Judge: Jon R. Takasugi, Case: 19STCV39580, Date: 2022-11-08 Tentative Ruling

Case Number: 19STCV39580    Hearing Date: November 8, 2022    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

Defendants’ motion for summary adjudication is GRANTED. 

On November 4, 2019, Plaintiffs Terry Herrera and Teodora Herrera (collectively, Plaintiffs) filed suit against Full Circle Real Estate Solutions, Inc. (Full Circle), the Mum Group, Marvin U. Mangabat, and Erik Lederman. Plaintiff filed a first amended complaint (FAC), alleging: (1) intentional misrepresentation; (2) concealment; (3) negligent misrepresentation; (4) conversion; (5) elder abuse; (6) rescission of contract; (7) violation of Business and Professions Code section 7163; (8) breach of fiduciary duty; (9) cancellation of instruments; (11) declaratory relief; (12) unjust enrichment; (13) equitable lien; (14) preliminary and permanent injunction; and (15) violation of Business and Professions Code section 17200.

Now, Defendants Full Circle and Danny Elia (collectively, Defendants) move for summary adjudication of the first, second, third, fourth, eighth, and ninth causes of action.

Discussion

Defendants argue that Plaintiffs cannot state a claim for their first, second, third, fourth, eighth, and ninth causes of action because: (1) Defendants are not “foreclosure consultants” within the meaning of Civil Code section 2945; and (2) Plaintiffs cannot establish that the property was their principal place of residence.

            As to the first point, Civil Code section 2945 defines a foreclosure consultant as:

Any person who makes any solicitation, representation, or offer to any owner to perform for compensation or who, for compensation, performs any service which the person in any manner represents will in any manner do any of the following:

(1) Stop or postpone the foreclosure sale.

(2) Obtain any forbearance from any beneficiary or mortgagee.

(3) Assist the owner to exercise the right of reinstatement provided in Section 2924c.

(4) Obtain any extension of the period within which the owner may reinstate his or her obligation.

(5) Obtain any waiver of an acceleration clause contained in any promissory note or contract secured by a deed of trust or mortgage on a residence in foreclosure or contained that deed of trust or mortgage.

(6) Assist the owner to obtain a loan or advance of funds.

(7) Avoid or ameliorate the impairment of the owner's credit resulting from the recording of a notice of default or the conduct of a foreclosure sale.

(8) Save the owner's residence from foreclosure.

(9) Assist the owner in obtaining from the beneficiary, mortgagee, trustee under a power of sale, or counsel for the beneficiary, mortgagee, or trustee, the remaining proceeds from the foreclosure sale of the owner's residence.

            (Civ. Code § 2945, subd. (a).)

            Civil Code section 2925 provides that a foreclosure consultant does not include:

                                    …

(6) A person who holds or is owed an obligation secured by a lien on any residence in foreclosure when the person performs services in connection with this obligation or lien.

            (Civ. Code § 2945, subd. (b)(6).)

            Defendants argue that they do not satisfy this definition because “FCRE is in the business of buying, renovating and reselling residential properties, and this was one such project. FCRE did not solicit Plaintiffs; instead, Plaintiffs solicited the assistance of FCRE. Plaintiffs came to FCRE looking for alternatives to foreclosure, which was scheduled to occur imminently. They asked if there was anything they could do, together, to avoid foreclosure. FCRE offered to joint venture the rehabilitation and re-sale of the Property. It did not, at any time, make any "solicitation, representation, or offer" to Plaintiffs to perform, for compensation any of those services of those representations identified in subd. (a) of Civil Code § 2945.1. I.” Moreover, Defendants contend that they are an equitable lienholder and thus are expressly exempted from the definition of a lienholder. (See Civ. Code § 2945, subd. (b)(6).)

            However, as to the latter point, Defendants were not an equitable lienholder prior to the agreement which is under scrutiny. As such, it is disingenuous for Defendants to suggest that they could not be a foreclosure consultant because of their equitable lien, which they obtained the lien as part of an agreement which was undisputedly entered into as part of a plan to avoid foreclosure. If Defendants’ interpretation of section 2945 was correct, any foreclosure consultant could make an equity stake in the property a condition of the consultation and thus be exempted from the definition of foreclosure consultant.

            As to the former point, Defendants’ own evidence indicates that the parties entered into an agreement with Defendants’ lender to continue the scheduled Trustee Sale of the foreclosed property to a later date in order to enable Defendants’ additional time to market and sell the Property. (SS ¶ 6.) Then, when the agreement fell apart, the lender decided to move forward with the Trustee Sale. (SS ¶ 9.) Thus, by Defendants’ own evidence, they offered, in exchange for a percentage cut of the proceeds, to help postpone the foreclosure sale. That Defendants’ assistance was directly tied to the postponement of the foreclosure sale is evidenced by the fact that when the agreement between Plaintiffs and Defendants was revoked, the lender decided to proceed with the foreclosure sale. Tellingly, Defendants’ brief is not accompanied by any supporting cases to show that entities performing similar services were found to not be foreclosure consultants. Moreover, while Defendants argue that Plaintiffs came to Defendants, and not the other way around, this assertion is not accompanied by any supporting evidence in the Separate Statement. “[A]ll material facts must be set forth in the separate statement. Both the Court and the opposing party are entitled to have all the facts upon which the moving party bases its motion plainly set forth in the separate statement. [Citations.]” (Allen v. Smith (2002) 94 Cal.App.4th 1270, 1282) (emphasis in original).

            This leaves Defendants’ argument that the home was not Plaintiffs’ principal place of residency, and thus does not qualify for protection under Civil Code section 2945.1. 

Civil Code section 2945.1 defines a “Residence in foreclosure" as a residence in foreclosure as defined in Civil Code section 1695.1. Civil Code section 1695.1 provides that:

“Residence in foreclosure” and “residential real property in foreclosure” means residential real property consisting of one- to four-family dwelling units, one of which the owner occupies as his or her principal place of residence, and against which there is an outstanding notice of default, recorded pursuant to Article 1 (commencing with Section 2920) of Chapter 2 of Title 14 of Part 4 of Division 3.   

            To show that the Property (i.e., 4653 West Avenue 40, Los Angeles, California 9006) was not Plaintiffs’ principal place of residency, Defendants submitted evidence that:

-          When asked her residence in deposition, Plaintiff Teodora Herrera provided that it was 4170 Toland Way, LA, California 90065, and stated that he had resided in that house since 1988 or 1989. (See SS ¶ 3.)

-          Terry Herrera’s driver’s license identified his address as 4170 Toland Way, LA, California 90065. (Ibid.)

-          On a confidential information statement, Plaintiffs listed 4170 Toland Way, Los Angeles 90065 as their sole residence from 2009 to Present. (Ibid.)

In opposition, Plaintiffs submitted declarations stating that the Property, and not 4170 Toland Way, Los Angeles 90065, was their principal place of residency:

16. Before the recording of the Notice of Default while we owned the Property and continuing through the execution of the Joint Venture Agreement and the Grant Deed, my husband and I spent most of our time living at the Property. The Property was our primary residence.

17. We also owned a property at 4170 Toland Way, Los Angeles (“Toland Way Property”). During the time period in question, we did spend substantial time at both the Properties.

18. I testified at my deposition in this action that the Toland Way Property is my residence because I more usually used that property for communicating, mail, etc. If I had been asked in the deposition where I stayed the majority of the time, I would have said the Property, not the Toland Way Property.

19. Terry and I slept more nights at the Property and spent more time during the day at the Property, than we did at the Toland Way Property. For that reason, the Property was our principal residence.

            (Plaintiffs Decls. ¶¶ 16-19.)

            However, “ ‘[w]here ... there is a clear and unequivocal admission by the plaintiff, himself, in his deposition’ ” and the plaintiff contradicts that admission in a subsequent declaration, “ ‘we are forced to conclude there is no substantial evidence of the existence of a triable issue of fact.’” (D’Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1.)

As such, Plaintiffs may not manufacturer a triable issue of triable fact by submitting declarations which contradict prior testimony. In deposition, Plaintiff Teodora Herrera was asked where she resided, and she identified a single address: 4170 Toland Way, Los Angeles. Plaintiff Teddy Herrera listed the Toland address on his drivers’ license. Plaintiffs received mail at this address, identified the Toland address alone as their place of residency in deposition, and in the Confidential Information Statement reporting activity about the Property here identified the Toland address alone as their sole residence for the last ten years. Indeed, despite that the Confidential Information Statement concerned the Property here, Plaintiffs did not list it as one of their residences but rather listed it only in the section asking for “the Street Address of the property in this transaction is…”. (SS ¶ 3.) Accordingly, the only evidentiary support for the contention that the Property was their principal place of residency is Plaintiffs’ claim that they spent more time at the Property than they did at the Toland Property.

The only legal support provided by Plaintiffs to show that this fact could qualify the Property as a principal place of residency is a section from the Military and Veteran Code concerning Cal-Vet loan properties. Not only is such a provision inapplicable here, but that very section provides that “there may be only one ‘principal place of residence,’ and where more than one residence is maintained or owned, the burden shall be on the veteran to show that the Cal-Vet farm or home is the principal place of residence” (emphasis added). As such, even under this provision, Plaintiffs would have to establish that the Toland Property was not their principal place of residence. This provision does not stand for the proposition that an individual can have multiple principal places of residence, one of which can be the place where they spend the majority of their time.  

Thus, even accepting Plaintiffs’ understanding principal place of residence, Plaintiffs’ evidence would still have to support a reasonable inference that the Toland Property was not their principal place of residence, and the Property was.  Plaintiffs’ evidence simply cannot reasonably support such an inference. Again, by their own admission, Plaintiffs listed the Toland Property as their residence on official documents and forms and in deposition Plaintiff Teodora Herrera identified only the Toland Property as her residence. In their declaration, Plaintiffs do not state that they used the Toland Property only as a place to receive mail and communications. Rather, Plaintiffs themselves stated that in additional to spending a substantial amount of time at the Property, they also spent a substantial time at the Toland Property, including overnight. (Herrera Decl. ¶ 17.) Finally, and importantly, Plaintiffs do not support their contention that they spent the majority of their time at the Property with any extrinsic evidence—they do not submit declarations from neighbors or any other evidence which could corroborate their contentions.

As such, the only evidence that Plaintiffs have submitted to support their contention that the Property was their principal place of residence is a declaration which contradicts deposition testimony. For the reasons set forth above, this evidence cannot raise a triable issue of material fact as this issue. (D’Amico, supra, 11 Cal.3d at p. 21.)

While Plaintiffs argue that the FCA was meant to protect Plaintiffs, the FCA itself defines its protections as covering “residences in foreclosure” which are defined as dwellings which the owner occupies as his or her principal place of residence. Plaintiffs have not submitted any evidence or legal authority which could support a reasonable inference that the Property constituted a principal place of residence to the exclusion of the Toland Property.

Based on the foregoing, Defendants’ motion for summary adjudication is granted. 

It is so ordered.

Dated:  November    , 2022

   Hon. Jon R. Takasugi
   Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the court at smcdept17@lacourt.org by 4 p.m. the day prior as directed by the instructions provided on the court website at www.lacourt.org.  If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative.  If all parties to a motion submit, the court will adopt this tentative as the final order.  If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar. 

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