Judge: Peter A. Hernandez, Case: 19STCV07167, Date: 2025-02-20 Tentative Ruling
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Case Number: 19STCV07167 Hearing Date: February 20, 2025 Dept: 34
I.
Background
This case arises out of the alleged
wrongful foreclosure of property. In 2010, Plaintiff Benzeen, Inc. (“Plaintiff”)
acquired real property located 3243 Iredell Lane, in Studio City, California (“Subject
Property”) that was subject to Defendant JP Morgan Chase Bank, National
Association’s (“Chase”) deed of trust, which was received by Chase through
receivership by the FDIC from the original lender Washington Mutual Bank, FA.
(FAC, ¶¶ 1, 11-12.) In November 2017, Plaintiff filed a Chapter 11 bankruptcy
case and listed a fee simple interest in the Subject Property subject to the
debt secured by the deed of trust which at the time, was in the amount of
$3,238,344.00 (Id. at ¶ 13.)
Plaintiff alleges that it offered to pay all amounts due to Chase through
Bankruptcy. (Id. at ¶ 14.)
In February
2018, Chase, by its counsel, Defendant McCarthy & Holthus, LLP (“McCarthy”
and collectively with Chase as “Defendants”), filed a motion seeking relief (1)
from the automatic stay under Bankruptcy Code section 362(d)(1), asserting that
the case was filed in bad faith, and (2) under Bankruptcy Code section
362(d)(4), alleging that Plaintiff’s bankruptcy petition was part of a scheme
to delay, hinder, or defraud it, involving the transfer of all or part
ownership of the property without consent or court approval. (Id. at ¶ 15.) On March 29, 2018, the
Bankruptcy Court granted the relief motion and on April 11, 2018, Plaintiff
filed an appeal from the relief order. (Id.
at ¶ 18.)
On May 31,
2018, Plaintiff’s appellate counsel, Michael Sment, called McCarthy regarding
the bankruptcy and spoke with an assistant to Chase’s counsel, Merdaud Jafania.
The assistant, Rozanne Castillo, told Mr. Sment that the bank had set a
foreclosure date, but they would wait for the appeal to be concluded before
proceeding with it. (Id. at ¶¶17-20.)
Plaintiff alleges that based on this representation, Plaintiff took no action
to obtain a stay order from the Bankruptcy Appellate Panel (“BAP”) to prevent a
trustee’s sale of the property. (Id.
at ¶ 21.)
On July 19,
2018, without further notice to Plaintiff, Defendants conducted a trustee’s
sale of the Subject Property and Chase purchased it at the trustee’s sale for
the full amount of the outstanding balance secured by the Subject Property, in
the amount of $4,058,016.28. (Id. at
¶¶ 22-23.)
On December
18, 2018, the BAP found the Bankruptcy Court’s relief order concerning the stay
MOOT, in part, because the foreclosure had been completed. (Opinion at 3.) It
also remanded the case back to the Bankruptcy Court concerning Chase’s
contention that the bankruptcy petition was a “scheme to delay, hinder or
defraud creditors.” (Id., at p. 4.) The Bankruptcy Court then found that
the Petition was MOOT, but if it was not MOOT, the Bankruptcy Court noted that
Plaintiff and its principal “blatant[ly] and fraudulent[ly]” created a “scheme
to avoid foreclosure.” (Ibid.)
Plaintiff
alleges that Chase intentionally and negligently misrepresented that it would
not foreclose and had no intention to honor the assistant’s statement. (Id.
¶¶ 28-33, 35-39.) Plaintiff also alleges that Chase wrongfully foreclosed based
upon the assistant’s alleged statements. (Id. at ¶¶ 41-45.)
On February 28, 2019, Plaintiff
commenced this action and on March 18, 2019, filed its First Amended Complaint
(“FAC”) against Defendants for:
(1) Intentional Misrepresentation;
(2) Negligent Misrepresentation;
(3) Wrongful Foreclosure;
(4) Vacate and Set Aside Foreclosure Sale; and,
(5) Cancellation of Trustee’s Deed upon Sale.
On April
18, 2019, the court stayed the case in its entirety due to the filing of a
notice of removal.
On
September 9, 2019, Plaintiff filed an amendment to the FAC, substituting DOE 1
with The Estate of Mara Pecel.[1]
On December
12, 2019, the court overruled McCarthy’s and Chase’s demurrers to the FAC.
On December
22, 2020, Chase filed the instant motion for summary judgment, or in the
alternative, summary adjudication.
On December
23, 2020, McCarthy filed a joinder to the motion for summary judgment. On July
14, 2021, the court granted Chase’s Motion for Summary Judgment. It concluded
“the litigation privilege bars [Plaintiff’s] claims against Chase as a matter
of law.”
Plaintiff appealed the court’s
ruling and on April 16, 2024, the Appellate Court issued its opinion. It
affirmed the court’s order regarding its finding that certain causes of action
could not proceed because they were barred by the litigation privilege, but it
remanded the case back to the trial court to consider Chase’s alternative
grounds concerning the equitable claims. Those specific, separate grounds
include (1) unclean hands, (2) statute of frauds, and (3) Plaintiff cannot
establish one or more elements of the fourth (Vacate and Set Aside Foreclosure Sale)
and fifth (Cancellation of Trustee’s Deed upon Sale) causes of action. (See
Notice of Motion and Motion for Summary Judgment or Adjudication on Plaintiff’s
First Amended Complaint (“Notice”).) The court now considers them below:
II.
Motion for Summary Judgment/Adjudication
A.
Remaining Issues
In its December 22, 2020 Notice, Chase raised the following issues:
(1)
Plaintiff’s claims fail because it
admitted Chase did not agree in writing that it would postpone the foreclosure,
which the statute of frauds requires and Plaintiff did not provide any
consideration for the promise.
(2)
Defendant Chase is not liable for its
statement under Civil Code section 47.
(3)
Plaintiff’s unclean hands prevent it
from recovering on claims relating to its fraudulent bankruptcy filings.
(4)
Plaintiff’s fraud claims fail because
Chase allegedly misrepresented a non-actionable future fact. And the
foreclosure did not damage Plaintiff because the bankruptcy court affirmed its
order allowing Chase’s foreclosure.
(5)
Plaintiff’s wrongful foreclosure and
document cancellation claims also fail because it cannot show: (1) a wrongful
sale, (2) prejudice to it, and (3) that it can tender the amount due on Chase’s
loan, so it cannot obtain any relief.
The Appellate Court’s mandate seeks the court to review the summary
adjudication issues concerning the equitable claims. As a result, the remaining
issues for this court to address concerns items nos. (1), (3) and (5), above.
B.
Request for Judicial Notice
A court may take judicial notice of
“records of (1) any court of this state or (2) any court of record of the
United States or of any state of the United States.” (Evid. Code, § 452, subd.
(d).) A court may also take judicial notice of “official acts of the
legislative, executive, and judicial departments of the United States and of
any state of the United States.” (Id.
at § 452, subd. (c).) Judicial notice may be taken of “facts and propositions
that are not reasonably subject to dispute and are capable of immediate and
accurate determination by resort to sources of reasonably indisputable
accuracy.” (Id. at § 452, subd. (h).)
“Judicial notice is properly taken
of the existence of a factual finding in another proceeding, but not of the
truth of that finding.” (Steed v. Department of Consumer Affairs (2012)
204 Cal.App.4th 112, 120.) “ ‘A court may take judicial notice of [another]
court's action, but may not use it to prove the truth of the facts found and
recited. [Citations.]’” (Id. at p. 120, internal citations omitted;
italics in original.) “Judicial notice of findings of fact does not mean that
those findings of fact are true; it means only that those findings of fact were
made.” (Id. at pp. 120-121.)
1.
Defendant Chase’s Request
Chase requests that the court take
judicial notice of the following:
·
Request No. 1: Deed of Trust,
dated August 27, 2005 and recorded as document 05 2172047 on September 9, 2005
with the Los Angeles County Registrar-Recorder’s Office (Exhibit 2 to
Compendium of Evidence);
·
Request No. 2: Purchase and Assumption Agreement,
dated September 25, 2008, found on the FDIC’s website at
https://www.fdic.gov/about/freedom/washington_mutual_p_and_a.pdf (Exhibit 3 to
Compendium of Evidence);
·
Request No. 3: Corporate
Assignment of Deed of Trust, dated January 31, 2014 and recorded as document
2014-0178227 on February 20, 2014 with the Los Angeles County
Registrar-Recorder’s Office (Exhibit 4 to Compendium of Evidence);
·
Request No. 4: Notice of
Default, dated March 9, 2012 and recorded as document 20120379853 on March 12,
2012 with the Los Angeles County Registrar-Recorder’s Office (Exhibit 5 to
Compendium of Evidence);
·
Request No. 5: Notice of
Trustee’s Sale, dated September 20, 2017 and recorded as document 20171087963
on September 22, 2017 with the Los Angeles County Registrar-Recorder’s Office
(Exhibit 6 to Compendium of Evidence);
·
Request No. 6: Chase’s proof of claim, Claim 2-1,
filed in Plaintiff’s bankruptcy case, United States Bankruptcy Court for the
Central District of California, case number 1:17-bk-13113-MT (Exhibit 7 to
Compendium of Evidence);
·
Request No. 7: Trustee’s Deed Upon Sale, dated July
25, 2018 and recorded as document 20180762913 on July 31, 2018 with the Los
Angeles County Registrar-Recorder’s Office (Exhibit 8 to Compendium of
Evidence);
·
Request No. 8: Second Deed of Trust, dated November
30, 2006 and recorded as document 20062729266 on December 8, 2006 with the Los
Angeles County Registrar-Recorder’s Office (Exhibit 9 to Compendium of
Evidence);
·
Request No. 9: Trustee’s Deed
Upon Sale, dated July 9, 2010 and recorded as document 20100980240 on July 19,
2010 with the Los Angeles County Registrar-Recorder’s Office (Exhibit 10 to
Compendium of Evidence);
·
Request No. 10: Trustee’s Deed Upon Sale, dated
November 19, 2010 and recorded as document 20101742772 on November 30, 2010
with the Los Angeles County Registrar-Recorder’s Office (Exhibit 11 to
Compendium of Evidence);
·
Request No. 11: Chase’s Notice of Motion and Motion
for Relief from the Automatic Stay, filed in [Plaintiff’s] bankruptcy case as
document 40, United States Bankruptcy Court for the Central District of
California, case number 1:17-bk-13113-MT (Exhibit 12 to Compendium of
Evidence);
·
Request No. 12: March 21, 2018 hearing transcript on
Chase’s Motion for Relief from the Automatic Stay in [Plaintiff’s] bankruptcy
case, filed in [Plaintiff’s] bankruptcy case as document 73, United States
Bankruptcy Court for the Central District of California, case number
1:17-bk-13113-MT, and included in the record before the Ninth Circuit
Bankruptcy Appellate Panel, in case number 18- 1097, document 18-10 (Exhibit 13
to Compendium of Evidence);
·
Request No. 13: March 29, 2018 Order granting Chase’s
Motion for Relief from the Automatic Stay, filed in [Plaintiff’s] bankruptcy
case as document 50, United States Bankruptcy Court for the Central District of
California, case number 1:17-bk-13113-MT (Exhibit 14 to Compendium of
Evidence);
·
Request No. 14: Ninth Circuit Bankruptcy Appellate
Panel’s December 18, 2018 memorandum opinion on the bankruptcy court’s order
granting Chase’s Motion for Relief from the Automatic Stay in [Plaintiff’s]
bankruptcy case, filed in [Plaintiff’s] bankruptcy case appeal before the Ninth
Circuit Bankruptcy Appellate Panel, in case number 18-1097, from the United
States Bankruptcy Court for the Central District of California, case number
1:17-bk-13113-MT (Exhibit 15 to Compendium of Evidence);
·
Request No. 15: Ninth Circuit’s order from [Plaintiff’s]
appeal of the Bankruptcy Appellate Panel’s December 18, 2018 memorandum opinion
filed in [Plaintiff’s] bankruptcy case appeal before the Ninth Circuit
Bankruptcy Appellate Panel, in case number 18-1097, from the United States
Bankruptcy Court for the Central District of California, case number
1:17-bk-13113-MT (Exhibit 16 to Compendium of Evidence);
·
Request No. 16: Chase’s
Supplemental Memorandum of Points and Authorities in Support of Motion for
Relief from the Automatic Stay, filed in [Plaintiff’s] bankruptcy case as
document 121, United States Bankruptcy Court for the Central District of
California, case number 1:17-bk-13113-MT (Exhibit 17 to Compendium of
Evidence);
·
Request No. 17: Chase’s Request
for Judicial Notice in Support of Supplemental Memorandum of Points and
Authorities in Support of Motion for Relief from the Automatic Stay, filed in [Plaintiff’s]
bankruptcy case as document 122, United States Bankruptcy Court for the Central
District of California, case number 1:17-bk-13113-MT (Exhibit 18 to Compendium
of Evidence);
·
Request No. 18: August 2, 2019
Order denying Chase’s Motion for Relief from the Automatic Stay, filed in [Plaintiff’s]
bankruptcy case as document 126, United States Bankruptcy Court for the Central
District of California, case number 1:17-bk-13113-MT (Exhibit 19 to Compendium
of Evidence);
·
Request No. 19: August 2, 2019
memorandum making findings and explaining why it denied Chase’s Motion for
Relief from the Automatic Stay, filed in [Plaintiff’s] bankruptcy case as
document 127, United States Bankruptcy Court for the Central District of
California, case number 1:17-bk13113-MT (Exhibit 20 to Compendium of Evidence);
·
Request No. 20: August 2, 2019
Order dismissing [Plaintiff’s] bankruptcy case, filed in [Plaintiff’s] bankruptcy
case as document 128, United States Bankruptcy Court for the Central District
of California, case number 1:17-bk-13113-MT (Exhibit 21 to Compendium of
Evidence);
·
Request No. 21: Bankruptcy court
docket, United States Bankruptcy Court for the Central District of California,
case number 1:17-bk-13113-MT (Exhibit 22 to Compendium of Evidence);
·
Request No. 22: Oral Argument
video, from the Bankruptcy Appellate Panel for the Ninth Circuit in the appear
from the United States Bankruptcy Court for the Central District of California,
case number 1:17-bk-13113-MT. It can be located at
https://www.ca9.uscourts.gov/media/view_video.php?pk_vid=0000014692.
The court GRANTS Chase’s request
for judicial notice as to Requests 1-5, 7-10. (Evid. Code, § 452, subd. (c).) Chase’s
request for judicial notice is GRANTED as to the existence of the documents and
of any factual findings made within Requests 6, 11-22, but not as the truth of
the factual findings within. (Evid. Code § 452, subd. (d).)
2.
Plaintiff’s Request
Plaintiff requests that the court take
judicial notice of:
·
Exhibit C: Disclosure Statement filed by
Plaintiff in Bankruptcy Case 17-bk-13113-MT;
·
Exhibit D: Chapter 11 Plan Dated April 15, 2018
filed by Plaintiff in Bankruptcy Case 17-bk-13113-MT; and
·
Exhibit H: Appellant's Statement of The Issues to
Be Presented On Appeal filed in connection with Plaintiff’s Appeal to the BAP.
Plaintiff’s request for judicial
notice is GRANTED as to the existence of Exhibits C, D, and H, but not to as
the truth of the factual findings within. (Evid. Code, § 452, subd. (d).)
C.
Evidentiary Objections
“All written objections to evidence
must be served and filed separately from the other papers in support of or in
opposition to the motion. Objections to specific evidence must be referenced by
the objection number in the right column of a separate statement in opposition
or reply to a motion, but the objections must not be restated or reargued in
the separate statement. Each written objection must be numbered consecutively
and must:
(1) Identify the name of the document in which
the specific material objected to is located;
(2) State the exhibit, title, page, and line number of the material
objected to;
(3) Quote or set forth the objectionable statement or material; and
(4) State the grounds for each objection to
that statement or material.”
(Cal. Rules of Court, rule 3.1354, subd. (b.)
1.
Plaintiff’s Evidentiary Objections
Plaintiff submits 15 evidentiary
objections to Plaintiff’s evidence and statement in support of Chase’s motion
for summary judgment, or adjudication. Plaintiff’s evidentiary objections are
not consecutively numbered. (Cal. Rules of Court, rule 3.1354, subd.
(b.) As a result, the court identified the objection by the number listed in the
undisputed fact box:
·
SUSTAINED as to Nos. 10, 11, 12, 13, 16, 22, 23 and
27; and,
·
OVERRULED as to
1, 20, 25, 30, 32, 37 and 38.
2.
Chase’s Evidentiary Objections
Defendant Chase submits 17 evidentiary
objections to Plaintiff’s evidence and statement in opposition to Chase’s
motion for summary judgment, or adjudication. The court ruling on these
objections are as follows:
·
SUSTAINED as to Nos. 1-2, 4-17; and,
· OVERRULED as to No.
1.
D.
Undisputed Facts
In 2005, Washington Mutual Bank gave
Ms. Pecel a $3,238,344.00 loan, evidenced by a Note and secured by a first
position Deed of Trust recorded against the Property. (Plaintiff’s Statement of Undisputed Facts
(“PSUF” 1.) Chase acquired the Note and
Deed of Trust from the FDIC in 2009. (PSUF,
Summary Adjudication Issue 3.) Equity
Funding Group recorded a second deed of trust against the Property in 2006. (PSUF
3.)
Plaintiff purchased the Property at
the foreclosure sale on the Equity Funding Group’s second deed of trust. (Id. at 4.) Roman Preys is Plaintiff’s principal. (Id.
at 5.) In March 2012, Chase’s
foreclosure trustee started the non-judicial foreclosure process by recording a
Notice of Default on the Property. (Id.
at 6.) Plaintiff admitted it did not
make any payments on Chase’s loan after it obtained title. (Id. at 26.) The foreclosure trustee, in September 2017,
recorded a Notice of Trustee’s Sale on the Property. (Id. at 7.) Chase hired McCarthy to represent it in Plaintiff’s
November 2017 bankruptcy case. (Id.
at 8) On March 29, 2018, the bankruptcy
court granted Chase’s motion under both Title 11, United States Code, section 362(d)(1)
(creditor not adequately protected) and (d)(4) (scheme to hinder, delay, or
defraud creditor). (Id. at
14.) The trustee held the foreclosure
sale on July 19, 2018, and Chase purchased the property for a credit bid of
$4,058,016.29. (Id. at 15.)
Plaintiff appealed the March 29, 2018
Order to the Bankruptcy Appellate Panel (BAP). (Id. at 16.) The BAP, in its December 18, 2018 opinion,
found the bankruptcy court’s ruling that the creditor was not adequately
protected was moot due to Chase’s foreclosure sale. (Id. at 17.) The BAP also found the bankruptcy court’s ruling
that Plaintiff delayed, hindered or defrauded lacked sufficient findings to
support its order and remanded the case to the bankruptcy court so it could
make those findings. (Id. at 18.) The Ninth Circuit denied Plaintiff’s appeal of
the BAP decision. (Id. at
19.) The bankruptcy court also denied
Chase’s motion for relief because it was moot. (Id. at 21.)
Plaintiff claims that it could have
avoided the July 2018 foreclosure sale by paying Chase’s loan through its
Chapter 11 Bankruptcy plan. (Id.
at 28.) Plaintiff admitted it had only
$4,775.00 in its bank account as of February 28, 2018 and would only have
$500,000.00 by August 15, 2018. (Id.
at 29.) Plaintiff admitted the McCarthy
administrative assistant made an oral statement about the foreclosure on a
telephone call to Mr. Sment, Plaintiff’s bankruptcy appellate counsel. (Id. at 33.) During the bankruptcy appeal, the McCarthy
assistant said Chase set a foreclosure sale date but it would wait for the
appeal to conclude before proceeding. (Id.
at 34.) Plaintiff admitted it is unable
to locate a written document showing Chase agreed to delay the foreclosure
sale. (Id. at 36.)
On July 18, 2018, Plaintiff asked
McCarthy “what is happening with Chase’s trustee’s sale of the property which
is apparently set for/continued to tomorrow [July 19, 2018].” (Id. at 39.) McCarthy informed Plaintiff that the
foreclosure sale was “still scheduled for tomorrow (July 19, 2018) at 9:00
a.m.” (Id. at 40.)
E.
Legal Standard
The function of a motion for
summary judgment or adjudication is to allow a determination as to whether an
opposing party cannot show evidentiary support for a pleading or claim and to
enable an order of summary dismissal without the need for trial. (Aguilar
v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) Code of Civil Procedure Section 437c,
subdivision (c) “requires the trial judge to grant summary judgment if all the
evidence submitted, and ‘all inferences reasonably deducible from the evidence’
and uncontradicted by other inferences or evidence, show that there is no
triable issue as to any material fact and that the moving party is entitled to
judgment as a matter of law.” (Adler v. Manor Healthcare Corp. (1992) 7
Cal.App.4th 1110, 1119.)
The materiality of a disputed fact
is measured by the pleadings, which set the boundaries of the issues to be
resolved at summary judgment. (Conroy v. Regents of University of California
(2009) 45 Cal.4th 1244, 1250.) “Thus, a ‘defendant moving for summary judgment
need address only the issues raised by the complaint; the plaintiff cannot
bring up new, unpleaded issues in his or her opposing papers.’” (Laabs v.
City of Victorville (2008) 163 Cal.App.4th 1242, 1253, as modified on
denial of reh’g (July 7, 2008), quoting Government Employees Ins. Co. v.
Superior Court (2000) 79 Cal.App.4th 95, 98-99, fn. 4.)
“ ‘To create a triable issue of
material fact, the opposition evidence must be directed to issues raised by the
pleadings. [Citation.] If the opposing party's evidence would show some factual
assertion, legal theory, defense or claim not yet pleaded, that party should
seek leave to amend the pleadings before the hearing on the summary judgment
motion. [Citations.]’” (Id. at p. 1253, quoting Distefano v. Forester
(2001) 85 Cal.App.4th 1249, 1264-1265.)
As to each claim as framed by the
complaint, the defendant moving for summary judgment must satisfy its initial
burden of proof by presenting facts to negate an essential element, or to
establish a defense. (Code Civ. Proc., §
437c, subd. (p)(2); Scalf v. D. B. Log
Homes, Inc. (2005) 128 Cal.App.4th 1510, 1520 (Scalf).)
More specifically, “[o]n a motion
for summary judgment, the initial burden is always on the moving party to make
a prima facie showing that there are no triable issues of material fact.” (Scalf, supra, 128 Cal.App.4th at p. 1519.) 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).) The
moving party has the burden of negating only those theories of liability as
alleged in the complaint and are not obligated to refute liability on some
theoretical possibility not included in the pleadings, simply because such a
claim is raised in a responding party’s declaration in opposition to a motion
for summary judgment. (Conroy, supra, 45 Cal.4th at p. 1254, internal
citations omitted.)
“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).) “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.)
“When deciding whether to grant
summary judgment, the court must consider all of the evidence set forth in the
papers (except evidence to which the court has sustained an objection), as well
as all reasonable inferences that may be drawn from that evidence, in the light
most favorable to the party opposing summary judgment.” (Id. at p. 467;
Code Civ. Proc., § 437c, subd. (c).)
D. Discussion
1.
Defendant Chase
The court will address the remaining
issues set forth Chase’s summary judgment notice:
·
Plaintiff’s claims fail because it admitted Chase
did not agree in writing that it would postpone the foreclosure, which the
statute of frauds requires and Plaintiff did not provide any consideration for
the promise.
·
Plaintiff unclean hands prevent it from recovering
on claims relating to its fraudulent bankruptcy filings.
·
Plaintiff wrongful foreclosure and document
cancellation claims also fail because Plaintiff cannot show: (1) a wrongful
sale, (2) prejudice to it, and (3) that it can tender the amount due on Chase’s
loan, so it cannot obtain any relief.
(Notice, at p. 2.)
In the alternative, Chase moves “for an
order adjudicating [Plaintiff’s] causes of action for: [1] Vacate and Set Aside
Foreclosure Sale [Cause of Action No. 4]; and [2] Cancellation of Trustee’s
Deed Upon Sale [Cause of Action No. 5].” (Ibid.) Chase argues that Plaintiff
cannot show: (1) a wrongful sale, (2) prejudice to it, and (3) that it can
tender the amount due on Chase’s loan, so it cannot obtain any relief.” (Id.
at pp. 2-3.)
2.
Defendant McCarthy
Defendant McCarthy brings a “joinder in
the motion for summary judgment filed by Defendant JPMorgan Chase Bank,
National Association.” (Notice of Joinder, p. 1.) Defendant McCarthy brings
this joinder “on the grounds that the undisputed material facts show that
McCarthy is entitled to judgment as a matter of law.” (Ibid.) McCarthy
“fully adopts and incorporates Chase’s points and authorities as though fully
set forth herein.” (Joinder MPA, p. 1:24-25.) McCarthy files an additional
memorandum of points and authorities separate from Chase, which is “intended to
supplement, rather than replace, [its] joinder in the motion and memorandum of
points and authorities filed by Defendant . . . Chase.” (Id. at p.
1:22-25.)
The court grants Defendant Chase’s
motion for summary judgment as explained above. Therefore, the Court GRANTS
Defendant McCarthy’s joinder in Chase’s motion for summary judgment.
3.
Unclean Hands
Defendants contend that Plaintiff’s
“unclean hands” bars its claims. (Motion at 16.) This affirmative defense applies to both
legal and equitable claims. (Camp v. Jefer, Mangels, Butler & Marmaro
(1995) 35 Cal.App.4th 620, 638; as modified on denial of rehearing.) In support
of its contention, Chase relies exclusively on comments made by the Bankruptcy
Court. (PUSF 11-13.) However, it appears the court never held a hearing to
making factual findings concerning Plaintiff’s unclean hand. Even if it had,
this court must independently make such findings and without any evidence
concerning Plaintiff’s alleged misconduct, the Bankruptcy Court’s comments
regarding Plaintiff’s conduct are hearsay and irrelevant. (Steed,
supra, 204 Cal.App.4th at 120.)
Summary Adjudication as to Issue
No. 3 is DENIED.
4.
Statute of Frauds
Next, Chase contends that to the extent
the statement made by Ms. Castillo indicates that the foreclosure would not
take place until after the appeal of the Bankruptcy Court’s decision was
resolved was an oral agreement, the statute of frauds required such an
agreement to be in writing and include new consideration. (Civ. Code §§ 1624,
1698, 2922; PSUF 33-34.) It is
undisputed that this oral statement was made to Plaintiff’s counsel. (PSUF 33-34.)
Chase has met its burden to produce evidence concerning the inability to
conform with the Statute of Frauds so the burden now falls on Plaintiff.
At the time the statement was made, the
Subject Property was in the process of being foreclosed. Under section 1698, subsection (b), “[a]
contract in writing may be modified by an oral agreement to the extent that the
oral agreement is executed by the parties.” As such, the oral agreement to
postpone the foreclosure would either need to be in writing or be
executed. Plaintiff does not provide any
admissible evidence of either a subsequent written agreement postponing the
foreclosure or that the oral agreement was executed by the parties. Moreover,
Plaintiff fails to provide any evidence to suggest that any of the provisions
in section 1698, subsection (d) are applicable.
Summary adjudication as to Issue No. 1
is GRANTED.
5.
Causes of Action Nos. 4 and 5
The elements for both the fourth cause
of action to vacate and set aside foreclosure sale and fifth cause of
action for cancellation of trustee’s deed upon sale are: (1) An illegal,
fraudulent, or willfully oppressive sale of real property pursuant to a power
of sale in a mortgage or deed of trust; (2) Plaintiff was prejudiced or harmed;
(3) Plaintiff tendered the amount off the secured indebtedness or was excused
from tendering. (Multani v. Witkin & Neal (2013) 215 Cal.App.4th
1428, 1449; Chavez v. Indymac Mortgage Services (2013) 219 Cal.App.4th 1052,
1062.)
Chase submits the following
evidence:
In March 2012, Chase’s foreclosure
trustee started the non-judicial foreclosure process by recording a Notice of
Default on the Property. (PSUF 6.) Plaintiff admitted it did not make any
payments on Chase’s loan after it obtained title. (Id. at 26.) The foreclosure trustee, in September 2017,
recorded a Notice of Trustee’s Sale on the Property. (Id. at 7.) Chase hired McCarthy to represent it in
Plaintiff’s November 2017 bankruptcy case.
(Id. at 8) The bankruptcy
court granted Chase’s motion under both Title 11, United States Code, section
362(d)(1) (creditor not adequately protected) and (d)(4) (scheme to hinder,
delay, or defraud creditor) on March 29, 2018. (Id. at 14.) The trustee held the foreclosure sale on July
19, 2018, and Chase purchased the property for a credit bid of
$4,058,016.29. (Id. at 15.)
Plaintiff admitted it had only
$4,775.00 in its bank account as of February 28, 2018 and would only have
$500,000.00 by August 15, 2018. (Id.
at 29.)
Chase met its burden that Plaintiff
cannot meet the elements both causes of action. Defendant does not provide any
admissible that – at a minimum – it had tendered or was excused from tendering
the amount of the indebtedness. The undisputed facts make it specifically clear
that Plaintiff did not tender the amount outstanding as the amount in its bank
account and the proposed amount it would have had a month after the foreclosure
sale were woefully inadequate and demonstrated that this element could not be
met. Moreover, the only evidence Plaintiff raises that would have been arguably
close to meeting the first prong that the sale was wrongful was that Ms.
Castillo represented the sale would not take place until the matter was
resolved. As shown above, however, there was no legal obligation created by
such a statement to warrant the subsequent sale illegal, fraudulent or
willfully oppressive.
Summary adjudication as to Issue No. 5
is GRANTED.
III.
Conclusion
Based on the foregoing, the Motion
for Summary Judgment is DENIED as to Issue No. 3. Alternatively, the Motion for
Summary Adjudication is GRANTED as to Issues Nos. 1 and 5. Previously, the
Appellate Court had affirmed the court’s ruling on Issues Nos. 2 and 4.