SCOTT VS ZHANG

Kirwan (1985) 39 Cal.3d 311, 318.)

1st Cause of Action Cancellation of Instruments: Cancellation of instruments requires: (1) a written instrument; (2) a reasonable apprehension that it may cause serious injury to someone; and (3) as to whom it is void or voidable. (Civ. Code §3412.) “All that is required under section 3412 of the Civil Code, either in pleading or proof is to show the facts constituting the invalidity of the instrument, whether they involve fraud, duress, accident, and mistake.” (Keele v. Clouser (1929) 101 Cal. App. 500, 502.) An action to cancel instruments related to the transfer of interest in property requires an interest in the property. (Osborne v. Abels (1939) 30 Cal. App. 2d 729, 731 [holding that a plaintiff without any title or interest in the property cannot maintain an action for cancellation of instruments or quiet title.])

It is undisputed that Plaintiffs do not allege that Defendant even held title or any interest in the Subject Property. Plaintiffs allege that the chain of title for the Subject Property includes a Substitution of Trustee, which purports to substitute California TD Specialists as trustee under a DOT encumbering the Subject Property, originally naming Plaintiffs as trustors, Youland, Inc. as beneficiary, and First American Title Company as trustee. (FAC, ¶¶ 7-8.) The SOT bears a notarial acknowledgment appearing to be executed by Defendant Zhang, with California notary commission number 2486399, dated September 12, 2024. (Id at ¶ 7.)

Plaintiffs assert that the signatures of Defendant as notary public, and Lin Jia, as agent of the Trustee, are forged based on a forensic document examination. (Id at ¶ 9.) Plaintiffs allege that Defendant did not sign the SOT, did not affix her notary seal to it, and did not have any signer personally appear before her to acknowledge execution of the SOT. (Id at ¶ 16.) Instead, an unknown person forged the signatures and misused Defendant’s notary seal and commission. (Id.)

Plaintiffs argue that the forged signatures render the SOT void under Gov. Code § 27287, which provides that no instrument affecting real property may be recorded unless “its execution must be acknowledged or proved, and the acknowledgment or proof must be certified as prescribed by law. “A void contract is without legal effect...It binds no one and is a legal nullity.” (Yvanova v. New Century Mortgage Corp. (2016) 62 Cal. 4th 919, 929.) However, the cases cited by Plaintiff for the proposition that a void instrument is a nullity and may be cancelled challenges to the underlying instrument. (see e.g.

Wutzke v. Bill Reid Painting Serv. (1984) 151 Cal. App. 3d 36, 40-41 [signor of deed of reconveyance did not have authority to sign.]) In contrast, assuming that the allegations of notary misconduct are true, this would affect only the validity of the recordation rather than the validity of the substitution itself. Because Defendant has no interest in the Subject Property and was not a party to the SOT, the FAC fails to state a cause of action against Defendant.

2nd Cause of Action Notary Misconduct—Gov. Code §§ 8206, 8214, 8228.1: Plaintiffs allege that Defendant was a commissioned notary public. (FAC, ¶29.) They assert that Defendant breached her statutory duties as a notary public by: (a) failing to keep her notary journal and seal under her exclusive control; (b) allowing an unauthorized person to access and use her seal and identity to create a forged acknowledgment on the SOT; (c) failing to respond within fifteen business days to Plaintiffs’ written journal entry request; and (d) failing to notify the Secretary of State of her change of address, obstructing verification of her notarial acts. (Id at ¶ 31.) Plaintiffs claim that they were damaged by this misconduct. (Id at ¶ 33.)

Defendant argues that the second cause of action is improper because it was added without leave of Court. Plaintiffs argue that, in sustaining the Demurrer to the Complaint, the Court granted leave to amend. An order granting leave to amend when a demurrer is sustained, allows the pleader to cure defects in the particular causes of action to which the demurrer was sustained. (Community Water Coalition v. Santa Cruz County Local Formation Com. (2011) 200 Cal. App. 4th 1317.) The plaintiff may amend the pleading only as authorized by the court’s order and may not add a new cause of action without having obtained permission to do so, unless the new cause of action is within the scope of the order granting leave to amend. (Harris v.

Wachovia Mortgage, FBS (2010) 185 Cal. App. 4th 1018, 1023.) Here, the order sustaining the Demurrer to the Complaint does not indicate that Plaintiffs may assert a new cause of action based on the alleged violations of the Gov. Code §§ 8206, 8214 and 8228.1. (See RJN, Ex. 2.) Therefore, the second cause of action is beyond the scope of the order granting leave to amend and was improperly asserted.

3rd Cause of Action Declaratory Relief: Pursuant to CCP §1060, any person under a written instrument who desires a declaration of his or her rights or duties with respect to another, may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an action or cross-complaint in the superior court for a declaration of his or her rights or duties. To demonstrate entitlement to declaratory relief, a plaintiff must show that the action presents “two essential elements: (1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to the rights or obligations of a party.” (Lee v. Silveira (2016) 6 Cal.App.5th 527, 546.) An actual controversy “encompasses a probable future controversy relating to the legal rights and duties of the parties.” (Ibid; emphasis added.)

Although the scope of section 1060 is broad, “[o]ne cannot analyze requested declaratory relief without evaluating the nature of the rights and duties that the plaintiff is asserting, which must follow some recognized or cognizable legal theories that are related to subjects and requests for relief that are properly before the court.” (D. Cummins Corp. v. United States Fidelity & Guaranty Co. (2016) 246 Cal. App. 4th 1484, 1489.) A person is a proper party to a declaratory relief action if he or she has a legal interest in the contract or would be directly affected by an interpretation of the terms, whereas one with no legal interest is not a proper party. (Id at 1493.)

Plaintiffs allege that an actual, present controversy exists between Plaintiffs and Defendants concerning (a) the validity and legal effect of the SOT and its forged acknowledgment; and (b) Defendant Zhang’s compliance with her statutory duties as a notary and the resulting liability of Zhang and Merchants under the notary bond. (FAC, ¶36.) Plaintiffs seek a judicial declaration that: (a) the SOT is forged and void or voidable as to Plaintiffs and does not constitute a validly acknowledged or recorded instrument affecting their title; (b) the SOT cannot be relied upon to initiate or support foreclosure proceedings or to claim trustee authority as to the Subject Property; and (c) Defendant Zhang’s acts and omissions constitute official misconduct and neglect under Government Code sections 8206, 8213.5, 8228.1 and related provisions, rendering her and Defendant Merchants liable to Plaintiffs for all damages proximately caused thereby under Government Code section 8214. (Id at ¶ 38.)

Again, as Plaintiffs have not established that Defendant had any interest in the Subject Property or SOT, her alleged misconduct does not create an actual controversy regarding the validity of the SOT itself or the authority of the substituted trustee to initiate foreclosure proceedings. Accordingly, Plaintiffs have not stated claim for declaratory relief.

Defendant Wynne Zhang’s Request for Judicial Notice as to Exhibits 1 and 2 GRANTED. Demurrer by Defendant Wynne Zhang as to the 1st, 2nd and 3rd Causes of Action SUSTAINED without leave to amend. Case Management Conference and OSC re proof of service of Defendant Merchants Bonding Company confirmed for 6.15.26.