Judge Ralph C. Hofer, Case Number: 22AHCV00519, Date: 2023-07-21 Tentative Ruling

Plaintiffs Richard Vartanian and Elvira Vartanian allege that they are an elderly couple and that in December of 2019 defendant Lazaros Georgiadis (Lazaros), on behalf of defendant Lending Star Capital, offered plaintiffs an attractive reverse mortgage on their real property located in Altadena. At the time plaintiffs were in active Chapter 13 bankruptcy due to the fact that the subject property was under foreclosure by the second lienholder. Plaintiffs allege that Lazaros falsely represented himself as a licensed mortgage broker, sent a loan package, and, together with defendant Ivan Torres, proposed that plaintiffs could be provided with a bridge second mortgage loan until plaintiffs could obtain a reverse mortgage to pay off the second deed of trust, provided the plaintiffs would first exit Chapter 13 bankruptcy.

Plaintiffs allege that in January of 2020, Lazaros sent plaintiffs a quote for a reverse mortgage, which was a fabrication since defendants did not open any reverse mortgage case with any reverse mortgage lender, and that plaintiffs were pushed to obtain mandatory counseling and sign the mortgage loan documents, although plaintiffs informed defendants repeatedly that they had no ability to repay the proposed loan.

In February of 2020, upon receiving the escrow papers, plaintiffs learned the identity of the investors, defendants Alex Dourbetas and Christina Dourbetas, who were not licensed mortgage brokers, and it became clear to plaintiffs that the transaction was not a bridge loan at all, but a second mortgage backed by a deed of trust. Plaintiffs then noticed that the payee in the escrow documents had been left blank, and brought that to the attention of Jamie Aguilar, who emailed plaintiffs with a copy of the escrow documents with the Dourbetas defendants typed in as payee.

Plaintiffs allege that at the insistence of defendants they filed a motion for voluntary dismissal of their bankruptcy case. Over the next several months, Lazaros attempted to get plaintiff Richard Vartanian to sign reverse loan documents, falsely assuring plaintiff that his wife could be added later on, when she could not. Plaintiffs learned that Lazaros never opened a reverse mortgage application for them.

In March of 2021, defendant Alex Dourbetas called plaintiffs and left a message stating, “we have a loan on your property, and you cannot pay for some time.” Dourbetas indicated he was considering foreclosing on the property in the next couple of days and wanted to give plaintiffs the opportunity to come up with some arrangement to make the loan. Plaintiffs attempted to meet with Dourbetas to come to an arrangement, but Dourbetas refused, stating that the account had been transferred to a collection agency, and on March 2, 2022, Dourbetas issued a notice of default, with a sale date set for July 12, 2022, which date has been postponed to August 2, 2022. Plaintiffs allege causes of action for elder abuse, IIED, fraud, cancellation of deed of trust, and quiet title.

The file shows that on August 16, 2022, the court, Judge Leis presiding, signed and filed an Order to Show Cause re Preliminary Injunction and Temporary Restraining Order, and issued an order restraining defendants from proceeding with the trustee’s sale scheduled for August 17, 2022. On September 6, 2022, the court signed and filed an order granting plaintiffs’ unopposed motion for preliminary injunction.

Plaintiff Richard Vartanian filed a previous motion for preference, which was originally heard on January 6, 2023. The court issued its tentative ruling via posting on LACourt.org website. The tentative ruling had been to deny or continue the motion on the grounds plaintiff had failed to seek available relief but was requesting a trial date outside the 120-day preference period, and that plaintiff had failed to present competent evidence showing that plaintiff Richard Vartanian was over 70 years of age.

The matter was called for hearing and argued, and the court continued the matter to February 10, 2023, and set a briefing schedule for supplemental briefing prior to the continued hearing.

At the hearing on February 10, 2023, the court noted that the matter had been continued for supplemental briefing, that no supplemental briefing had been filed, and again noted that the granting of a preference order on that date would require trial to be set within 120 days, by June 10, 2023. The motion was denied without prejudice on the ground plaintiff had failed to seek available relief but was requesting a trial date outside the 120-day preference period, and that plaintiff had failed to present competent evidence showing that plaintiff Richard Vartanian was over 70 years of age. The court conducted a Case Management Conference that date and a trial was scheduled for April 29, 2024.

Since that hearing date, on February 15, 2023, the Dourbetas defendants, as cross-complainants, have filed and served a cross-complaint against their co-defendants, alleging that the cross-complainants lent money to plaintiffs at the recommendation of the cross-defendants, who represented they had done proper due diligence as to plaintiffs’ suitability as borrowers, and falsely represented they were licensed to handle this sort of investment placement. Cross-complainants also allege that at no time prior to the subject transaction did the cross-complainants know that the Vartanian plaintiffs had requested a reverse mortgage from cross-defendants. The cross-complaint alleges causes of action for declaratory relief, fraud and concealment, and negligence.

On July 3, 2023, counsel for plaintiffs filed a Supplemental Declaration, stating that, “All parties have been served and have filed an answer to the First Amended Complaint or have otherwise appeared in this case.” [Frazee Decl., para. 2]. The declaration specifies that on November 23, 2022, defendants Georgiadis, Torres, Albanez dba The Lending Capital, and Lending Star Capital filed an answer to the FAC, and on August 26, 2022, defendants Aguilar and Prime Time Escrow, Inc. were dismissed from the case. [Frazee Decl., paras. 3, 4]. This representation is consistent with the file in this matter.

On July 11, 2023, counsel for defendants and cross-complainant Alex Dourbetas filed a Request for Dismissal without prejudice of the Cross-complaint filed in this matter as to “Jaime Aguilar, an individual.” The dismissal was entered by the court as requested the same date.

“The moving party has failed to submit a declaration indicating that all essential parties have been served with process or have appeared, as required under CCP section 36 (c)(1). Moving party is ordered to file such a declaration, which reports as to each named party that they have been served with process or appeared in this action, by no later than July 7, 2023. If cross-complainant’s attorney accomplishes service quickly, and plaintiff’s attorney files a declaration regarding service, plaintiff’s attorney may file an ex parte application to advance the… hearing date to an earlier date. If cross-complainant’s attorney for cross complaint Alex Dourbetas does not accomplish service by July 7, 2023, the attorney needs to file a declaration as to why service has not been accomplished. The court at that time probably will grant the motion for preference and set a trial date.”

As noted above, counsel for plaintiffs has now filed a declaration stating that all parties to the First Amended Complaint have filed an answer or been dismissed. [Frazee Decl., paras. 2-4].

The court had been previously concerned specifically that the file did not reflect service or appearance by cross-defendant, Jaime Aguilar. This party had been dismissed as a defendant by plaintiffs, but at that time remained named as a cross-defendant. While counsel for cross-complainant has not filed a declaration as to why service has not been accomplished on this cross-defendant, counsel for cross-complainant has filed a Request for Dismissal of that party from the cross-complaint, so from the entire action, and that dismissal was entered as requested on July 11, 2023. Cross-defendant Jaime Aguilar accordingly is no longer a party to this action at all.

The motion accordingly is granted, and the tentative ruling of June 6, 2023, in the event compliance with CCP section 36 (c)(1) had been shown, will become the order of the court, as set forth more specifically below.

“(a) A party to a civil action who is over 70 years of age may petition the court for a preference, which the court shall grant if the court makes both of the following findings:

CCP §36.5 provides that the motion may be supported by an affidavit by the party’s attorney “based upon information and belief” as to the party’s “medical diagnosis and prognosis.”

“Upon the granting of such a motion for preference, the court shall set the matter for trial not more than 120 days from that date and there shall be no continuance beyond 120 days from the granting of the motion for preference except for physical disability of a party or a party’s attorney, or upon a showing of good cause stated in the record. Any continuance shall be for no more than 15 days and no more than one continuance for physical disability may be granted to any party.”

The hearing at which the preference order was originally requested to be granted was set for June 16, 2023. Calculating 120 days from the date of the original hearing is October 14, 2023, which is a Saturday, so the trial would have been required to be set on or before October 13, 2023. A trial date in September of 2023 would fall within this window. Plaintiff has accordingly now requested a trial date within the timeframe authorized by the statute. (120 days from the date of the continued hearing date of July 21, 2023 is November 18, also a Saturday, so the trial date would be required to be set on or before November 17, 2023, which makes the requested September date also within the proper time-frame).

With respect to the requirements for a preference order under CCP section 36, subdivision (a), the first requirement is that the moving party establish that the party is over 70 years of age.

Here, the moving papers submit a declaration of plaintiff Richard Vartanian, who states that he is 87 years old. [Vartanian Decl., para. 2]. Declarant attaches a true and correct copy of his Certificate of Live Birth, which shows that he was born on August 5, 1935, so that he is currently 87 years old, and over 70 years of age. [Vartanian Decl., para. 2, Ex. A]. This fact now is established by competent evidence.

With respect to whether plaintiff has a substantial interest in this action, the moving papers argue that plaintiff was personally abused by defendants in this matter. Plaintiff’s declaration indicates, “I am the only witness for Plaintiffs in many instances.” [Vartanian Decl., para. 5]. It is clear that plaintiff is one of two plaintiffs in the action, which involves transactions related to plaintiff’s home, and it would appear to be undisputed that plaintiff has a substantial interest in the action as a whole.

With respect to whether plaintiff has established that his health is such that a preference is necessary to prevent prejudicing his interest in the litigation, the statute was amended in 1990 so that advanced age alone is not enough to give rise to preference. A party must now show that “the health of the party is such that a preference is necessary to prevent prejudicing the party’s interest in the litigation.”

The legal authorities relied upon in the moving papers all appear to pre-date the amendment, so that plaintiff’s argument that the granting of this motion is mandatory upon a showing that plaintiff is over seventy years of age is outdated, and no longer a correct statement of the law.

The decision to grant or deny a preferential trial setting under CCP § 36 “rests at all times in the sound discretion of the trial court in light of the totality of the circumstances.” Salas v. Sears, Roebuck & Co. (1986) 42 Cal.3d 342, 344.

As noted above, CCP §36.5 provides that the motion may be supported by an affidavit by the party’s attorney “based upon information and belief” as to the party’s “medical diagnosis and prognosis.”

The motion is curious here, as while plaintiff previously relied on a declaration of counsel concerning plaintiff’s medical condition, plaintiff has not submitted a declaration of counsel in support of the current motion. Plaintiff instead relies on plaintiff’s own declaration, in which he states:

“In February 2022 and March of 2023, I was diagnosed with congestive heart failure and on March 10, 2023, I received a heart pacemaker implant which seems to be working but I have side effects. One of them is anemia which sucks my energy and another is excessive body fluids accumulation.”

This declaration does not fit into the statutory exception for an attorney declaration to the normal rule that declarations must contain admissible evidence, not hearsay or conclusions. See Weil & Brown, California Practice Guide, Civil Procedure Before Trial (The Rutter Group, 2023 rev.) Section 12:247.2. However, plaintiff here appears to have some basis for his own reports concerning his condition, side effects and symptoms.

The showing will be found sufficient to establish entitlement to a preference order, particularly given the congestive heart failure and the anemia which is reported to have an impact on plaintiff’s energy, which raises a possibility that plaintiff’s interest in the litigation could be prejudiced by these conditions if they affect his ability to meaningfully participate in the trial as time goes on.

In Fox v. Superior Court (2018) 21 Cal.App.5th 529, the court of appeal in response to a petition concerning a trial court order denying a motion for trial preference, reviewed the petition, opposition and supporting documentation, and issued a peremptory writ of mandate directing the respondent superior court to vacate its previous order and grant a new order setting the trial in the matter within 120 days of the court of appeal opinion. The attorney’s declaration in Fox described the elder in that case suffering, besides various cancers, asbestos related disease and severe coronary artery disease, what the attorney described as “’chemo brain’ or a fogginess in thought process that impairs her ability to focus, concentrate and effectively communicate.” Fox, at 531.

The court of appeal appeared to set a liberal standard of proof under subdivision (a), observing that in the case before it there was no genuine dispute that the 81-year-old plaintiff Ms. Fox was “very sick,” and also emphasized,

“And critically, her mental state has deteriorated to a point where she becomes confused and forgetful. All told, the evidence shows that while Ms. Fox is currently able to participate in a trial, she has good reason for concern that will not be the case for much longer as her health deteriorates.”

The court of appeal rejected an argument in that case that an elder moving for preference under subdivision (a) must show that death or incapacity might deprive the elder of the opportunity to have the case effectively tried, noting:

“Section 36, subdivision (a), says nothing about “death or incapacity.” Whether there is “substantial medical doubt of survival ... beyond six months” is, to be sure, a matter of specific concern under subdivision (d), but the relevant standard under subdivision (a) is more open-ended. The issue under subdivision (a) is not whether an elderly litigant might die before trial or become so disabled that she might as well be absent when trial is called. Provided there is evidence that the party involved is over 70, all subdivision (a) requires is a showing that that party's “health ... is such that a preference is necessary to prevent prejudicing [her] interest in the litigation.” (Italics added.) Metalclad's proposed reading of subdivision (a), requiring a showing of what amounts to likely unavailability for trial, sets the prejudice standard too high.”

Here, the evidence that the party’s health is declining in his advanced age is sufficient to meet this standard, although submitted by the party rather than the attorney or a medical professional.

As noted above, 120 days from the date of this hearing, at which the motion will be granted, falls on November 18, 2023, a Saturday, so that the trial date will be set no later than November 17, 2023.

2) Plaintiff is one of two plaintiffs in this action, which involves transactions and representations made to plaintiff concerning plaintiff’s home, so plaintiff has a substantial interest in this action as a whole; and

The motion for preference is therefore granted and the current trial date is advanced and vacated and the case is set for trial on October 16, 2023 at 9:00 a.m. (within 120 days—by November 17, 2023) with a FSC set for October 12, 2023 at 9:00 a.m. An OSC Re ADR Compliance is set for September 27, 2023 at 8:30 a.m. All other currently set dates are advanced to this date and vacated.

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