Judge: Mark A. Young, Case: 20SMCV01617, Date: 2023-03-01 Tentative Ruling

Case Number: 20SMCV01617    Hearing Date: March 1, 2023    Dept: M

CASE NAME:           Revah, et al., v. National Mortgage Resource, et al.

CASE NO.:                20SMCV01617

MOTION:                  Motion to Set aside/Vacate Declaration of Non-Monetary Status

HEARING DATE:   3/1/2023

Legal Standard

            If a party has a good faith reasonable belief that it was named in an action solely in its capacity as a trustee of a deed of trust and not for wrongful acts on its part, it may file a declaration of nonmonetary status. (Civil Code, § 2924l(a).) Parties who have appeared in the action have 15 days from service of the declaration to object. (Civil Code, § 2924l(c).) If no objection is served within the 15 days, the trustee is not required to participate any further in the action or proceeding, but will be bound by any court order relating to the deed of trust. (Civil Code, § 2924l(d).) 

A late objector may move under Code of Civil Procedure section 473 to require the trustee participate in the action because of its performance of its duties as trustee, but the motion must specify the factual basis of the demand. (Civil Code, § 2924l(e).)

Analysis

Defendant Best Alliance’s objections are OVERRULED.

Defendant Best Alliance’s request for judicial notice is GRANTED.

Plaintiff alleges that Defendant Best Alliance Foreclosure and Lien Services Corp. was the Trustee in charge of handling the foreclosure Sale of Plaintiff s residence located on Alta Drive, in Beverly Hills, California.  On November 1, 2021, Best Alliance filed a Declaration of Non-Monetary Status ("DMNS”). Plaintiff chose not to object because the original complaint focused on the actions of the Defendant, the foreclosing lender, National Mortgage Resources, Inc. ("NMR"). Later, Plaintiff’s counsel learned of information provided by Pepe De La Vega, which suggests Best Alliance’s liability in this action.

Best Alliance opposes on the grounds that there is insufficient evidence to support their substantive liability. Civil Code section 2924l does not make clear that this is a proper basis for opposition of this motion. The section only requires that the motion specify the factual basis of the demand. Otherwise, relief from a declaration of non-monetary status would only require that Plaintiff demonstrate relief under Code of Civil Procedure section 473. This would not require the Court to delve into Best Alliance’s substantive liability, or any defenses they may have. Again, this motion only determines that Best Alliance is no longer a “nominal defendant not subject to a judgment for damages.” (Bae v. T.D. Service Co. of Arizona (2016) 245 Cal.App.4th 89, 105.) Any substantive challenges to liability may be determined after Best Alliance is a participate in the action and no longer a nominal defendant. The better context for this substantive challenge to liability would be a demurrer or other appropriate motion.

Plaintiff asserts that it did not discover any basis for Best’s liability until Plaintiff’s counsel “learned of and prepared” the declaration of Pepe De La Vega. Plaintiff provides that the process of obtaining certain bridge loans for Plaintiff, Mr. De La Vega learned that Steven Miller, the principal at NMR, and Trustee Best Alliance were engaged in highly suspect activity. To wit, it was their custom and practice that Miller would telephone his "very close friend" at Best Alliance to postpone the Trustee's Sale "at least 30 times" by only a few days, each time "clipping Plaintiff, Mr. Revah, for more loan fees" in exchange for only a few more days postponement of the sale. (See ¶¶ 20-24.) Such a factual basis may justify Best Alliance reinstatement as an active participant in the lawsuit.

Defendant notes that Plaintiff does not provide an explanation as to when counsel discovered these new facts proffered by De La Vega, or otherwise determined liability was appropriate. However, the standard provided in section 2924l(e), which allows for relief if the plaintiff “later through discovery, or otherwise determine that the trustee should participate in the action because of the performance of its duties as a trustee” is quite broad. It is unclear whether a more specific showing under Code of Civil Procedure section 473(a) or (b) is required. Notably, section 2924l does not impose any significant burdens on either trustees or plaintiffs, and its procedures are very mechanical. A timely filed objection under section 2924l(c) need only be served timely and show a factual basis. If those basic requirements are met, then a trustee “shall thereafter be required to participate in the action[.]” The instant requirements for relief under subsection (e) are also equally as mechanical. Furthermore, given the liberality inherent in amendments, and the general preference for resolution on the merits, the Court is tentatively inclined to grant the motion.

Accordingly, Plaintiff’s motion is GRANTED.