Judge Peter A. Hernandez, Case Number: 19PSCV00643, Date: 2023-12-13 Tentative Ruling

Plaintiffs Syed M. Hammad Rizvi (“Rizvi”), Afsah Moinuddin (“Moinuddin”) and Eagle Ridge Property Management, LLC (“Eagle Ridge”) (collectively, “Plaintiffs”) allege as follows:

Rizvi and Moinuddin are married and formed Eagle Ridge to hold title to their primary residence located at 10068 Eagle Ridge Court, Rancho Cucamonga, CA (“Eagle Ridge Residence”). In March 2018, Rizvi met Vincente Cuevas (“V. Cuevas”) outside of a partially completed home located on a 1.24 acre lot at 1533 Calle Cristina, San Dimas, California (“the Cristina Property”). V. Cuevas represented that he was the owner and builder of the Cristina Property. After Rizvi consulted with his banker and informed V. Cuevas that he was unable to purchase the Cristina Property, V. Cuevas advised Rizvi that he could help Rizvi structure the purchase and arrange a loan so he could afford to buy it. V. Cuevas subsequently introduced Rizvi to Kevin Cornell (“Cornell”) of KWC Realty Services, Inc. dba Priority One Mortgage (“Priority One”).

In April 2018, Cornell told Rizvi that he could obtain a purchase and construction loan to finish the construction of the home and that there would be at least one year of reserve funds (later modified to six months) to pay for the construction and monthly interest payments while the construction was being completed. V. Cuevas also promised Rizvi that he would refer $1.2 million of the purchase price for at least 5 years. Rizvi decided to purchase the Cristina Property and engaged Cornell and Priority One to assist as the mortgage broker. Cornell advised Rizvi that he would help fill out the salient information in the Uniform Residential Loan Application (“Loan Application”) and told Rizvi to ignore the asset, liability or income sections on same. The Loan Application Cornell initially sent to Rizvi was partial only and indicated that the loan was for the purchase of a primary residence. Cornell also advised Rizvi that Plaintiffs should take title to the Cristina Property under Eagle Ridge. Plaintiffs signed the purchase agreement on April 19, 2018.

On May 9, 2018, Cornell provided Rizvi with a completed Loan Application which modified the purpose of the property from “primary residence” to “investment.” On June 18, 2018, Plaintiffs executed a promissory note with Diligent Lending, a hard money lender, for the principal sum of $2,699,000.00. Per the terms of the promissory note, Plaintiffs were to make interest only payments of $25,033.15 per month, with an interest rate of 10.99%, and a 28.99% default interest rate (“Note”). A deed of trust in the principal amount of the Note was recorded. On May 28, 2018, Cornell sent a short form deed of trust to Rizvi and told him to sign and return it. A deed of trust in the amount of $940,000.00 was then recorded in second position in favor of Cuevas and Jesus Anthony Rubio (identified therein as “Tony Rubio;” hereinafter, “Rubio”) and references a note, even though no such note exists; although Plaintiffs executed a note for $2,040,000.00 in favor of V. Cuevas and Rubio, Cornell and V. Cuevas told Plaintiffs that this $2,040,000.00 reflected the amount owed to Rubio by V. Cuevas previously secured by the Cristina Property in first position as well as V. Cuevas’s equity in the Cristina Property that he was willing to forego for at least five years. The $2,040,000.00 note is not reflected in the escrow instructions or closing statement but indicates that it is secured by a deed of trust on the Cristina Property. Cornell, Priority One and Diligent Lending purposefully and fraudulently characterized the Note as a business purpose loan.

Shortly after escrow closed, on August 23, 2018, Rizvi received a notice from Diligent Lending demanding that he start making monthly interest payments of $25,033.15 on the Note. Rizvi asked Diligent Lending about the 6 months interest reserve that was supposedly built into the loan but was told by Cornell and Diligent Lending that there were no reserve funds. Plaintiffs had to refinance the Eagle Ridge Residence and get equity out to save the Cristina Property. Now that Plaintiffs had to use the equity in the Eagle Ridge Residence to maintain the Note payments, though, Plaintiffs did not sufficient funds for a down payment to refinance. Plaintiffs have since defaulted on their obligations under the Note.

On July 18, 2019, Plaintiffs filed a complaint, asserting causes of action against Diligent Lending, Priority One, Cornell and Does 1-100 for:

On December 6, 2019, the court granted Diligent Lending’s petition to compel arbitration as to Plaintiffs and ordered the matter stayed as to Plaintiffs and Diligent Lending only.

On January 24, 20204, Vincente Cuevas (“V. Cuevas”) filed a cross-complaint, asserting causes of action against Rizvi, Diligent Lending, Priority One and Moes 1-50 for:

On January 29, 2020, Plaintiffs dismissed Diligent Lending, without prejudice. On March 11, 2020, V. Cuevas dismissed Rizvi, without prejudice.

On June 8, 2020, Case Nos. 19PSCV00643 and 19PSCV00656 were deemed related; Case No. 19PSCV00656 was designated as the lead case.

On October 20, 2020, Priority One and Cornell filed a First Amended Cross-complaint, asserting causes of action against Andrew A. Dioli (“Dioli”), FMC Lending Inc. (“FMC”), Bayshore Advisors, Inc. (“Bayshore”), Rushmyfile.Inc. (“Rushmyfile”), V. Cuevas, Vince Cuevas, Shahid Iqbal and Roes 1-10 for:

On December 29, 2020, Dioli, FMC, Bayshore and Rushmyfile filed a cross-complaint, asserting causes of action against Priority One, Cornell and Moes 1-10 for:

On June 7, 2021, the court ordered Priority One and Diligent Lending to be dismissed from V. Cuevas’ cross-complaint.

In the summer of 2017, V. Cuevas, Maria G. Cuevas (“M. Cuevas”) and New Home Design & Construction (“NHDC”) approached Rubio about investing in a construction and development project at the Cristina Property. V. Cuevas and Rubio agreed that Rubio would receive a 30% interest in the project and an additional 5% of the profits when the Cristina Property was sold and the project was complete. V. Cuevas represented to Rubio that there was only one loan on the Cristina Property, a $1,000,000.00 seller carry back, and that the Cristina Property had been appraised to be work $4.9 million on completion. Rubio subsequently loaned monies to V. Cuevas totaling $800,000.00 between July 25-December 11, 2017, which was documented by a promissory note and deed of trust. In April, 2018 Rubio learned that the Cristina Property was in foreclosure and at risk of being sold. V. Cuevas assured Rubio that his investment was safe and that a new investor would pay off the existing financing and provided security for Rubio’s investment. V. Cuevas told Rubio that he would need to surrender his lien on the Cristina Property in exchange for a larger lien so that additional construction lending could be obtained by Rizvi, whom V. Cuevas represented was his “new partner” on the project. V. Cuevas told Rubio that Rizvi’s involvement would allow Rubio to make more money and that Rizvi would pay Rubio an additional $125,000.00 in cash within two weeks of closing. Rubio’s security interest in the Cristina Property was subsequently released on order to facilitate the Rizvi note and deed of trust. Rubio did not receive the $125,000.00 promised after escrow closed. Rubio has unsuccessfully demanded a return of the loan monies. On June 11, 2019, a new lender recorded and served a notice of default and intent to sell the Cristina Property.

On July 23, 2019, Rubio filed a complaint, asserting causes of action against V. Cuevas, Maria G. Cuevas, Home Design & Construction and Does 1-10 for:

On November 13, 2019, V. Cuevas filed a cross-complaint, asserting causes of action against Rizvi, Diligent Lending, Priority One and Moes 1-50 for:

On June 8, 2020, Case Nos. 19PSCV00643 and 19PSCV00656 were deemed related; Case No. 19PSCV00656 was designated as the lead case.

On October 26, 2020, the court sustained Priority One’s demurrer to V. Cuevas’ cross-complaint, without leave to amend. On June 7, 2021, the court ordered Rizvi and Diligent Lending dismissed without prejudice from V. Cuevas’ cross-complaint.

On October 12, 2021, Plaintiff dismissed NHDS, without prejudice. On October 14, 2021, “Final Judgment” was entered.

The Law Offices of Edward T. Weber (“Firm”) seeks to be relieved as counsel of record for Bayshore, FMC and Rushmyfile (“Clients”).

The court has discretion to allow an attorney to withdraw, and such a motion should be granted provided that there is no prejudice to the client and it does not disrupt the orderly process of justice. (See Ramirez v. Sturdevant (1994) 21 Cal.App.4th 904, 915; People v. Prince (1968) 268 Cal.App.2d 398.)

California Rule of Court (“CRC”) Rule 3.1362 requires (1) a notice of motion and motion directed to the client (made on the Notice of Motion and Motion to Be Relieved as Counsel—Civil form (MC-051)); (2) a declaration stating in general terms and without compromising the confidentiality of the attorney-client relationship why a motion under Code of Civil Procedure § 284(2) is brought instead of filing a consent under section 284(1) (made on the Declaration in Support of Attorney's Motion to Be Relieved as Counsel—Civil form (MC-052)); (3) service of the notice of motion and motion, the declaration, and the proposed order on the client and on all other parties who have appeared in the case; and (4) a proposed order relieving counsel (prepared on the Order Granting Attorney's Motion to Be Relieved as Counsel—Civil form (MC-053)). The court may delay the effective date of the order relieving counsel until proof of service of a copy of the signed order on the client has been filed with the court.

Attorney Edward T. Weber (“Weber”) represents, in relevant part, that Clients have ceased operations and that he has no further authority to defend or represent them in this action. Weber also represents that Substitutions of Counsel cannot be obtained as there is no new attorney available to take over the case.

Weber states that he has served Clients by mail at Clients’ last known address(s) with copies of the respective motion papers served with his declaration and that he has confirmed within the past 30 days that the address(es) are current, via communications by emails to Clients multiple times.

The court determines that the requirements of Rules of Court Rule 3.1362 enumerated above have been sufficiently met.

Accordingly, the motions are granted, effective upon the filing of the respective proofs of service showing service of the respective signed orders upon the respective Clients at the respective Clients’ last known address(es).

The court will set an Order to Show Cause Re: Representation of Corporations for January 16, 2024 at 9:00 a.m.

[1] Motions #1-#3 were filed on November 13, 2023 (mail-served November 10, 2023); Motions #1 and #2 were originally set for hearing on December 7, 2023 and Motion #3 was originally set for hearing on December 12, 2023. On November 13, 2023, the court rescheduled the hearing on Motion #3 to December 7, 2023; moving counsel was instructed to give notice. On November 21, 2023, a “Notice Re: Continuance of Hearing and Order” was filed, wherein the December 7, 2023 scheduled hearing on Motions #1-#3 was reset to December 13, 2023; notice was given to counsel. On December 1, 2023, moving counsel filed (and served the Clients and V. Cuevas via mail and all other parties via email) a “Notice of Continuance of Hearings,” advising therein of the new December 13, 2023 hearing date.