Judge: Colin Leis, Case: 19STCV08587, Date: 2023-04-11 Tentative Ruling

Case Number: 19STCV08587    Hearing Date: April 11, 2023    Dept: 74

Superior Court of California

County of Los Angeles – CENTRAL District

Department 74

MOVING PARTIES:             LENNAR TITLE COMPANY (FORMERLY KNOWN AND SUED AS NORTH AMERICAN TITLE COMPANY)

RESPONDING PARTY:       NAPEAN CAPITAL GROUP, LLC, et al.

Motion for Summary Judgment and/or Summary Adjudication

The court considered the moving papers, opposition, and reply papers filed in connection with this motion.

BACKGROUND

In March 2019, Plaintiff North American Title Insurance Company (“NATIC”) filed a complaint against Defendants Napean Capital Group, LLC, Frederic Shih-Hsing Yang and Jihong Anna Yang, as Co-Trustees of the Yang Family Trust U/A Dated May 14, 2012 and Does 1 through 20 (“Lenders”). On October 25, 2022, Lennar Title Company (formerly known and sued as NATC) (“Lennar”) filed its motion for summary judgement and/or adjudication.

REQUEST FOR JUDICIAL NOTICE

            The Court grants Lenders’ request for judicial notice of exhibits 1-19. The Court denies Lenders’ request for judicial notice of exhibits 20-35.

EVIDENTIARY OBJECTIONS

            Lenders’ Objections to the Declaration of Amy J. Cooper:

            SUSTAINED: ¶ 3,

            OVERRULED: ¶¶ 1-2, ¶¶ 4-22

            Lennar and NATIC’s Objections to the Declaration of Jason Goldstein:

            SUSTAINED: 7-13, 15, 17-26 to the extent that they include arguments

                        OVERRULED: 1-6, 14, 16, 27-74

            Lennar and NATIC’s Objections to the Declaration Albert J. Rush:

            SUSTAINED: 2-6

                        OVERRULED: 1

LEGAL STANDARD

“[A] motion for summary judgment shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” (Code Civ. Proc., § 437c, subd. (c).) The moving party bears the initial burden of production to make a prima facie showing that there are no triable issues of material fact. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.) If the moving party carries this burden, the burden shifts to the opposing party to make a prima facie showing that a triable issue of material fact exists. (Ibid.) Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.” (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.)

A plaintiff moving for summary judgment must show that there is no defense to any of the asserted causes of action and does so by proving each element of the cause of action. (Code Civ. Proc., § 437c, subds. (a)(1), (p)(1).)

DISCUSSION

Lennar seeks summary adjudication of Lenders’ First through Fifth Causes of Action, which are based on whether Lennar was an agent and fiduciary of Lenders.  Lennar claims that Lenders cannot prevail on their First through Fifth Causes of Action because Lennar was neither a fiduciary nor an agent to the parties to the escrow when it acted as sub-escrow.  Lennar also seeks summary adjudication of Lenders’ Sixth Cause of Action for violation of Penal Code section 495.  Lennar claims that Lenders cannot prevail on their Sixth Cause of Action because they have provided no evidence that Lennar obtained property in any manner constituting theft as defined by Penal Code section 484.

A.    Lenders’ First through Fifth Causes of Action

The Court finds that admissible evidence exists that creates a triable issue whether Lennar provided services which qualify as “escrow” under Financial Code Section 17003, Lennar communicated directly with Lenders, and Lennar’s actions were not limited to those performed by underwritten title companies.  Lennar correctly points out existence of a fiduciary duty is a question of law.  Although Lennar claims that Lenders improperly attempt to create a triable issue of fact by stating there is no difference between an escrow and a subescrow, the Court finds that Lenders provide sufficient evidence to show Lennar owed a fiduciary duty to Lenders and acted as their escrow agent. 

Lennar claims that Financial Code section 17003 does not apply to title companies that provide subescrow services because Financial Code section 17006 specifically exempts “any person whose principal business is that of preparing abstracts or making searches of title that are used as a basis for the issuances of a title insurance by a company doing business under any law of this state relating to insurance companies.”  Lennar claims that as a subescrow and underwritten title company, its role was to prepare “title searches, title examinations, title reports, certificates or abstracts of title upon the basis of which a title insurer writes its policies.”  (Ins. Code § 12340.5).  Lennar notes that as the underwritten agent of a title insurer, a title company’s duties are primarily owed to the insurer.  (Lennar’s Separate Statement of Undisputed Material Facts “SSUF” No. 18.)  However, Lennar fails to explain its actions inconsistent with the duties performed by an underwritten title company and subescrow such as: accepting written instructions from Lenders, accepting Lenders’ money, sending receipts to Lenders which confirmed that the receipt was from their “ESCROW OFFICER,” failing to disavow its representation that Mark Pilatti and NATC were Lenders’ escrow agents, accepting Lenders’ Deed of Trust, disbursing Lenders’ loan funds, and recording Lenders’ Deed of Trust and Modification.  (Lennar Separate Statement, Additional UMF Nos. 5-7, 9, 17; Goldstein Decl., ¶¶ 8-11, 13, 36-37, 41, 44-45, Appendix Exhs. 5, 6, 7, 8, 9, 16 at pp. 64:23-65:20, 70:12-73:7 and Exhs. 8-9, 17 at pp. 64:23-65:16 and Exh. 8, 18 at pp. 70:5-24, 74:9-75:12 and Exhs. 12, 14, 23 at pp. 26:19-27:11 and Exh. 8, 24 at pp. 71:11 – 72:2, 73:3-16, 93:18 and Exhs. 6-7, 18; RNJ, Exh. 3-4, 6.)  These actions, which Lennar does not deny, provide sufficient evidence that Lennar actions were not limited to those of an underwritten title company.  Thus, the Court denies Lennar’s motion for summary adjudication of the first through fifth causes of action.

B.     Lenders’ Sixth Cause of Action

The Court finds that there is sufficient evidence to support Lenders’ sixth cause of action.  Intent to defraud is a question of fact and Lenders have shown sufficient circumstantial evidence which could support a finding that Lennar knowingly aided the “fraudsters” (i.e. Sona Plavjian, George Plavjian and Siaosi Nalesoni) by “concealing, selling or withholding any property from the owner, knowing the property to have been so stolen or obtained” in violation of Penal Code § 496. 

As to Lennar aiding the “fraudsters,” Lenders point to the fact that Lennar took Lenders’ money, gave it to the “fraudsters,” and twice failed (in 2016 and 2017) to obtain for Lenders the required first priority lien position Deed of Trust on the real property owned by The Henya Trust.  (Lennar Separate Statement, Additional UMF Nos. 5-7, 9, 17; Goldstein Decl., ¶¶ 8-11, 13, 36-37, 41, 44-45, Appendix Exhs. 5, 6, 7, 8, 9, 16 at pp. 64:23-65:20, 70:12-73:7 and Exhs. 8-9, 17 at pp. 64:23-65:16 and Exh. 8, 18 at pp. 70:5-24, 74:9-75:12 and Exhs. 12, 14, 23 at pp. 26:19-27:11 and Exh. 8, 24 at pp. 71:11 – 72:2, 73:3-16, 93:18 and Exhs. 6-7, 18; RNJ, Exh. 3-4, 6.)  In reply, Lennar contends that its failure to record Lenders’ deed of trust in first lien position does not constitute evidence which raises a triable issue of fact because there is no guarantee that a deed of trust can be recorded in first lien position, given that tax liens always have priority. A tax lien’s priority does not, however, dispel the circumstantial evidence that creates a triable issue about Lennar’s role in aiding the “fraudsters.”

As to Lennar’s intent to steal, Lenders point to two letters from Pilatti which promised the recordation of “full recons” from U.S. Bank and National City Bank, which Lenders claim were not obtained, and the deposition testimony of Greco and Pilatti in which they state that they would not close the 2016 escrow given the same facts today. (Lennar Separate Statement, Additional UMF Nos. 10-11; Goldstein Dec., ¶¶ 36-37, Exh. 16, pp. 69:13-25, 70:2-11, 89:15-25, 90:1-22, 91:15-22, 92:22-25, 93:1-14.) In reply, Lennar alleges the clarity of 20/20 hindsight fails to demonstrate an intent to steal. The court finds sufficient evidence exists to raise a triable issue of fact as to Lennar’s knowledge of fraud and intent to steal.

Based on the foregoing, the court denies Lennar’s motion for summary adjudication and summary judgment.

Responding party is ordered to give notice of this ruling.

IT IS SO ORDERED.

DATED:  April 11, 2023

_____________________________

Colin Leis

Judge of the Superior Court

Superior Court of California

County of Los Angeles – CENTRAL District

Department 74

MOVING PARTIES:             PLAINTIFF AND CROSS-DEFENDANT NORTH AMERICAN TITLE INSURANCE COMPANY

RESPONDING PARTY:       DEFENDANTS, CROSS-COMPLAINANTS AND CROSS-DEFENDANTS NAPEAN CAPITAL GROUP, LLC AND FREDERIC SHIH-HSING YANG AND JIHONG ANNA YANG, AS CO-TRUSTEES OF THE YANG FAMILY TRUST U/A DATED MAY 14, 2012

Motion for Summary Judgment

The court considered the moving papers, opposition, and reply papers filed in connection with this motion.

BACKGROUND

In March 2019, Plaintiff North American Title Insurance Company (“NATIC”) filed a complaint against Defendants Napean Capital Group, LLC, Frederic Shih-Hsing Yang and Jihong Anna Yang, as Co-Trustees of the Yang Family Trust U/A Dated May 14, 2012 and Does 1 through 20 (“Lenders”).  On October 25, 2022, NATIC filed its motion for summary adjudication.

REQUEST FOR JUDICIAL NOTICE

            The court grants NATIC’s requests for judicial notice of exhibits 1, 6, 10, 20, and 21 under Evidence Code section 452(c).  The court grants NATIC’s requests for judicial notice of exhibits 9, 10, 12, 13, 14, and 17 under Evidence Code section 452(d).

EVIDENTIARY OBJECTIONS

            Lenders’ Objections to Declaration of Jennifer R. Slater:

                        SUSTAINED: ¶ 3

                        OVERRULED: ¶¶ 4-10

            Lenders’ Objections to Declaration of Margery Q. Lee:

                        SUSTAINED: None

                        OVERRULED: ¶¶ 1, 3-5, 7, 9-12

            NATIC’s Objections to Declarations of Jason Goldstein:

            SUSTAINED: 7-13, 15, 17-20, 22-26 to the extent that they include arguments

                        OVERRULED: 1-6, 14, 16, 27-42

            NATIC’s Objections to Declarations of Albert Rush:

            SUSTAINED: 43-49

                        OVERRULED: 44

            NATIC’s remaining Objections

            SUSTIANED: None

OVERRULED: 50-74

LEGAL STANDARD

“[A] motion for summary judgment shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” (Code Civ. Proc., § 437c, subd. (c).) The moving party bears the initial burden of production to make a prima facie showing that there are no triable issues of material fact. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.) If the moving party carries this burden, the burden shifts to the opposing party to make a prima facie showing that a triable issue of material fact exists. (Ibid.) Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.” (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.)

DISCUSSION

NATIC requests summary adjudication of Lender’s sixth cause of action on the grounds that it fails as a matter of law because NATIC did not buy, sell, or receive stolen property; did not aid any person or entity in concealing, selling, or withholding any property stolen from Lenders; and Lenders have failed to produce any admissible evidence establishing NATIC possessed the requisite criminal intent required under California Penal Code section 496.

NATIC does not dispute that North American Title Company (now known as Lennar Title Company) (“NATC”) was NATIC’s agent.  (NATIC’s Response to Lenders’ Undisputed Material Facts “RUMF”.)  The court finds sufficient evidence exists to permit a jury to find liability under Lenders’ sixth cause of action if the jury were so inclined.  Intent to defraud is a question of fact. Lenders offer sufficient circumstantial evidence which could support a finding that NATIC through its agent, NATC, knowingly aided the “fraudsters” (i.e. Sona Plavjian, George Plavjian and Siaosi Nalesoni) in “concealing, selling or withholding any property from the owner, knowing the property to have been so stolen or obtained” in violation of Penal Code § 496. Under agency theory, this aid would be imputed to the principle, NATIC.

As to NATC aiding the “fraudsters,” Lenders point to the fact that NATC took Lenders’ money, gave it to the “fraudsters,” and twice failed (in 2016 and 2017) to obtain for Lenders the required first priority lien position Deed of Trust on the real property owned by The Henya Trust.  (NATC Separate Statement of Undisputed Material Fact “SSUMF” and Additional Material Facts Nos. 5-7, 9, 17; Goldstein Decl., ¶¶ 8-11, 13, 36-37, 41, 44-45, Appendix Exhs. 5, 6, 7, 8, 9, 16 at pp. 64:23-65:20, 70:12-73:7 and Exhs. 8-9, 17 at pp. 64:23-65:16 and Exh. 8, 18 at pp. 70:5-24, 74:9-75:12 and Exhs. 12, 14, 23 at pp. 26:19-27:11 and Exh. 8, 24 at pp. 71:11 – 72:2, 73:3-16, 93:18 and Exhs. 6-7, 18; RNJ, Exh. 3-4, 6.)  The court finds that there is sufficient circumstantial evidence which raises a triable issue of fact as to Lennar’s role in aiding the “fraudsters.”

As to NATC’s intent to steal, Lenders point to two letters from Pilatti which promised the recordation of “full recons” from U.S. Bank and National City Bank, which Lenders claim were not obtained, and the deposition testimony of Greco and Pilatti in which they state that they would not close the 2016 escrow given the same facts today.  (NATC SSUMF and Additional Material Facts Nos. 10-11; Goldstein Dec., ¶¶ 36-37, Exh. 16, pp. 69:13-25, 70:2-11, 89:15-25, 90:1-22, 91:15-22, 92:22-25, 93:1-14.) The court finds sufficient evidence exists to raise a triable issue of fact as to NATC’s knowledge of fraud and intent to steal.

Based on the foregoing, the court denies NATIC’s motion for summary adjudication.

Responding party is ordered to give notice of this ruling.

IT IS SO ORDERED.

DATED:  April 11, 2023

_____________________________

Colin Leis

Judge of the Superior Court