Judge: Anne Richardson, Case: 23STCV01629, Date: 2023-08-29 Tentative Ruling

Case Number: 23STCV01629    Hearing Date: August 29, 2023    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

Background

Plaintiff Allstate Lending Group, Inc. (Allstate) sues Defendants 3566 Beverly Glen, LLC (Beverly Glen LLC), Ando Hacopian, Lucine Hacopian, Hacopian Design & Development Group, LLC (Hacopian Design), 2376 Kimridge, LLC (Kimridge LLC), Peter Z. Yuo, Koonlawee Nademanee, Auayporn Nademanee, Maria Gonzales, and Does 1-100 pursuant to a January 25, 2023 Complaint alleging claims of (1) Quiet Title and (2) Specific Performance [Cal. Civil Code 1695.14].

The Complaint alleges that all Defendants except for Maria Gonzalez currently have an ownership interest in 3566 Beverly Glen Boulevard, Sherman Oaks, California 91423 (Property). The Complaint also alleges, and its attachments show, that in early 2022 Allstate initiated foreclosure proceedings on the Property based on a defaulted loan secured by a deed of trust in its favor and scheduled a foreclosure sale for July 14, 2022. The Complaint next alleges that the foreclosure took place or was recorded on July 22, 2022. The Complaint last alleges, among other things, that on October 11, 2022, Defendant Maria Gonzalez, other such Defendants, and Does 1-100 recorded a falsely notarized Notice of Rescission of Trustee’s Deed Upon Sale, i.e., rescission of the deed that resulted from the trustee foreclosure sale. Based on these allegations, the Complaint seeks a rescission of the notice of rescission of trustee sale, to secure quiet title, and to restore the Property to the time before the rescission.

On July 6, 2022, Allstate made a combined ex parte application and motion to set aside the false rescission of the trustee sale of the Property.

On July 7, 2023, the Court set a hearing on the motion for August 29, 2023 and ordered Plaintiff to give notice.

On August 22, 2023, Allstate dismissed Defendant Yuo from this action.

On August 23, 2023, Allstate served the Complaint on Defendants Koonlawee Nademanee and Auayporn Nademanee, filing corresponding proofs of service on August 24, 2023. On August 25, 2023, a series of additional notices and acknowledgments of service of the summons and complaint were also filed.

Allstate’s motion is now before the Court.

Motion to Set Aside False Rescission

Legal Standard

It is unlawful for any person to take unconscionable advantage of any owner of residential real property in foreclosure. (Civ. Code, § 1695.13.)

If unconscionable advantage has been taken of the property owner in any transaction involving residential real property in foreclosure after a notice of default has been recorded, the conveyance is voidable by the owner-seller. (Civ. Code, §§ 1691, 1695.14, subd. (a).)

In addition to any other remedy that may be available (see Civ. Code, § 1695.9), the transaction may be rescinded by a written notice from the owner-seller within two years of the date of the transaction (Civ. Code, § 1695.14, subd. (a)).

The rescission is accomplished by recording a notice of rescission in the county where the property is located. (Civ. Code, § 1695.14, subd. (b).)

The rescission notice must contain the name of the property owner, the name of the equity purchaser in addition to any successor of record, and a particular description of the real property. (Civ. Code, § 1695.14, subd. (b).)

On delivery of the notice of rescission, the person holding the record title or any successor-in-interest must reconvey the title to the owner-seller within 20 days free and clear of any encumbrances created after the rescinded transaction, and the seller must restore any consideration paid by the buyer. (Civ. Code, § 1695.14, subd. (b).)

Order Setting Aside False Rescission of Trustee Sale: DENIED, Without Prejudice.

“Sections 1695 through 1695.14 [of the Civil Code, otherwise known as the Home Equity Sales Contracts Act (HESCA),] were enacted to protect homeowners facing foreclosure from ‘equity purchasers’ who, through oppressive methods, might induce them to sell their homes for a small fraction of their fair market value. (§ 1695.)” (Handy v. Shiells (1987) 190 Cal.App.3d 512, 518; see Civ. Code, § 1695, subd. (a) [“The Legislature finds and declares that homeowners whose residences are in foreclosure have been subjected to fraud, deception, and unfair dealing by home equity purchasers”].)

Here, the homeowners, if any, are alleged to be all Defendants except for Maria Gonzalez. (See Complaint, ¶¶ 2-9 [alleging each of these Defendants “has an ownership interest in the subject property”].) Allstate does not show by its evidence that it ever became the homeowner or trustor of the Property. Instead, its Complaint, its motion, and the attachments to the Complaint and motion show that Allstate was the beneficiary of an April 24, 2018 deed of trust on the Property. (See Complaint, Ex. A, Notice of Default, p. 2 & Trustee’s Sale Guarantee, Schedule B, §§ 4, 5; see also Ex Parte/Motion, Han Decl., Ex. C [February 8, 2023 letter from “Allstate Lending Group, Inc[.]” identifying itself as “the beneficiary on this deed of trust”].) Notably, the Complaint fails to attach the foreclosure sale recordation instrument numbered #20220749011, which would show who became the owner of the Property after the trustee sale on the Property. (See Complaint, ¶¶ 14, 23 [claiming to attach as Exhibit A to the Complaint the July 22, 2022 Recorder’s Office instrument #20220749011 re: the foreclosure sale], Ex. A [instead attaching instruments #20220652697 and #20220329156].) As a result, Allstate fails to show by its own evidence that it is an equity homeowner or trustor of a property under foreclosure, for which reason Allstate appears to lack standing to invoke relief under the HESCA generally and under Civil Code section 1695.14 specifically. (See Handy v. Shiells, supra, 190 Cal.App.3d 515-516 [to benefit from the HESCA, party must be a homeowner in foreclosure that actually dealt with an equity purchaser or a foreclosure consultant]; see, e.g., Segura v. McBride (1992) 5 Cal.App.4th 1028, 1031-1034 [action brought pursuant to the HESCA by homeowner in foreclosure that sold property to equity purchaser and sought damages as result of purchaser’s violations of the HESCA].)

Instead, the relief sought by Allstate appears to be a claim for cancellation of instrument pursuant to Civil Code section 3214. (Civ. Code, § 3214 [A “written instrument, in respect to which there is a reasonable apprehension that if left outstanding it may cause serious injury to a person against whom it is void or voidable, may, upon his application, be so adjudged, and ordered to be delivered up or canceled”]; U.S. Bank National Assn. v. Naifeh (2016) 1 Cal.App.5th 767, 778 [“To prevail on a claim to cancel an instrument, a plaintiff must prove (1) the instrument is void or voidable due to, for example, fraud; and (2) there is a reasonable apprehension of serious injury including pecuniary loss or the prejudicial alteration of one’s position”].) A motion for such relief is not before the Court, however, nor is it clear to the Court that cancellation of an instrument can be obtained by way of a noticed motion other than a motion completely disposing of the issue, claim, or proceedings generally (summary judgment or adjudication), or where Defendants have not been served with the motion.

The record does not reflect proof of service of Allstate’s motion on the defendants, and the Notices and Acknowledgements of Receipt reflect only service of the summons and complaint on or about August 15, 2023, which is ten days prior to this motion.

Under these circumstances, the Court DENIES Allstate’s motion, Without Prejudice. 

Conclusion

Plaintiff Allstate Lending Group, Inc.’s Motion to Set Aside False Rescission of Trustee’s Sale is DENIED, Without Prejudice.