Judge: Cynthia A Freeland, Case: 37-2020-00009480-CU-NP-NC, Date: 2024-04-05 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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SOUTH BUILDING TENTATIVE RULINGS - March 21, 2024

03/22/2024  01:30:00 PM  N-27 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Cynthia A. Freeland

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Civil - Unlimited  Non-PI/PD/WD tort - Other Summary Judgment / Summary Adjudication (Civil) 37-2020-00009480-CU-NP-NC SCOTT VS JENNINGS [IMAGED] CAUSAL DOCUMENT/DATE FILED: Motion for Summary Judgment and/or Adjudication, 01/04/2024

Defendant Southwest Escrow Corporation ('Defendant')'s motion for summary judgment or, in the alternative, summary adjudication is denied.

Initial Considerations Initially, the court notes that Defendant's Notice of Motion for Summary Judgment, or in the Alternative, Summary Adjudication identifies only Defendant as the moving party. While other papers include Defendant Melonee Lee Ellis ('Ms. Ellis') as a moving party, she is not included in the Notice of Motion.

Consequently, the court finds that there is no motion to which Ms. Ellis is a moving party. The court limits its analysis accordingly.

Defendant's request for judicial notice is granted. However, the court does not take judicial notice of the truth of the statements contained within those documents. See People v. Woodell (1998) 17 Cal. 4th 448, 455.

Plaintiffs Jeremy and Kristal Scott (collectively, 'Plaintiffs')'s evidentiary objections are addressed in the Legal Analysis section of this tentative ruling and, as will be explained, are largely well taken and necessitate a denial of the motion. Defendant's evidentiary objections, on the other hand, are not Code-compliant. Evidentiary objections must be submitted either: (1) in writing under California Rules of Court ('CRC'), Rule 3.1354, or (2) at the hearing in the presence of a court reporter. See Cal. R. Ct.

3.1352. CRC, Rule 3.1354(b) provides that: All written objections to evidence must be served and filed separately from the other papers in support of or in opposition to the motion. Objections to specific evidence must be referenced by the objection number in the right column of a separate statement in opposition or reply to a motion, but the objections must not be restated or reargued in the separate statement. Each written objection must be numbered consecutively and must: (1) Identify the name of the document in which the specific material objected to is located; (2) State the exhibit, title, page, and line number of the material objected to; (3) Quote or set forth the objectionable statement or material; and (4) State the grounds for each objection to that statement or material.

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3065240 CASE NUMBER: CASE TITLE:  SCOTT VS JENNINGS [IMAGED]  37-2020-00009480-CU-NP-NC Cal. R. Ct. 3.1354(b).

Defendant's evidentiary objections are difficult to follow. For example, Defendant objects to Exhibit A (specifically, ¶¶ 3-8 and 10-14 of Mr. Scott's declaration) on various grounds without delineating which ground(s) is/are applicable to each paragraph (or portion of each paragraph). The objection then refers the court to Defendant's Reply Separate Statement Nos. 2-3, 12, 15-27, 19, and 20-24. Turning to Defendant's Reply Separate Statement No. 2, for example, Defendant asserted a hearsay objection to ¶ 3 of Mr. Scott's declaration which, apparently, is predicated on information contained within Exhibits F and 508 of Plaintiffs' Compendium of Exhibits. The objection in the Reply Separate Statement then refers the court back to Defendant's first, second, and third evidentiary objections, all of which are based on more than just hearsay. In short, the court cannot decipher the particular evidence to which Defendant is objecting and the grounds for those objections. Consequently, the court will not consider Defendant's deficient evidentiary objections.

The court declines to deny the motion on procedural grounds. First, Plaintiffs are correct that under California Code of Civil Procedure ('CCP') § 437c(a)(2): Notice of the motion and supporting papers must be served on all other parties to the action at least 75 days before the time appointed for hearing. If the notice is served by mail, the required 75-day period of notice shall be increased by 5 days if the place of address is within the State of California, 10 days if the place of address is outside the State of California but within the United States, and 20 days if the place of address is outside the United States. If the notice is served by facsimile transmission, express mail, or another method of delivery providing for overnight delivery, the 75-day period of notice shall be increased by two court days.

Cal. Code Civ. P. § 437c(a)(2). CCP § 437c(a)(2)'s notice period is mandatory. See Lackner v. North (2006) 135 Cal. App. 4th 1188, 1207-1208. The court lacks authority to entertain a summary judgment motion or shorten the notice period absent the consent of the prejudiced party. See Credit Suisse First Boston Mortgage Capital v. Danning, Gill, Diamond & Kollitz (2009) 178 Cal. App. 4th 1290, 1301; National Grange of Order of Patrons of Husbandry v. California Guild (2017) 17 Cal. App. 5th 1130, 1144-1148; Urshan v. Musicians' Credit Union (2004) 120 Cal. App. 4th 758, 764-766; McMahon v. Sup.

Ct. (2003) 106 Cal. App. 4th 112, 115.

In this case, Defendant's proof of service reflects that it served Defendant Carlos Jennings with the moving papers via U.S. mail on January 4, 2024. See ROA No. 467. However, because Defendant served Mr. Jennings via U.S. mail, service needed to be accomplished at least 80 days before the hearing, or by January 2, 2024. Consequently, Defendant provided Mr. Jennings only 78 days' notice of the hearing on this matter. That being said, Exhibit A to Defendant's reply papers contains a March 11, 2024 e-mail from Mr. Jennings who represents that he received the moving papers and has no objection to the manner of service. On that basis, the court concludes that Mr. Jennings consented to receiving the moving papers on less than 80 days' notice and thus the court may proceed to the motion's merits.

Nor will the court deny the motion owing to alleged defects in Defendant's Separate Statement. Plaintiffs are correct that Defendant's Separate Statement must 'set[] forth plainly and concisely all material facts that the moving party contends are undisputed. Each of the material facts stated shall be followed by a reference to the supporting evidence.' Cal. Code Civ. P. § 437c(b)(1). 'Material facts' for purposes of a motion for summary judgment and/or adjudication are facts that relate to the cause of action, claim for damages, issue of duty, or affirmative defense that is the subject of the motion and that could make a difference in the disposition of the motion. See Cal. R. Ct. 3.1350(a)(2). To be 'material,' a fact must be essential to the action and, if proven, change the outcome of the case. See Los Angeles Nat'l Bank v. Bank of Canton (1991) 229 Cal. App. 3d 1267, 1274. In this case, Plaintiffs contend that UMF Nos. 6, 13-16, 18, 20, and 22-26 are not 'facts', but rather 'claims, allegations, contentions or hearsay about what may have been said.' This argument is not well taken. As Defendant correctly notes, the operative pleading frames the issues that can be addressed by way of a summary judgment motion. See Cal. Calendar No.: Event ID:  TENTATIVE RULINGS

3065240 CASE NUMBER: CASE TITLE:  SCOTT VS JENNINGS [IMAGED]  37-2020-00009480-CU-NP-NC Code Civ. P. § 437c; Conroy v. Regents of University of California (2009) 45 Cal. 4th 1244, 1250. The facts to which Plaintiffs are objecting derive from their own Second Amended Complaint ('SAC') and are directly relevant to the subject matter at issue. Moreover, Defendant is not required to address every material allegation set forth in the SAC – only those that are relevant to Plaintiffs' conspiracy and breach of fiduciary duty claims.

Factual Background and Procedural History The following allegations, all of which are set forth in Plaintiffs' Second Amended Complaint (the 'SAC') are offered simply as background for the present motion's purposes. The recitation in no way suggests that the court has admissible evidence of such facts. In May 2019, Mr. Scott responded to Defendant Carlos Jennings ('Mr. Jennings')'s Craigslist advertisement seeking a real estate investment partner.

See the SAC, ¶ 12. Over the next month, Mr. Scott and Mr. Jennings discussed a potential partnership agreement and various investment opportunities. Ibid., ¶¶ 13-14. Mr. Jennings then introduced Mr. Scott to Mr. Jennings' lender, Defendant ML Mortgage Corp. ('ML'), given Mr. Jennings's good working relationship with ML's loan officer, Defendant Brad Warren ('Mr. Warren'). Ibid., ¶ 15. Mr. Warren subsequently requested and obtained from Mr. Scott the documents needed to pre-qualify Mr. Scott for a loan. Ibid., ¶¶ 15.1-15.3.

In July 2019, Mr. Jennings presented Mr. Scott with certain real property located at 137 Frontier Drive, Oceanside, CA 92053 (the 'Property'), which was being sold by Rosario C. Szabad. Ibid., ¶¶ 3, 16. Over the next few weeks, Mr. Scott, Mr. Jennings, Mr. Warren, and ML took the steps necessary to proceed through escrow. Ibid., ¶¶ 17-19. On July 26, 2019, Mr. Jennings drafted and presented to Mr. Scott an Investor Agreement to memorialize the parties' partnership agreement. Ibid., ¶ 20.1. However, as the purchase of the Property proceeded, Mr. Warren insisted that Mrs. Scott be added to the loan application. Ibid., ¶ 20.4. On September 24, 2019, Mr. Jennings drafted an amended Investor Agreement which included Mrs. Scott as a party. Ibid., ¶ 20.5. Under the amended Investor Agreement, Plaintiffs would receive $5,000.00 upon the close of escrow. Mr. Jennings would be responsible for the costs of inspection, appraisal, deposit, down payment, and 100% of the monthly mortgage payments.

After two years, the Property would be sold, and Mr. Jennings would retain 100% of the profits. Ibid.

The parties' original intent was to procure a conventional loan for the Property from ML, which would require only Mr. Scott's credit information. Ibid., ¶ 21. On July 30, 2019, Mr. Warren prepared a Uniform Residential Loan Application which contained various alleged falsehoods, including the representation that Mr. Scott intended to occupy and use the Property as his primary residence. Ibid., ¶¶ 21.1-21.2. On September 10, 2019, Mr. Warren prepared a new application which required Mr. and Mrs. Scott's signatures and contained the same purported falsehoods as the original loan application. Ibid., ¶¶ 21.3-21.4. On September 24, 2019, a notary public arrived at Plaintiff's residence with the final loan documents. It was at that time that Plaintiffs realized the loan was a Federal Housing Administration ('FHA') loan, not a conventional loan as originally contemplated. Ibid., ¶ 22. Mr. Warren later assured Plaintiffs that it was 'ok' to execute the loan documents, explaining that '[o]nce this loan is transferred to a serving lender[,] No one knows anything about it be [sic] owner occupied or rented.' Ibid., ¶ 25.

Mr. Warren further explained that the loan was switched from a conventional loan to an FHA loan to lower Mr. Jennings's down payment. Ibid., ¶¶ 27.1-27.2. Plaintiffs ultimately executed the FHA loan application in reliance upon Mr. Warren's various representations. Ibid., ¶ 29.

Unbeknownst to Plaintiffs, Mr. Jennings asked Defendant Alicia Young ('Ms. Young') to find someone to provide the down payment on the Property in the amount of $16,830.00. Ibid., ¶ 30.1. Ms. Young then asked Defendant Tamika R. Kennedy ('Ms. Kennedy') to provide the down payment under an allegedly fraudulent gift scheme, which Ms. Kennedy agreed to do. Ibid., ¶ 30.2. On September 27, 2019, Ms.

Young and Ms. Ellis, who was working as Defendant's escrow agent/officer assigned to the Property, exchanged several e-mails concerning the down payment from Ms. Kennedy. Ibid., ¶¶ 30.3-30.5. That same day, Ms. Ellis e-mailed Mr. Warren stating that 'The[y] [sic] need to make sure it come from a bank, which is in the buyer's loan package. Or we will blow the deal.' Ibid., ¶ 30.6. The SAC alleges that the foregoing statement from Ms. Ellis evidenced her agreement to join in the conspiracy and Calendar No.: Event ID:  TENTATIVE RULINGS

3065240 CASE NUMBER: CASE TITLE:  SCOTT VS JENNINGS [IMAGED]  37-2020-00009480-CU-NP-NC defraud the United States and Plaintiffs, and/or to subject Plaintiffs to Mr. Jennings's and ML's wrongful and tortious conduct, and to aid and abet Mr. Jennings, ML, and Mr. Warren in their alleged wrongful and illegal acts. Ibid. On September 30, 2019, Ms. Kennedy executed the Gift Letter under which she falsely represented that she is Plaintiffs' aunt. Ibid., ¶¶ 30.9-30.11, Ex. C. Ms. Kennedy has since testified that when she presented the Gift Letter to Defendant she informed them that the statements contained therein were not true. Ibid., ¶ 30.12. SW nevertheless proceeded to close escrow. Ibid.

Plaintiffs, for their part, contend that Mr. Jennings forged their signatures on the Gift Letter and that they had no knowledge of the document until after they commenced the present action. Ibid., ¶¶ 30.13-30.14.

Plaintiffs filed the SAC on March 17, 2022. See ROA No. 275. The SAC alleges that Defendant aided and abetted in the conspiracy to commit mortgage fraud by issuing funds to Ms. Young and Mr.

Jennings from escrow. Ibid., ¶¶ 30.16-30.22. Defendant owed Plaintiffs a fiduciary duty as their escrow agent to disclose material facts unknown to Plaintiffs which may have affected Plaintiffs' decision to proceed with the loan and the purchase of the Property. Ibid., ¶¶ 30.23, 39.1. Defendant now seeks summary judgment or, in the alternative, summary adjudication as to: (1) Plaintiffs' ninth, tenth, twelfth, fourteenth, seventeenth, and eighteenth causes of action, all of which are based upon civil conspiracy and/or aiding and abetting liability theories (the 'Derivative Liability Claims'), and (2) Plaintiffs' twentieth and twenty-first causes of action, which are based on Defendant's direct liability (the 'Direct Liability Claims').

Legal Analysis Motions for summary judgment and adjudication are subject to the same rules and procedures. See Lunardi v. Great-West Life Assurance Co. (1995) 37 Cal. App. 4th 807, 819; Cal. Code Civ. P. § 437c(f)(2). The court applies a three-step analysis when ruling on a motion for summary judgment or adjudication: (1) identify the causes of action, issue(s) of duty or defense framed by the pleadings; (2) determine whether the movant has satisfied his or her burden of showing the defense or causes of action have no merit because one or more elements cannot be established, or that there is a complete defense to the cause or causes of action, or that a duty exists or does not exist; and (3) if the movant has made a prima facie showing that he or she is entitled to judgment as a matter of law, the burden shifts and the court determines whether the opposing party has provided evidence of a triable material fact as to the cause of action, issue of duty or defense. See Linden Partners v. Wilshire Linden Assocs.

(1998) 62 Cal.4th 508, 518; Choi v. Sagemark Consulting (2017) 18 Cal. App. 5th 308, 318 (citing Cal. Code Civ. P. §§ 437c(o), (p)(2); Pipitone v. Williams (2016) 244 Cal. App. 4th 1437, 1449). The opposing party 'must set forth specific facts beyond the pleadings to show the existence of a triable issue of material fact.' Choi, 18 Cal. App. 5th at 318 (citing Cal. Code Civ. P. § 437c(p)(2)). 'There is a triable issue of fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.' Aguilar v. Atlantic Richfield Co. (2001) 25 Cal. 4th 826, 850. The court must 'liberally construe the evidence in support of the [opposing party] and resolve doubts concerning the evidence in favor of that party.' Dore v. Arnold Worldwide, Inc. (2006) 39 Cal. 4th 384, 389.

The court finds that Defendant has not met its initial burden of providing admissible evidence demonstrating that it is entitled to judgment as a matter of law on the Derivative or Direct Liability Claims.

Toward that end, the court finds that Plaintiffs' evidentiary objections are well taken. To start, to the extent Defendant has relied on the SAC as 'evidence' in support of the motion, the operative pleading is, in fact, not evidence at all. As set forth above, the SAC merely frames the issues to be adjudicated on summary judgment, it does not constitute evidence in support thereof. See Regents of University of California v. Sup. Ct. (1996) 41 Cal. App. 4th 1040. Second, and more importantly, Mr. Weber's declaration provides no admissible evidence in support of the motion. Mr. Weber claims to have personal knowledge of the facts set forth in his declaration, yet there are no facts showing his connection to the matters stated therein or establishing the source of his information sufficient to substantiate his claimed personal knowledge. Mr. Weber makes no attempt to authenticate properly any of the documents attached to his declaration. He does not state that he even read any of the documents attached to his declaration. Nor does Mr. Weber indicate that he was present at Mr. Warren's and Ms.

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3065240 CASE NUMBER: CASE TITLE:  SCOTT VS JENNINGS [IMAGED]  37-2020-00009480-CU-NP-NC Kennedy's depositions at the time they were taken. Consequently, Mr. Weber's declaration and the attached exhibits are not admissible for the present motion's purposes. Ms. Kerby's declaration does not suffer from the same deficiencies; however, Defendant has offered Ms. Kerby's declaration solely to introduce into evidence the Escrow Instructions and Amended Escrow Instructions that Defendant keeps and maintains in the regular course of business. This evidence, without more, is not sufficient to demonstrate that Defendant is entitled to judgment as a matter of law on Plaintiffs' Derivative and Direct Liability Claims.

Because Defendant did not meet its initial burden, the burden does not shift to Plaintiffs to provide evidence of a triable issue of material fact sufficient to defeat the motion. Accordingly, the court denies the motion.

In light of the foregoing, the court denies Defendant's motion for summary judgment or, in the alternative, summary adjudication.

This is the tentative ruling for the hearing at 1:30 p.m. on Friday, March 22, 2024. If no party appears at the hearing, this tentative ruling will become the order of the court as of March 22, 2024. If the parties are satisfied with the court's tentative ruling or do not otherwise wish to argue the motion, they are encouraged to give notice to the court and each other of their intention not to appear, though this notice is not required.

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