Judge: Malcolm Mackey, Case: 22STCV05079, Date: 2023-03-13 Tentative Ruling

Case Number: 22STCV05079    Hearing Date: March 13, 2023    Dept: 55

SHETTY v. BLOCK                                                             22STCV05079

Hearing Date:  3/13/23,  Dept. 55

#Add-on:  DEMURRER TO FIRST AMENDED COMPLAINT.

 

Notice:  Okay

Opposition

 

MP:  Defendants JACK EMREK and SUE EMREK, individually and as Trustees of the EMREK FAMILY TRUST.

RP:  Plaintiffs

 

 

Summary

 

On 2/9/22, plaintiffs NIKI-ALEXANDER SHETTY et al filed a Complaint.

On 9/22/22, plaintiffs filed a First Amended Complaint, alleging the following:

The EMREK defendants purported to retain a security interest in Plaintiffs’ home, when the security interest and loan documents that Plaintiff ADINA ZAHARESCU signed with NEW HAVEN FINANCIAL, INC., was to finance the acquisition of a Chatsworth Property.

The security interest was based on forged changes in the Note and Deed of Trust that she executed on December 29, 2005, as part of the loan documents for the Chatsworth Property transaction, which never closed with NEW HAVEN, but instead with another lender.  On or about July 7, 2008, timely, within three years from the date of the original transaction, Plaintiffs sent a recission demand, pursuant to the Truth in Lending Act. Defendant THOMAS BLOCK  obtained an assignment of the altered and forged Deed of Trust from Defendant SUE EMREK, as trustee of the EMREK FAMILY TRUST, recorded on 7/7/11.  The Deed of Trust was rendered void by Plaintiff’s rescission, and the note was rendered unsecured.  Block has been foreclosing on plaintiffs’ home pursuant to the altered, forged Note and Deed of Trust, with a trustee’s sale date of February 22, 2022.

The causes of action are:

1. WRONGFUL FORECLOSURE;

2. QUIET TITLE;

3. CANCELLATION OF INSTRUMENT;

4. DECLARATORY RELIEF;

5. VIOLATION OF REGULATION Z OF THE TRUTH IN LENDING ACT;

6. FRAUD;

7. ACCOUNTING;

8. VIOLATION OF THE UNFAIR BUSINESS PRACTICES ACT.

 

 

MP Positions

 

Moving party requests an order sustaining the demurrer to the 5th and 6th claims of the First Amended Complaint, on grounds including the following:

 

·         Fifth Cause of Action for Violation of the Truth In Lending Act and Sixth Cause of Action of the F AC for Fraud:  The amended complaint seeks to allege that the Emreks defendants are "behind the scenes" seeking to enforce the promissory note by and through co-Defendant Block.  But an assignment establishes that the Emreks are not involved in current enforcement of the Note or the Deed of Trust. The Emreks no longer had any interest in the Deed of Trust nor the accompanying promissory note, as both had been assigned to co-Defendant Block. (See Assignment, F.A.C., Exhibit 5, p. 2).

·         5th Cause of Action:  There is a one-year statute of limitations in which to file an action for damages under TILA. See 15 U.S.C. § 1640(e); Beach v. Ocwen Fed Bank (1998) 523 U.S. 410,412. Regulation Z was to implement TILA, and as part of TILA, is subject to its statute of limitations.   Plaintiffs received the loan of $77,786.00 on or about January 31, 2006. (FAC, ¶  20.).   This action was filed on February 9, 2022, or more than 16 years later.

·         6th Cause of Action:  The statute of limitations for fraud in California is three years. Code of Civil Procedure §338(d). Plaintiffs were well aware of any acts allegedly taken by the Emreks to promote this alleged fraud by 2008, when Plaintiffs received all of the relevant documentation. The time to file was by 2011 or more than a decade prior to this current litigation. 

 

 

RP Positions

 

Opposing parties advocate overruling, or leave to amend, for reasons including the following:

 

·         Although defendants claim that the Emreks involvement in this matter ended for a time, it is Emreks’ participation in creation and recordation of false documents and forgery and attempted foreclosure by transferee defendant Thomas Block in 2022, which is at issue.  The issue here is not whether the Emreks divested their interest in the promissory note and Deed Of Trust in 2011, it is whether the Emreks have any interest in the first place, in the unenforceable note and Deed Of Trust that they caused to be altered, forged prior to recording in the official records of Los Angeles County in violation of the Truth in Lending Act.

·         This suit and the cause of action for violation of Regulation Z were brought within one year of the Emreks’ and Block’s attempts to collect and planned foreclosure date.  The Emreks and Block only recently, as of February 22, 2022, sought to collect and foreclose on the security interest, which has been rendered unsecured under federal law.

 

 

Tentative Ruling

 

The demurrer is overruled.

Twenty days to answer.

The First Amended Complaint sufficiently alleges that demurring parties were still involved.  Judicial notice of an assignment does not necessarily contradict involvement, since factually, assignors can continue participation. 

In ruling upon demurrers, courts treat as being true “not only the complaint's material factual allegations, but also facts that may be implied or inferred from those expressly alleged.”  Poseidon Development, Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal.App.4th 1106, 1111-12.  Accord  Schauer v. Mandarin Gems of Cal., Inc. (2005) 125 Cal. App. 4th 949, 953.

An assignment does not necessarily preclude all participation.  After an assignment, assignees take assignors’ rights and remedies subject to any defenses that obligors had against the assignors before notice of the assignment. Manson, Iver & York v. Black (2009) 176 Cal.App.4th 36, 49 (“An assignment transfers the interest of the assignor to the assignee.”);  Johnson v. County of Fresno (2003) 111 Cal. App. 4th 1087, 1096.  After assignments, the assignor lacks standing to participate in litigation, except where assignees expressly consent to prosecution continued by their assignors, in which case no reversible error occurs.   Cal. Prac. Guide:  Civ. Pro. Before Trial (The Rutter Group 2022) §2:25  (citing  Purcell v. Colonial Ins. Co. (1971) 20 Cal.App.3d 807, 814;  Greco v. Oregon Mut. Fire Ins. Co. (1961) 191 Cal.App.2d 674, 687);  CCP   § 368.5.

Next, allegations of the timing of actions, do not necessarily commence a Statute of Limitations, since generally some harm is first required.

The TILA Statute of Limitations can be as much as 3 years, and extended further by the continuing violation doctrine, if the complaint alleges a series of unactionable harms.  Struiksma v. Ocwen Loan Servicing, LLC (2021) 66 Cal. App. 5th 546, 559.

A Statute of Limitations does not accrue until the claiming party was entitled to prosecute an action, which is when the last element essential to the cause of action has occurred, including appreciable harm.  County of Santa Clara v. Atlantic Richfield Co. (2006) 137 Cal. App. 4th 292, 316-17.

“'A demurrer on the ground of the bar of the statute of limitations will not lie where the action may be, but is not necessarily barred'.... It must appear clearly and affirmatively that, upon the face of the complaint, the right of action is necessarily barred.... This will not be the case unless the complaint alleges every fact which the defendant would be required to prove if he were to plead the bar of the applicable statute of limitation as an affirmative defense."  Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort  (2001) 91 Cal.App.4th 875, 881.  Accord  State of Cal. ex rel. Metz v. CCC Information Services, Inc. (2007)149 Cal. App. 4th 402, 413;  United W. Medical Ctrs. v. Sup. Ct. (1996) 42 Cal. App. 4th 500, 505.