specific breach of fiduciary duty for which it seeks to hold the defendant liable." (Ibid.)
According to the complaint in Casey, the banks aided and abetted the corporate fiduciaries by: " 'allowing them to open accounts with invalid tax identification numbers, which accounts were then used to drain funds from the Estate to the accounts of individual directors, officers, their families and affiliated companies; allowing large sums of cash, often in excess of $250,000 at a time and aggregating some $6 million, to be removed from [the banks'] cash vaults (in unmarked duffel bags); violating banking regulations and the [banks'] own internal policies and procedures; allowing obviously forged negotiable instruments to be paid; and, ignoring monetary restrictions ("not to exceed" limits) appearing on the face of individual checks by paying sums in excess of such limits.' " (Id. at p. 1142.)
Casey recognized that the case before it involved "the intersection of two distinct legal principles—one that strictly limits a bank's duties to nondepositors and another that extends tort liability to anyone who knowingly aids and abets the tort of another." (Casey, supra, 127 Cal.App.4th at pp. 1151-1152.) Casey reasoned that "[r]econciling these competing principles within the sensitive context of a claim against a bank for aiding and abetting a customer's wrongdoing depends on a strict application of the pleading requirement for the knowledge element of the aiding and abetting claim. In other words, on demurrer, a court must carefully scrutinize whether the plaintiff has alleged the bank had actual knowledge of the underlying wrong it purportedly aided and abetted. If narrowly circumscribed in this fashion, such an aiding and abetting claim against a bank is a reasonable exception to the case law limiting bank duties to nondepositors." (Id. at p. 1152.) The assertion of a claim of aiding and abetting liability against an escrow holder by a non-party to the escrow, such as presented here, requires a similar reconciliation of competing principles. In this case, to satisfy the Casey actual knowledge pleading standards, the third amended complaint must allege Commonwealth's actual knowledge of the primary violation in which they purportedly participated—William's conversion of the net proceeds of the sale of the Trust property to his own use. There is no direct allegation that Commonwealth actually knew William was converting trust property.
Plaintiff's recognition that William's conversion of the trust assets was the primary violation is shown by the statement in her reply brief that, "William's sale of the property was not a 'conversion' on the ground that Holbrook's resignation as trustee and appointment of William were unlawful. The sale was a conversion because William took the entire proceeds and did not give James Goodno the one-half to which he was entitled under the trust. Whether Holbrook's resignation and his appointment of William as trustee were lawful or not, there would be no conversion if William had given James his share of the proceeds." (Original italics and bolding.)
Allegations that Commonwealth knew that William did not have title to the property and that it knew he could sell trust property only if he were appointed as personal representative or acting successor trustee do not satisfy this standard. Nor is Commonwealth's actual knowledge of the primary violation furnished by allegations that Commonwealth transferred title from Ada to the trust by recording that trust, instead of petitioning the court in a proceeding that would have required notice to James; that the trust on its face provided that James was the successor trustee; that Commonwealth drafted Holbrook's resignation and appointment of William as successor trustee or that Holbrook signed the document at Commonwealth's request.
Commonwealth points out that it is incorrect to state that it "transferred title" to the trust by simply recording the trust. As the trial court recognized, recording the trust does not constitute "transferring title."
The allegation that Commonwealth prepared an affidavit of death of trustee "falsely and fraudulently stating that [William] was the duly appointed and acting successor trustee" does not contain an allegation that Commonwealth had actual knowledge that William was not the duly appointed and acting successor trustee. Even were that so, the allegation that the false and fraudulent affidavit of death prepared by Commonwealth was the basis for William's selling the property on behalf of the trust does not suffice to allege Commonwealth actually knew that the property was being converted by William. The closest plaintiff comes to alleging actual knowledge is the allegation in the second sentence of paragraph 24 that Holbrook's resignation and William's appointment as trustee "was for the known and intended purposes of allowing [William] to execute and deliver a deed to the . . . property to buyer Julita Alvarez, receive the proceeds of sale as said trustee, and convert those proceeds to his own use and benefit without accounting to James . . . , the other trust beneficiary, or sharing those proceeds equally with him as required by the Trust." However, the complaint never specifies that it was Commonwealth who had such actual knowledge.
The allegation that "[t]he intentional tort of conversion alleged against [Commonwealth] [arises] out of its complicity in the fraudulent conduct which falsely established [William] as the successor trustee of the [Trust]," suggests that the primary wrong with which Commonwealth is being charged is that it assisted William in becoming successor trustee. Although other allegations also state that William's appointment as successor trustee enabled him to sell the property, the allegations still fall short of alleging that Commonwealth had actual knowledge that William was converting the property and/or its proceeds.
The allegation that Commonwealth "was aware of and was an active participant in the collusion and fraud perpetrated by [Commonwealth], [William] and Holbrook to enable [William] to act as the purported successor trustee of the Trust," similarly falls short. This allegation is somewhat akin to allegations rejected by the Casey court. Casey characterized the plaintiff's "general allegation that the banks knew the [corporate fiduciaries] were involved in 'wrongful or illegal conduct' " as one that did "not constitute sufficient pleading that the banks had actual knowledge the [corporate fiduciaries] were misappropriating funds from [the corporation]." (Casey, supra, 127 Cal.App.4th at p. 1152; In re First Alliance Mortgage Co., supra, 471 F.3d at p. 993.) Casey also held the "allegation that 'each [bank] acted with knowledge of the primary wrongdoing and realized that its conduct would substantially assist the accomplishment of the wrongful conduct' [did] not satisfy the actual knowledge pleading requirement. [Citation.]" (Id. at p. 1153.) It failed to identify the primary wrong and was not otherwise supported by the rest of the complaint, which failed to allege the banks knew the corporate fiduciaries were misappropriating funds from the corporation. (Ibid.) Nor was the plaintiff's case helped by the allegation that the corporate fiduciaries were making unauthorized cash withdrawals in breach of their fiduciary duties and were actually involved in a criminal or dishonest and wrongful enterprise and were, at least, laundering money. (Id. at pp. 1152-1153.) "This 'kitchen sink' allegation—either carefully parsed out or read as a whole—does not assert the banks had actual knowledge of the misappropriation at issue here." (Ibid.)
Having reviewed the third amended complaint as a whole and its parts in context, we conclude it does not allege Commonwealth's actual knowledge of the primary wrongdoing and thus fails to state a cause of action for aiding and abetting liability. Therefore, we conclude the trial court properly sustained Commonwealth's demurrer.
Although the Casey court concluded the trial court properly sustained the demurrer to the aiding and abetting cause of action, it concluded that the plaintiff should be allowed an opportunity to allege sufficient facts to establish the knowledge element of the aiding and abetting cause of action. Therefore, the court reversed the judgment and remanded for the purpose of allowing the plaintiff to file an amended complaint, if he so chose. (Casey, supra, 127 Cal.App.4th at pp. 1154-1155.)
The remaining question for us is whether Commonwealth's demurrer was properly sustained without leave to amend. We have previously recognized that "the burden falls upon the plaintiff to show what facts he or she could plead to cure the existing defects in the complaint. [Citation.] 'To meet this burden, a plaintiff must submit a proposed amended complaint or, on appeal, enumerate the facts and demonstrate how those facts establish a cause of action.' [Citation.]" (Das v. Bank of America, N.A., supra, 186 Cal.App.4th at p. 734.) Plaintiff has nowhere contended that she could plead facts other than she has in this third amended complaint or that she could cure the existing defects by allegations that Commonwealth had actual knowledge that William was converting the trust asset and/or the proceeds of sale. Rather, she contends she has in her third amended complaint stated facts that would support Commonwealth's liability both for conspiracy and for aiding and abetting liability. Because appellant has effectively received two opportunities to amend her complaint and she has not suggested on appeal how she would amend if given the opportunity, we discern no abuse of discretion. "As explained in Rakestraw v. California Physicians' Service (2000) 81 Cal.App.4th 39, 44 , '[t]he burden of showing that a reasonable possibility exists that amendment can cure the defects remains with the plaintiff; neither the trial court nor this court will rewrite a complaint. [Citation.] Where the appellant offers no allegations to support the possibility of amendment and no legal authority showing the viability of new causes of action, there is no basis for finding the trial court abused its discretion when it sustained the demurrer without leave to amend. [Citations.]' " (Das v. Bank of America, N.A., supra, 186 Cal.App.4th at p. 745.)
DISPOSITION
The judgment is affirmed. Commonwealth is awarded its costs on appeal.
Kline, P.J. We concur: Lambden, J. Richman, J.