Judge Bruce G. Iwasaki, Case Number: BC361768, Date: 2023-09-26 Tentative Ruling

Tentative Ruling: Motion to Amend the Judgment is granted in part; the Fifth Amended Judgment shall order Plaintiff to pay Defendant Lehman Brother Holdings, Inc. $557,955.96 plus post-judgment interest, accruing from September 16, 2020, within sixty days of August 21, 2023.

This action arises from a dispute over ownership of certain real property (Longwood Property), originally owned by Fannie Marie Gaines (Fannie) and Milton Gaines (Milton). As this matter involves nearly two decades worth of factual and procedural history, including multiple Court of Appeal rulings, the Court will limit the background to only the directly relevant history.

This action was brought by Fannie after she attempted to refinance her home loan on the Longwood Property with Defendant Countrywide. The Complaint alleged that a Countrywide employee lied to Fannie and Milton, falsely telling them that Countrywide could not refinance their loan, and then referred them to her fiancé, Joshua Tornberg (Tornberg), for help. Tornberg and others deceived Fannie and Milton into transferring title to the Longwood Property to Tornberg in a leaseback deal that Tornberg never intended to honor. Tornberg took out a loan against the property that in 2010 was acquired by Defendant Lehman Brothers Holdings, Inc. (Defendant Lehman).

In November 2006, Fannie filed a complaint alleging causes of action for fraud and related claims arising out of the sale of her home. During the course of this litigation, Fannie died and her son, Milton Howard Gaines (Gaines or Plaintiff), as the successor in interest to Plaintiff Fannie, stepped in as the plaintiff. In 2012, Tornberg and Defendants were dismissed based on Plaintiff’s failure to bring the case to trial within five years. However, Defendant Lehman remained because it was added to the suit after it acquired the Tornberg loan in 2010.

After trial, in July 2018, the Court entered judgment, quieting title to the Longwood property in Plaintiff Gaines’s favor, cancelling the warranty deed from Fannie and Milton to Tornberg, and cancelling Lehman’s deed of trust against the property.

In an appeal from the original judgment, the Court of Appeal found the Court had properly quieted title to a parcel of real property in Plaintiff, but abused its discretion in failing to require Plaintiff, as a precondition, to repay to Defendant Lehman over half a million dollars in benefits Plaintiff’s parents had received in a previous transaction involving the Longwood Property. Thus, the Court of Appeal ordered the judgment modified and ordered this Court to exercise its equitable discretion to set the amount of the repayment between a minimum of $567,955.96 and maximum of $854,647.93 (the latter being the full amount of the benefits plaintiff’s parents received); this amended judgment was also to provide that, if Plaintiff failed to meet the repayment condition, then judgment for Plaintiff would be vacated and judgment would be entered in favor of Defendant Lehman.

In the Amended Judgment, this Court, in exercising its discretion, determined that Plaintiff Gaines should pay the minimum amount ($567,955.96), declined to award prejudgment interest on that amount or on any other component of the benefits Gaines received, and ordered payment within 180 days.

The Court, in a Second Amended Judgment, ordered repayment of the minimum amount of $567,955.96 within six months (by March 15, 2021), without interest. At Plaintiff’s request, the time for repayment was extended in a Third Amended Judgment to May 26, 2021, again without interest.

The Court issued a Fourth Amended Judgment in this matter on May 24, 2021. In the Fourth Amended Judgment, the trial court extended the deadline for repayment indefinitely, until two months after the resolution of another quiet title action that had recently been filed by yet another claimant to the Longwood Property.[1]

Defendant Lehman appealed this amended judgment order. On May 2, 2023, the Court of Appeal issued a ruling ordering this Court to modify its Fourth Amended Judgment. Importantly, the Court of Appeal ordered:

“the judgment [is] modified to require plaintiff to pay the delinquent taxes in full within 60 days of the issuance of our remittitur, and to require plaintiff to remain current in paying future property taxes when due. If plaintiff does so, his obligation to pay defendant the minimum amount ordered by the trial court ($567,955.96), plus postjudgment interest calculated from an accrual date of September 16, 2020, will become due as ordered in the fourth amended judgment. If plaintiff does not pay the delinquent taxes by the deadline ordered here, then plaintiff is obligated to pay the $567,955.96 plus postjudgment interest to defendant within a reasonable time to be determined by the trial court in a manner consistent with the views expressed in this opinion. If payment of the $567,955.96 plus postjudgment interest to defendant is not timely made, judgment for plaintiff is to be vacated and judgment is to be entered for defendant.” (Gaines v. Lehman Brothers Holdings, Inc. (Cal. Ct. App., May 2, 2023, No. B314160) 2023 WL 3187917, at *8.)

On July 12, 2023, Defendant Lehman filed a motion for an order entering the proposed Fifth Amended Judgment so that the judgment will coincide with the decision of the Court of Appeal in Second District Civil Appeal. Plaintiff Milton Howard Gaines opposed, in part, to this motion.

Defendant Lehman requests the Court modify the Fourth Amended Judgment and enter a Fifth Amended Judgment that compels Plaintiff Gains to cure the tax delinquency by September 11, 2023, or to pay the entire amount of principal and interest on the judgment by September 12, 2023, or to have title quieted against Plaintiff and in favor of Defendant Lehman on September 13, 2023.

The parties do not dispute that the May 2, 2023 Court of Appeal decision ordered the delinquent taxes paid on the property 60 days after issuance of the remittitur. There is also no dispute that the Court of Appeal remanded to the discretion of this Court the question of when to schedule a date by which Plaintiff Gaines would pay Lehman $567,955.96 plus post judgment interest accrued since September 16, 2020 – if Plaintiff did not pay the delinquent taxes in full within 60 days. It is also undisputed that the remittitur issued on July 10, 2023; therefore, the deadline for payment of the delinquent taxes expired on September 11, 2023. The parties do not dispute that the delinquent taxes have not been paid by this date.

Based on these undisputed facts, Plaintiff Gains, in opposition, requests a Fifth Amended Judgment that schedules a deadline for payment to Lehman on either October 21, 2023 or October 26, 2023 – which is approximately 60 days from quiet title resolution deadline set by the Court in the Fourth Amended Judgment.

Therefore, the only unresolved issue before this Court in amending the Fourth Amended Judgment is the determination of what is a reasonable time within which Gaines has to pay the entire amount of the judgment in the event that he did not cure the tax delinquency on the Longwood property within 60 days of the issuance of the remittitur.

Defendant Lehman takes the position that one day is reasonable based on Civil Code section 1657.

Civil Code section 1657, which applies to contract interpretations, states: “If no time is specified for the performance of an act required to be performed, a reasonable time is allowed. If the act is in its nature capable of being done instantly--as, for example, if it consists in the payment of money only--it must be performed immediately upon the thing to be done being exactly ascertained.”

Even assuming a judgment is interpreted pursuant to contract principles (as argued by Defendant Lehman), this statute has no bearing on the issues here because the time to comply with the judgment has not been left “unspecified;” rather, the Court of Appeal has ordered this Court to determine the reasonable time to comply.

As another point against Defendant Lehman’s suggestion that September 12, 2023 is the appropriate date to order compliance with the judgment, the Court notes that, while Defendant Lehman acted diligently in bringing this motion to amend the judgment, the motion’s originally calendar date was November 7, 2023; Defendant then waited nearly three weeks to bring an ex parte application to advance the hearing date (August 3, 2023) which was heard on August 7, 2023. The motion was then advanced to September 26, 2023. The “reasonable” date of September 11, 2023 that was set forth in Defendant’s moving papers essentially render it impossible for Plaintiff Gaines to comply because it requires Plaintiff Gaines to have paid the judgment on a date that has already passed by the time of entry of judgment. On its face, Defendant Lehman’s “reasonable time” is unreasonable.

The Reply now suggests that it should be “within the next 24 hours.” From this phrase, it is unclear if Defendant now means within 24 hours of the filing of the reply, the hearing on this motion, or entry of the Fifth Amended Judgment.

In contrast, the opposition’s argument for a reasonable time is persuasive. The Court, in the unmodified portion of the Fourth Amended Judgment, previously determined that a reasonable time for repayment was 60 days after the resolution of the quiet title action. The Court of Appeal did not modify this portion of the Judgment but conditioned it upon Plaintiff curing the tax default and paying post-judgment interest. Here, the evidence shows that the quiet title action was resolved prior to September 11, 2023 deadline imposed by the Court of Appeal (either on August 21, 2023 – when Longwood 18 filed a request for dismissal of the quiet title action, or on August 29, 2023 – when Longwood 18 recorded a withdrawal of lis pendens). Either date would have triggered the timing requirement in the Fourth Amended Judgement.

Moreover, the purpose of the original extension was to provide time for Plaintiff Gaines to sell the Longwood property to generate the funds to make the $567,955.96 payment to Lehman required by the Fourth Amended Judgment. Given the short lapse between Plaintiff’s default in payment of the delinquent taxes and the Court’s original objection to facilitate the sale of the Longwood property – the 60 days is a reasonable time period.

Finally, Defendant Lehman argues that the lis pendens removal date of August 29, 2023 should not govern where the matter was dismissed on August 21, 2023. In support, Defendant Lehman cites Albertson v. Raboff (1956) 46 Cal.2d 375. Defendant Lehman argues that once that action is dismissed, the lis pendens ceases to be effective.

The Court will adhere to the earlier date of August 21, 2023 recognizing that the lis pendens has no legal effect after the conclusion of litigation. (Cf. Cyr v. McGovran (2012) 206 Cal.App.4th 645, 652 [explaining that the recording of a lis pendens has the potential to slander title because it “clouds title until the litigation is resolved or the lis pendens is expunged.”].)

As such, the Court will amend the judgment ordering Plaintiff to pay $557,955.96 plus post judgment interest, accruing from September 16, 2020, within sixty days of August 21, 2023. The Judgment is modified to require Plaintiff to pay Lehman $557,955.96, plus post-judgment interest accruing from September 16, 2020, on or before October 10, 2023.

The motion to amend the judgment is granted in part. By October 2, 2023, Plaintiff must prepare, serve, and submit a proposed Fifth Amended Judgment consistent with the Court’s order herein.

[1] The record indicate that Plaintiff Gaines intends to use the proceeds from the sale of the Longwood Property to pay the judgment amount owed to Defendant Lehman.

Department 58