Judge Kerry Bensinger, Case Number: 21STCV44465, Date: 2024-12-05 Tentative Ruling

CASE: U.S. Bank National Association, As Trustee for Velocity Commercial Capital Loan Trust 2019-3 v. Sannette Gite, As Trustee of the Vaughn Family Trust, et al.

CROSS-DEFENDANT U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR VELOCITY COMMERCIAL CAPITAL LOAN TRUST 2019-3’S MOTION FOR SUMMARY JUDGMENT OR, IN THE ALTERNATIVE, SUMMARY ADJUDICATION OF ISSUES

CROSS-DEFENDANT MARA ENTERPRISES’ MOTION FOR SUMMARY JUDGMENT OR, IN THE ALTERNATIVE, SUMMARY ADJUDICATION OF ISSUES

September 2011: Lions Proof LLC (Lions Proof)[1] records a grant deed transferring the Property to Lions Proof.[2]

November 15, 2011: Lions Proof conveys the Property to M&R Bookkeeping Tax Services (M&R).

October 2012: M&R conveys the Property to Brandon Terrell-Anderson (Terrell-Anderson), the manager for M&R. M&R concurrently conveys the Property to Tatatabom, Inc. (Tatatabom).

December 2012: Terrell-Anderson conveys the Property to Dmico Anderson (Anderson).

September 2013: Jung Hyun Chung (formerly Jung Hyun Park) conveys the Property to Kramerwood Place 8940 Land Trust (Kramerwood Trust).

2014: Gite quitclaims the Property to Earthsicle Corporation (Earthsicle) to help her clean the chain of title to the Property.

May 2015: Yong Chung[3], as trustee of the Kramerwood Trust, conveys the Property to Yong Chung. On the same day, Yong Chung conveyed the Property to Kramerwood Trust.[4]

July 2015: Gite files an unlawful detainer action complaint against Chung Yong Hwa for forcible detainer and forcible entry of the Property. No lis pendens is filed.

October 2016: Gite obtains a judgment of possession in the unlawful detainer action in May 2016 and records the judgment in October 2016.

March 28, 2017: The grant deed signed by Vaughn deeding the Property to the Vaughn Family Trust is recorded.

February 22, 2018: Gite’s quiet title action against Lions Proof is reclassified to civil unlimited. Gite adds M&R, Terrell-Anderson, Tatatabom, Anderson, Kramerwood Trust, Yong Chun, Jung Hyun Chung, Earthsicle, and others, as defendants. Gite alleges the deed granting the Property to Lions Proof is a forgery.

April 10, 2018: “Chung Yong”, individually and as trustee of the Kramerwood Trust, Anderson and Jung Hyun Park convey the Property to “Chung Yong” in his individual capacity.

April 25, 2018: Chung Yong conveys the Property to Yong Hwa Chung and Jung Hyun Park as co-trustees of the Paulista Vivola Living Trust, U/A dated February 17, 2018.

May 2019: Gite files a Notice of Lis Pendens in her quiet title action, but it is not recorded.

July 18, 2019: Jung Hyun Park transfers her interest to the Property to Yong Hwa Chung by quitclaim deed. On the same day, two additional conveyances occur: (1) Yong Hwa Chung and Jung Hyun Park, as co-trustees of the Paulista Vivola Living Trust, convey the Property to Yong Hwa Chung as his sole and separate property; (2) Yong Hwa Chung records a deed of trust, security agreement and assignment of leases, rents, and profits and fixture filing naming Velocity as beneficiary. The second deed of trust is used to secure a $960,000 loan from Velocity.[5]

October 2019: Gite obtains a judgment in her favor in the underlying quiet title action. An Amended Judgment is entered in April 2020. Gite, as trustee of the Vaughn Family Trust is adjudged the sole owner in fee simple of the Property. Yong Chung, Lions Proof, M&R, Terrell-Anderson, Anderson, Kramerwood Trust, Yong Chun, Tatatabom, Jung Hyun Park, and Jung Hyun Chung are adjudged to never had any right, title, estate, interest, or lien, whatever, in the Property.

December 30, 2019: Mara loans Yong Hwa Chung $400,000. The loan is secured by a deed of trust with assignment of rents and is recorded with Mara as the named beneficiary.

On December 6, 2021, US Bank initiated its action for quiet title and declaratory relief (the US Bank Action) against Gite, and others, in Case No. 21STCV44465.

On January 14, 2022, Mara initiated its action for quiet title and declaratory relief (the Mara Action) against Gite, and others, in Case No. 22STCV01686.

On January 13, 2023, in the US Bank Action, Gite filed the operative First Amended Cross-Complaint (FAXC) against US Bank, Mara, and Velocity, among others. On the same day, in the Mara action, Gite filed the operative Second Amended Cross-Complaint (SAXC) against US Bank, Mara, and Velocity, among others. The allegations against US Bank and Mara in Gite’s operative cross-complaints are identical.

As relevant here, Gite’s cross-complaint alleges the following causes of action against US Bank and Mara: (1) quiet title, (2) declaratory relief, and (3) slander of title.[6]

On February 8, 2024, Case Nos. 21STCV44465 and 22STCV01686 were consolidated in this department. Case No. 21STCV44465 is the lead case.

On June 28, 2024, US Bank filed a motion for summary judgment, or in the alternative, summary adjudication of issues on Gite’s FAXC.

On July 8, 2024, Mara filed a motion for summary judgment, or in the alternative, summary adjudication of issues on Gite’s SAXC.

Because US Bank’s and Mara’s motions are substantively identical, as are Gite’s oppositions to the pending motions, the court addresses US Bank’s and Mara’s motions together.

When reviewing a motion for summary judgment or summary adjudication, courts must apply a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent’s claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.”¿ (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.)¿¿A motion for summary judgment must 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).)

“[T]he initial burden is always on the moving party to make a prima facia showing that there are no triable issues of material fact.”¿ (Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519.)¿ A defendant seeking summary judgment “bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850 (Aguilar).) A defendant moving for summary judgment or summary adjudication “has met his or her burden of showing that a cause of action has no merit if the party has shown that one or more elements of the cause of action . . . cannot be established, or that there is a complete defense to the cause of action.”¿ (Code Civ. Proc., § 437c, subd. (p)(2).)¿ A moving defendant need not conclusively negate an element of plaintiff’s cause of action.¿ (Aguilar, supra, 25 Cal.4th at p. 854.)¿¿

To meet this burden of showing a cause of action cannot be established, a defendant must show not only “that the plaintiff does not possess needed evidence” but also that “the plaintiff cannot reasonably obtain needed evidence.”¿ (Aguilar, supra, 25 Cal.4th at p. 854.)¿ It is insufficient for the defendant to merely point out the absence of evidence.¿ (Gaggero v. Yura (2003) 108 Cal.App.4th 884, 891.)¿ The defendant “must also produce evidence that the plaintiff cannot reasonably obtain evidence to support his or her claim.”¿ (Ibid.)¿ The supporting evidence can be in the form of affidavits, declarations, admissions, depositions, answers to interrogatories, and matters of which judicial notice may be taken.¿ (Aguilar, supra, 25 Cal.4th at p. 855.)¿¿

“Once the defendant … has met that burden, the burden shifts to the plaintiff … to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto.” (Code Civ. Proc., § 437c, subd. (p)(2).)¿The plaintiff may not merely rely on allegations or denials of its pleadings to show that a triable issue of material fact exists, but instead, “shall set forth the specific facts showing that a triable issue of material fact exists as to the cause of action.”¿(Ibid.)¿ A plaintiff opposing summary judgment defeats the motion by showing one or more triable issues of material fact exist as to the challenged element. (Aguilar, supra, 25 Cal.4th at p. 849.) “If the plaintiff cannot do so, summary judgment should be granted.” (Avivi v. Centro Medico Urgente Medical Center (2008) 159 Cal.App.4th 463, 467.)¿¿

The court must “liberally construe the evidence in support of the party opposing summary judgment and resolve all doubts concerning the evidence in favor of that party,” including “all inferences reasonably drawn therefrom.” (Yanowitz v. L’Oreal USA, Inc. (2005) 36 Cal.4th 1028, 1037; Aguilar, supra, 25 Cal.4th at pp. 844-45.)¿ “On a summary judgment motion, the court must therefore consider what inferences favoring the opposing party a factfinder could reasonably draw from the evidence.¿ While viewing the evidence in this manner, the court must bear in mind that its primary function is to identify issues rather than to determine issues.¿ [Citation.] Only when the inferences are indisputable may the court decide the issues as a matter of law.¿ If the evidence is in conflict, the factual issues must be resolved by trial.” (Binder v. Aetna Life Ins. Co. (1999) 75 Cal.App.4th 832, 839.)¿ “Put another way, have defendants conclusively negated a necessary element of the [plaintiff’s] case or demonstrated that under no hypothesis is there a material issue of fact that requires the process of trial?”¿ (Jeld-Wen, Inc. v. Superior Court (2005) 131 Cal.App.4th 853, 860, internal citation omitted.)¿Further, “the trial court may not weigh the evidence in the manner of a factfinder to determine whose version is more likely true.¿ [Citation.]¿ Nor may the trial court grant summary judgment based on the court’s evaluation of credibility.¿ [Citation.]” ¿(Id. at p. 840; see also Weiss v. People ex rel. Department of Transportation (2020) 9 Cal.5th 840, 864 [“Courts deciding motions for summary judgment or summary adjudication may not weigh the evidence but must instead view it in the light most favorable to the opposing party and draw all reasonable inferences in favor of that party”].)¿¿

US Bank objects to Exhibits A, B, and C attached to the declaration of Rickey Ivie. The objections are OVERRULED.

US Bank and Mara present identical objections to the declarations from Gite, Don Ector and Robert Brown. US Bank and Mara stack the same grounds in support of their objections. The objections to the declarations of Don Ector and Robert Brown are OVERRULED.

The objections to Gite’s declaration are OVERRULED, with the exception of the following objections, which are SUSTAINED.

GITE, as Trustee of the VAUGHN FAMILY TRUST dated November 6, 1997 (“Gite”) on January 13, 2023, in the matter of Mara Enterprises v. Sannette Gite, as Trustee of the Vaughn Family Trust, et al., Los Angeles County Superior Court Case No. 22STCV01686, which was consolidated with the Lead Case U.S. Bank National Association, as Trustee for Velocity Commercial Capital Loan Trust 2019-3 v. Sannette Gite, as Trustee of the Vaughn Family Trust, et al., Los Angeles County Superior Court Case No. 21STCV44465.

2. Grant Deed recorded on March 5, 1998, with the Recorder’s Office for Los Angeles

3. Grant Deed recorded on March 5, 1998, with the Recorder’s Office for Los Angeles County as Instrument No. 98 355596.

4. Verified Complaint filed by Mara on January 14, 2022, in the matter of Mara Enterprises v. Sannette Gite, as Trustee of the Vaughn Family Trust, et al., Los Angeles County Superior Court Case No. 22STCV01686, which was consolidated with the Lead Case U.S. Bank National Association, as Trustee for Velocity Commercial Capital Loan Trust 2019-3 v. Sannette Gite, as Trustee of the Vaughn Family Trust, et al.

5. Minute Order dated February 8, 2024, consolidating the following two cases: U.S. Bank National Association, as Trustee for Velocity Commercial Capital Loan Trust 2019-3 vs. Sannette Gite, as Trustee of the Vaugh Family Trust, et. al., Los Angeles Superior Court Case No. 21STCV44465; and Mara Enterprises vs. Sannette Gite, as Trustee of the Vaugh Family Trust, et. al., Los Angeles Superior Court Case No. 22STCV01686.

6. Answer to Verified Complaint filed by Gite on June 20, 2022, in the matter of Mara Enterprises v. Sannette Gite, as Trustee of the Vaughn Family Trust, et al., Los Angeles County Superior Court Case No. 22STCV01686, which was consolidated with the Lead Case U.S. Bank National Association, as Trustee for Velocity Commercial Capital Loan Trust 2019-3 v. Sannette Gite, as Trustee of the Vaughn Family Trust, et al., Los Angeles County Superior Court Case No. 21STCV44465.

7. Affidavit - Death of Trustee recorded on September 19, 2011, with the Recorder’s Office for Los Angeles County as Instrument No. 20111271066.

8. Grant Deed recorded on July 18, 2019, with the Recorder’s Office for Los Angeles County as Instrument No. 20190699916.

9. Deed of Trust recorded on December 30, 2019, with the Recorder’s Office for Los Angeles County as Instrument No. 2019-1457096.

10. Minute Order dated August 16, 2023, in the matter of Mara Enterprises v. Sannette Gite, as Trustee of the Vaughn Family Trust, et al., Los Angeles County Superior Court Case No. 22STCV01686, which was consolidated with the Lead Case U.S. Bank National Association, as Trustee for Velocity Commercial Capital Loan Trust 2019-3 v. Sannette Gite, as Trustee of the Vaughn Family Trust, et al., Los Angeles County Superior Court Case No. 21STCV44465.

US Bank and Mara (hereafter, Cross-Defendants) move for summary judgment, or summary adjudication, on Gite’s crossclaims for quiet title, declaratory relief, and slander of title. Cross-Defendants do so on the following grounds: (1) Gite lacks standing to bring any crossclaims against Cross-Defendants, and (2) the slander of title claim separately fails because the recording of the deeds granting US Bank and Mara their respective interests in the Property are privileged and Gite cannot demonstrate that the Cross-Defendants acted with malice.[8] For the reasons stated herein, Cross-Defendants are not entitled to summary judgment or summary adjudication.

Cross-Defendants argue Gite lacks standing to prosecute her crossclaims. In support, Cross-Defendants point to the language of the Vaughn Family Trust which expressly provides that upon the death of Luerendia Vaughn the trustee (Gite) is to distribute the entire trust estate, including any assets subsequently added to the trust estate to Mark Lawson (Lawson).[9] (See Vaughn Family Trust, Art. 2.2.) Relying on this language, Cross-Defendants argue Gite lacks standing because any purported right to the Property is held by Lawson. Cross-Defendants further point out that Lawson has not challenged Cross-Defendants’ interests in the Property.

The argument lacks merit. The trust language merely directs Gite, in her capacity as trustee, to distribute the trust assets to Lawson. Cross-Defendants do not provide any evidence showing Gite transferred the Property to Lawson. Gite admits as much in her opposition. In an apparent concession, Cross-Defendants argue in reply that it is unreasonable for Gite to have failed to transfer the Property to Lawson since Luerendia Vaughn passed away twelve (now thirteen) years ago. However, Gite’s inaction as trustee is not an issue relevant to this action, let alone, to these motions. Essentially, Cross-Defendants ask this court to imply that the Property is no longer an asset of the Vaughn Family Trust. In the absence of any supporting evidence, the court declines to do so. The Property is an asset of the Trust. Therefore, Gite, as trustee, has standing to bring these claims. “In general, the person who has the right to file suit under the substantive law is the real party in interest. [Citation.] At common law, where a cause of action is prosecuted on behalf of an express trust, the trustee is the real party in interest because the trustee has legal title to the cause.” (Saks v. Damon Raike & Co. (1992) 7 Cal.App.4th 419, 427.) Further, Gite has standing to press her claims because the terms of the Family Vaughn Trust entrust Gite with discretion to sell the Property.[10] Quieting title directly serves that end.

Cross-Defendants fail to meet their initial burden. Summary judgment is not warranted for purported lack of standing.

Cross-Defendants argue their publications were privileged because they are rival claimants to the Property and are entitled to protect their interests. Further, because the publications are privileged, Cross-Defendants argue Gite must establish malice to prevail on her claim for slander of title, which, according to Cross-Defendants, she cannot do.

Gite disagrees and points to triable issues; namely, that the deeds and assignments granting Cross-Defendants their purported interests in the Property were void ab initio and Cross-Defendants were on notice of the defects in the title before they made their loans.

The elements of a cause of action for slander of title are: “(1) a publication, (2) which is without privilege or justification, (3) which is false, and (4) which causes direct and immediate pecuniary loss.” (Alpha and Omega Development, LP v. Whillock Contracting, Inc. (2011) 200 Cal.App.4th 656, 664; see also CACI No. 1730.)

“Civil Code section 47 extends a conditional privilege against defamation to statements made without malice on subjects of mutual interests.” (Hui v. Sturbaum (2014) 222 Cal.App.4th 1109, 1118; see also CAC No. 1723.) “For the purposes of section 47’s qualified privilege, ‘malice’ means that the defendant (1) ‘ “was motivated by hatred or ill will towards the plaintiff,” ’ or (2) ‘ “lacked reasonable grounds for [its] belief in the truth of the publication and therefore acted in reckless disregard of the plaintiff’s rights.” ’ ” (Schep v. Capital One, N.A. (2017) 12 Cal.App.5th 1331, 1337.) Under the common-interest privilege of Civil Code section 47(c), the defendant bears the initial burden of showing facts to bring the communication within the privilege. The plaintiff (or cross-complainant) then must prove that the statement was made with malice. (Lundquist v. Reusser (1994) 7 Cal.4th 1193, 1203.)

Here, Cross-Defendants meet their burden to show the publications fall within the privilege. US Bank is a rival claimant of the Property by and through the July 18, 2019 Velocity Deed of Trust and the Assignment of Deed of Trust. (US Bank’s Undisputed Material Facts Nos. 11, 12, 36, 37, 57, 58, 78, 79.) Mara is a rival claimant of the Property by and through the December 30, 2019 Deed of Trust. (Mara’s Undisputed Material Facts Nos. 11, 12, 36, 37, 57, 58, 78, 79).

The burden shifts. Gite argues the deeds of trust are void ab initio because the deed from which they were derived was forged. “A forged document is void ab initio and constitutes a nullity; as such it cannot provide the basis for a superior title as against the original grantor.”
(WFG Nat'l Title Ins. Co. v. Wells Fargo Bank, N.A. as Tr. for Park Place Sec., Inc. Asset-Backed Pass-Through Certificates, Series 2005-WCW2 (2020) 51 Cal.App.5th 881, 891, citing Wutzke v. Bill Reid Painting Service (1984) 151 Cal.App.3d 36, 43.)

The heart of Gite’s argument is that Cross-Defendants were on notice of Gite’s claims to title. In support, Gite offers the opinion of experts Robert Brown (Brown) and Don Ector (Ector) to establish Cross-Defendants’ reckless disregard of Gite’s title claims. Brown states,

“It is my informed opinion that in entering their transactions, facts and circumstances were made known or constructively known to the Defendants Velocity, US Bank and Mara Enterprises which constituted bright “red flags” putting the lenders and assignee on notice that the potential for fraud and illegal activity were highly in evidence.” (Brown Decl., ¶ 4.)

“The Site X report, which was possessed by Velocity and US Bank before their respective transactions, contains a litany of unusual “back and forth” transfers of the property between various individuals and entities, which should have raised serious concerns to a reasonable lender regarding the validity of the borrower/grantor’s legal title to the property. It is curious that the preliminary title reports only references conveyances for the prior 24 months from the lending date of July 2019. This seems highly unusual, and it does not appear that the lender discussed or shared the Site X report with the title company. Nonetheless, lenders and assignees have constructive notice of pertinent matters in the public record.” (Brown Decl., ¶ 5.)

Regarding Velocity, there are many atypical and uncharacteristic elements in the file which place the bona fides of the lender and the legitimacy of the overall loan in dire question, i.e., the prior loan that was paid off with the proceeds of the subject loan had matured and was past due for over seven months. It had only been on the property for a little less than two years. It is very questionable why the defendant would make a loan allowing the borrower to “cash out” an additional $100,000, especially based on what purported to be a “month to month’ rental agreement on the subject property. In my view, the underwriting analysis and rationale for the loan are dubious. (Brown Decl., ¶ 6.)

I am also of the opinion that turning a blind eye to all the red flags, not investigating the title, recording the deed of trust and making no inquiry about the Sannette Gite; The Vaughn Family Trust interest in the property was reckless. I doubt that any conventional lenders would have engaged in this transaction with this borrower and property. One could only infer that Velocity just didn’t want to know, which is why they sought no explanation to explain the litany of unusual “back and forth” transfers of the property which conflicted with the borrowers claim of ownership. (Brown Decl., ¶ 7.)

Given that there was a recorded Judgement for possession, litigation occurring and ongoing just preceding the making of the loan, the lender by exercising due diligence could have easily examined the court records which would have disclosed the litigation between the borrower and Sannette Gite, trustee of the Vaughn Family Trust, and contacted her or her counsel to discuss her interest in the property. Conducting this brief inquiry would have taken minimal effort by the lender and firmly informed them of the circumstances regarding title to the property that they were relying on and encumbering to make an approximately one-million-dollar loan transaction. This is especially important given that the Borrower did not exhibit the individual income to support repayment of the Loan and the alleged rental income from the property was very speculative. This was a very dubious underwriting position, at best, in my opinion, based upon my experience as a former lender’s counsel and as a current bank director. (Brown Decl., ¶ 8.)

In this case, I reviewed pertinent aspects of the file including deposition testimony from the parties, reviewed the public record regarding the property, the preliminary title report issued by Chicago Title Company and the Site X report obtained by Velocity Commercial Capital. A preliminary title report customarily reports all transfers, liens, judgements or burdens in the public record on or related to the property from inception. Here, the report only indicates that there have been no transfers of title for two years from the date of the report. For reasons that are unknown to me, it does not disclose the entire history of transactions regarding the property. However, The (sic) Site X report shows transfers on the property commencing in 1998. (Ector Decl., ¶ 4.)

The Site X report shows that Lion’s Proof (sic) transferred the property to both M&R Bookkeeping Tax Services LLC and to Sannette Gite: Vaughn Family Trust in 2011. Subsequently, there are numerous independent, uninsured transfers of the property by Sannette Gite: Vaughn Family Trust and transfers of the property by Yong Chung. These transfers raise red flags for any reasonable lender, broker or title officer because they conflict with exclusive title ownership of the property. In my opinion, Velocity, US Bank and Mara enterprises (entities) should have investigated or at a minimum inquired about the interest of Sannette Gite: Vaughn Family Trust before proceeding with a loan to Yong Chung and recording a deed of trust or the assignment obtained from him on the property. Failing to investigate to make an inquiring after obtaining knowledge of these conflicting transfers of the property or failing to review the public record was reckless in my opinion. (Ector Decl., ¶ 5.)

In sum, Gite submits evidence of Mara and Velocity’s reckless disregard of Gite’s title claims. And because US Bank stands in the shoes of Velocity as Velocity’s assignee, the court’s conclusion regarding Velocity likewise extends to US Bank. Gite’s arguments raise triable issues of material fact sufficient to defeat Cross-Defendants’ motions.

The motions for summary judgment, or in the alternative, summary adjudication, filed by U.S. Bank National Association and Mara Enterprises are DENIED.

CASE: U.S. Bank National Association, As Trustee for Velocity Commercial Capital Loan Trust 2019-3 v. Sannette Gite, As Trustee of the Vaughn Family Trust, et al.

CROSS-DEFENDANT VELOCITY COMMERCIAL CAPITAL LLC’S MOTION FOR SUMMARY JUDGMENT, OR IN THE ALTERNATIVE, SUMMARY ADJUDICATION AS TO SANNETTE GITE’S FIRST AMENDED CROSS-COMPLAINT

RESPONDING PARTY Defendant/Cross-Complainant Sannette Gite, Trustee of the Vaughn Family Trust

This case concerns ownership of, title to, and loans against 8940 Kramerwood Place, Los Angeles, California 90034 (the Property). For the purposes of these proceedings, the Property was originally owned by William Anthony Vaughn and Luerendia Vaughn (collectively, the Vaughns). The Vaughns transferred title to the Property to the Vaughn Family Trust in 1998. Defendant and cross-complainant Sannette Gite (Gite or Cross-Complainant) was named as Trustee of the Vaughn Family Trust (Gite) in 2011. Since then, the Property has been the subject of numerous conveyances and quiet title actions. Here, U.S. Bank National Association (US Bank), as assignee of Velocity Commercial Capital LLC (Velocity), and Mara Enterprises (Mara) each allege an ownership interest in the Property. To that end, US Bank and Mara filed separate actions against Gite, in her capacity as Trustee of the Vaughn Family Trust, and others, to quiet title to the Property.

September 2011: Lions Proof LLC (Lions Proof)[11] records a grant deed transferring the Property to Lions Proof.[12]

November 15, 2011: Lions Proof conveys the Property to M&R Bookkeeping Tax Services (M&R).

October 2012: M&R conveys the Property to Brandon Terrell-Anderson (Terrell-Anderson), the manager for M&R. M&R concurrently conveys the Property to Tatatabom, Inc. (Tatatabom).

December 2012: Terrell-Anderson conveys the Property to Dmico Anderson (Anderson).

September 2013: Jung Hyun Chung (formerly Jung Hyun Park) conveys the Property to Kramerwood Place 8940 Land Trust (Kramerwood Trust).

2014: Gite quitclaims the Property to Earthsicle Corporation (Earthsicle) to help her clean the chain of title to the Property.

May 2015: Yong Chung[13], as trustee of the Kramerwood Trust, conveys the Property to Yong Chung. On the same day, Yong Chung conveyed the Property to Kramerwood Trust.[14]

July 2015: Gite files an unlawful detainer action complaint against Chung Yong Hwa for forcible detainer and forcible entry of the Property. No lis pendens is filed.

October 2016: Gite obtains a judgment of possession in the unlawful detainer action in May 2016 and records the judgment in October 2016.

March 28, 2017: The grant deed signed by Vaughn deeding the Property to the Vaughn Family Trust is recorded.

April 10, 2018: “Chung Yong”, individually and as trustee of the Kramerwood Trust, Anderson and Jung Hyun Park convey the Property to “Chung Yong” in his individual capacity.

April 25, 2018: Chung Yong conveys the Property to Yong Hwa Chung and Jung Hyun Park as co-trustees of the Paulista Vivola Living Trust, U/A dated February 17, 2018.

May 2019: Gite files a Notice of Lis Pendens in her quiet title action. It is not recorded.

December 30, 2019: Mara loans Yong Hwa Chung $400,000. The loan is secured by a deed of trust with assignment of rents and is recorded with Mara as the named beneficiary.

On December 6, 2021, US Bank initiated its action for quiet title and declaratory relief (the US Bank Action) against Gite, and others, in Case No. 21STCV44465.

On January 14, 2022, Mara initiated its action for quiet title and declaratory relief (the Mara Action) against Gite, and others, in Case No. 22STCV01686.

As relevant here, on January 13, 2023, in the US Bank Action, Gite filed the operative First Amended Cross-Complaint (FAXC) against Velocity, among others.

In the FAXC, Gite alleges the following causes of action against Velocity: (1) declaratory relief, and (2) slander of title.[16]

On July 12, 2024, Velocity filed a motion for summary judgment, or in the alternative, summary adjudication of issues on Gite’s SAXC.

Velocity raises three arguments in support of its motion: (1) Gite cannot prevail on her claims against Velocity because Velocity assigned its interest in the Property to US Bank; (2) Gite cannot prevail on her Third Cause of Action for Slander of Title because Velocity recorded the challenged Deed of Trust without knowledge of Gite’s claim to title, and (3) Velocity incorporates by reference US Bank and Mara’s assertion that Gite lacks standing to bring any crossclaims. Because the court has considered and rejected the challenge to Gite’s standing (see Tentative Order re: US Bank’s and Mara’s Motions for Summary Judgment), the court considers Velocity’s first and second arguments.[18]

Velocity argues it is entitled to summary judgment because Velocity assigned its claims and liabilities to US Bank. In support, Velocity submits the Deed of Trust whereby Velocity assigned its rights in the Property to US Bank. Velocity also cites two cases: Professional Collection Consultants v. Hanada (1997) 53 Cal.App.4th 1016 (Professional Collection) and Truck Ins. Exchange v. Bennett (1997) 53 Cal.App.4th 75 (Truck Ins.). Velocity relies on Professional Collection for the general proposition that the assignee acquires all the rights and liabilities of the assignor and Truck Ins. for the proposition that liability from a slander of title action is assignable.

Velocity’s arguments lack merit. First, the December 2019 Deed of Trust does not convey Velocity’s liabilities to US Bank. The Deed of Trust states, in relevant part, that Velocity, as assignor “does hereby grant, assign transfer and convey, without recourse unto U.S. Bank National Association, …., assignee, the described deed of trust with all interest, all liens, and any rights due or to become due thereon.” (Lawrence Decl., ¶ 8, Ex. D.) The assignment merely transfers Velocity’s rights and interests in the Property to US Bank. “The burden of proving an assignment falls upon the party asserting rights thereunder. An assignment agreement must describe the subject matter of the assignment with sufficient particularity to identify the rights assigned.” (Heritage Pac. Fin., LLC v. Monroy (2013) 215 Cal.App.4th 972, 988 (cleaned up).) Here, there is no language which assigns with sufficient particularity Velocity’s tortious liabilities to US Bank. Velocity did not submit any evidence to support its interpretation of the assignment.

Second, Professional Collection is inapposite. That case concerned the applicable statute of limitations for contract actions brought by the Federal Deposit Insurance Corporation. Further, Professional Collection has no application here because it merely states the general rule that an “assignee stands in the shoes of the assignor, acquiring all of its rights and liabilities.” (Professional Collection, 53 Cal.App.4th at pp. 1018-1019.) It does not stand for the proposition that an assignor is absolved of liability after an assignment of rights. Indeed, as discussed above, the lynchpin of the argument turns on the language of the assignment. Under Professional Collection, an assignee (here, US Bank) acquires the rights and liabilities of the assignor. Here, the assignment is silent with respect to the transfer of Velocity’s tortious liabilities, if any.

Third, Velocity misreads Truck Ins. That case states “a slander or disparagement of title action is assignable, as it arises from the violation of a property right; a defamation cause of action, as arising from the purely personal right of the reputation of the one injured, is not assignable.” (Truck Ins., 53 Cal.App.4th 75, 85, fn. 4.) As Gite correctly points out, Truck Ins. concerns whether a plaintiff may assign the right to pursue a cause of action for slander, not whether a defendant avoids liability for the wrongful act by assigning the property.

However, Velocity’s assignment impacts Gite’s declaratory relief cause of action.[19] If Velocity lacks any present right or interest in the Property, there is no actual controversy between Gite and Velocity upon which declaratory relief may be granted. “To qualify for declaratory relief, a party would have to demonstrate its action presented two essential elements: (1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to the party’s rights or obligations.”¿ (Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909 (cleaned up).) “[T]here is no basis for declaratory relief where only past wrongs are involved.”¿ (Osseous Technologies of America, Inc. v. DiscoveryOrtho Partners LLC (2010) 191 Cal.App.4th 357, 366, quotation marks omitted.)

Gite argues a controversy still exists “as to who has legal ownership over the subject property, and whether the assignment by defendant Velocity conveyed any rights to defendant U.S. Bank.” (Opposition, p. 9:12-13.) But Gite merely points to past conduct (here, Velocity’s assignment). Further, Gite seeks a declaration which would merely reflect Velocity’s current lack of rights or interests in the Property. In the FAXC, Gite alleges:

“Cross-Complainant desires a judicial declaration that SANNETTE GITE was the owner of the Property as of September 2, 2011, pursuant to the grant deed and judgment recorded in the Official Records of the County of Los Angeles (Exhibits 1 and 10); that the grant deed and judgment recorded in the Official Records of the County of Los Angeles (Exhibits 1 and 10) secured Cross-Complainant’s rights and interest in the Property as of September 2, 2011; that December 30, 2019 Deed of Trust (Exhibit 9), July 18, 2019 Deed of Trust (Exhibit 7) and October 19, 2020 Assignment of Deed of Trust (Exhibit 8) did not secure Cross-Defendants MARA ENTERPRISES’ and U.S. NATIONAL BANK ASSOCIATION’S, as Trustee of Velocity Commercial Capital Loan Trust, interest in the Property as of December 30, 2019, and had not been valid liens secured against the Property; that Cross-Defendants U.S. NATIONAL BANK ASSOCIATION and MARA ENTERPRISES are not bona fide encumbrancers for value based on the December 30, 2019 Deed of Trust (Exhibit 9), July 18, 2019 Deed of Trust (Exhibit 7) and October 19, 2020 Assignment of Deed of Trust (Exhibit 8); and that the claims of Cross-Defendants, and each of them against the Property are without any rights whatsoever such that Cross-Defendants have no right, title, estate, or interest in the Property or any part thereof.”

(FAXC, ¶ 43, emphasis in original.) In other words, the declaration Gite seeks would achieve the same result as Velocity’s assignment: leaving Velocity without any right or interest in the Property.[20] Given there is no dispute of Velocity’s present disinterest in the Property, summary adjudication of Gite’s declaratory relief claim is warranted.

Velocity argues the slander of title claim fails because it recorded the Deed of Trust without knowledge or notice of Gite’s actual or potential claim to title. The elements of a cause of action for slander of title are: “(1) a publication, (2) which is without privilege or justification, (3) which is false, and (4) which causes direct and immediate pecuniary loss.” (Alpha and Omega Development, LP v. Whillock Contracting, Inc. (2011) 200 Cal.App.4th 656, 664; see also CACI No. 1730.)

In support, Velocity submits the declaration of Sandie Lawrence to establish the following: in 2019, Velocity was approached by Yong Hwa Chung (Chung) regarding a loan. Lawrence Decl., ¶ 5.) Prior to approving a loan, Velocity investigated Chung’s title interest and obtained a preliminary title report from Chicago Title. (Lawrence Decl., ¶ 5, Ex. A.) Velocity obtained a title policy based on the preliminary title report. (Lawrence Decl., ¶ 6, Ex. B.) Neither the report nor the policy indicated an actual or potential claim to title by Gite or any other third party. (Lawrence Decl., ¶ 6, Exs. A, B.) In reliance on the title report and policy, Velocity extended and funded a loan to Chung, and thereafter recorded the Chung Deed of Trust (DOT). (Lawrence Decl., ¶¶ 6, 7, Ex. C.) Velocity assigned its interest in the Chung DOT to US Bank and recorded and Assignment of Deed of Trust on October 19, 2020, which ended Velocity’s interest in the Chung DOT. (Lawrence Decl., ¶ 8, Ex. D.) Velocity meets its initial burden.

The burden shifts. Gite argues Velocity acted with reckless disregard when it recorded its title and liens against the Property. In support, Gite states that Velocity obtained a “Site X” report which showed all the conveyances on the Property since it was initially conveyed to the Vaughn Family Trust. The report clearly showed Gite, as trustee, had a continuing interest in the Property which was inconsistent with Chung’s purported ownership of the Property. Yet, Velocity did not investigate the information, nor did it discuss the information with the title company who provided the preliminary report. Gite also points out that the preliminary report showed title transactions on the Property for only two years prior to the report.

Further, Gite offers the opinion of experts Robert Brown (Brown) and Don Ector (Ector) to establish the element of reckless disregard. Brown states,

In short, Brown opines that a reasonable lender would have investigated the information contained in the Site X report or made an inquiry to determine the nature and extent of the Vaughn Family Trust’s interest in the Property; not to do so was reckless. Indeed, a cursory review of the History of Title Transfers listed above amply supports Brown’s “red flag” assessment. (See Brown Decl., ¶ 5.) Brown further opines that it was reckless for defendant Velocity not to make an inquiry or investigation of the information it obtained as well as the information in the public record.

In reply, Velocity argues Gite’s expert declarations do not establish the element of reckless disregard because they merely posit Velocity was constructively aware of Gite’s claim. Velocity’s summary of Gite’s expert declarations is reductive. Velocity ignores the Site X report. Brown and Ector each opine that Velocity was reckless in failing to investigate the information contained in the Site X report. Velocity does not dispute having obtained the report. Velocity’s custodian of records, Sandie Lawrence, does not mention or discuss the Site X report. Velocity does not dispute its failure to discussing the Site X report with the title company.

Velocity argues it was not reckless because Velocity investigated the title, as demonstrated by obtaining a preliminary report and thereafter, a title policy. Velocity points out that Gite never recorded a lis pendens in her quiet title action. However, at best, Velocity points to triable issues of fact: whether Velocity exercised reasonable diligence in investigating title by relying on a two-year preliminary title report and whether ignoring the information in the Site X report was reckless, among other issues. Gite’s arguments raise triable issues of material fact sufficient to defeat Velocity’s motion for summary adjudication of the Third Cause of Action.

Velocity’s Motion for Summary Adjudication of the Second Cause of Action for Declaratory Relief is GRANTED.

Velocity’s Motion for Summary Adjudication of the Third Cause of Action for Slander of Title is DENIED.

[1] In her declaration, Gite explains she met with a notary on September 2, 2011 in a proposed sales transaction with Lions Proof. Gite signed a grant deed conveying the Property to Lions Proof which was notarized and sent to escrow to be held in escrow until certain deal terms were met. However, those terms were not met, and the escrow was cancelled. (Gite Decl., ¶ 5.)

[2] In Gite’s quiet title action, Judge Christopher K. Lui issued a statement of decision finding Gite’s testimony credible that (1) she never transferred the Property to any of the defendants, (2) the signature on the document purporting to execute a grant deed transferring the Property to Lions Proof was not hers (i.e., a forgery); (3) Gite deeded the Property to Earthsicle in an effort to clean the title, and (4) Earthsicle executed a deed reconveying the Property to the Vaughn Family Trust. (Statement of Decision, Case No. BC692757, 10/31/20.) In other words, Gite’s quiet title action established Gite’s right to the Property, Lions Proof’s grant deed was a forgery, and each subsequent transaction derived from Lions Proof’s grant deed was illegitimate. Judgment was entered consistent with the court’s findings.

[3] Also referred to herein as Chung Yong Hwa, Yong Chun, Chung Yong, and Yong Hwa Chung.

[4] Yong Chung would later record grant deeds again conveying the Property to Yong Chung as trustee of the Kramerwood Trust in August 2015 and October 2017.

[5] Although not discussed by the parties, US Bank, by way of assignment, has the first lien on the Property.

[6] Gite also alleged a cause of action for negligence against US Bank and Mara. On June 14, 2023, the court sustained US Bank’s Demurrer to the negligence claim without leave to amend. On August 16, 2023, the court sustained Mara’s demurrer to the negligence claim with leave to amend. Gite, however, did not amend her pleading. Accordingly, the only claims alleged against US Bank and Mara are for quiet title, declaratory relief, and slander of title.

[7] US Bank and Mara both ask the court to disregard and strike Gite’s Opposition to Separate Statement of Undisputed Material Facts in Support of the Motion for Summary Judgment because Gite did not comply with California Rules of Court, rule 3.1350. The court declines to do so.

[8] With respect to Cross-Defendants’ motions, the operative conveyances are (1) Lions Proof’s recording of the November 15, 2011 grant deed, (2) Velocity’s recording of the July 18, 2019 Deed of Trust, (3) Mara’s recording of the December 30, 2019 Deed of Trust, and (4) Velocity’s October 2020 assignment to US Bank.

[9] The parties do not explain Lawson’s relationship to the Property or whether he is still alive.

[10] Article 4.3 of the Vaugh Family Trust states, in pertinent part: “After the death of trustor, … , the successor trustee shall have the power to partition, allot and distribute the trust estate in undivided interests or in kind, or partly in money and partly in kind, at valuations determined by the trustee, and to sell such property as the trustee, in the trustee’s discretion, considers necessary to make a division or distribution. (See Vaughn Family Trust, Art. 4.3, emphasis added.)

[11] In her declaration, Gite explains she met with a notary on September 2, 2011 in a proposed sales transaction with Lions Proof. Gite signed a grant deed conveying the Property to Lions Proof which was notarized and sent to escrow to be held in escrow until certain deal terms were met. However, those terms were not met, and the escrow was cancelled. (Gite Decl., ¶ 5.)

[12] In Gite’s quiet title action, Judge Christopher K. Lui issued a statement of decision finding Gite’s testimony credible that (1) she never never transferred the Property to any of the defendants, (2) the signature on the document purporting to execute a grant deed transferring the Property to Lions Proof was not hers (i.e., a forgery); (3) Gite deeded the Property to Earthsicle in an effort to clean the title, and (4) Earthsicle executed a deed reconveying the Property to the Vaughn Family Trust. (Statement of Decision, Case No. BC692757, 10/31/20.) In other words, Gite’s quiet title action established Gite’s right to the Property, Lions Proof’s grant deed was a forgery, and each subsequent transaction derived from Lions Proof’s grant deed was illegitimate. Judgment was entered consistent with the court’s findings.

[13] Also referred to herein as Chung Yong Hwa, Yong Chun, Chung Yong, and Yong Hwa Chung.

[14] Yong Chung would later record grant deeds again conveying the Property to Yong Chung as trustee of the Kramerwood Trust in August 2015 and October 2017.

[15] Although not discussed by the parties, US Bank, by way of assignment, has the first lien on the Property.

[16] Gite also alleged causes of action for quiet title and negligence against Velocity. On June 19, 2023, the court sustained Velocity’s Demurrer to the First and Sixth Causes of Action with leave to amend. Gite did not amend the FAXC. Accordingly, the only claims alleged against Velocity are for declaratory relief and slander of title.

[17] Gite argues Velocity’s motion should be denied because Velocity seeks summary judgment on the wrong pleading. Gite argues the SAXC and not the FAXC is the operative pleading. Gite is not entirely correct. The FAXC is the operative pleading in the US Bank Action while the SAXC is the operative pleading in the Mara Action.

[18] With respect to Velocity’s motion, the operative conveyances are (1) Lions Proof’s recording of the November 15, 2011 grant deed, (2) Velocity’s recording of the July 18, 2019 Deed of Trust, (3) Mara’s recording of the December 30, 2019 Deed of Trust, and (4) Velocity’s October 2020 assignment to US Bank.

[19] The assignment, however, does not affect the slander of title claim because title to the Property is not an element of that claim.

[20] Gite also admits her declaratory relief claim is a proxy for her quiet title claim. (See Opposition, p. 9:13-15 [stating Gite “did not amend the complaint to preserve the same legal effect of clearing title”].) A cause of action for declaratory relief should not be used as a duplicate cause of action for the determination of identical issues raised in another cause of action.¿ (General of America Insurance Co. v. Lilly (1968) 258 Cal.App.2d 465, 470.) The court sustained Velocity’s demurrer to Gite’s quiet title claim. (See Minute Order, 6/15/23.)