Judge: Stephen P. Pfahler, Case: 20CHCV00340, Date: 2022-07-29 Tentative Ruling

Case Number: 20CHCV00340    Hearing Date: July 29, 2022    Dept: F49

Dept. F-49

Date: 7-29-22 c/f 7-11-22

Case #20CHCV00340

Trial Date: 1-27-23 c/f 5-23-22 c/f 2-7-22

SUMMARY JUDGMENT

MOVING PARTY: Defendant, Second Chance Homes Loans, et al.

RESPONDING PARTY: Plaintiff, Henry Hardison

RELIEF REQUESTED

Motion for Summary Judgment

SUMMARY OF ACTION

Plaintiff Henry Hardison owned a single family residential home located at 21649 Arapahoe Trails, Chatsworth. On June 24, 2005, Plaintiff borrowed $130,000 from M&T Mortgage Corporation. The loan was secured by a second deed of trust on the property.

Plaintiff defaulted on the second loan in 2010. On July 18, 2012, Wilmington Trust, NA, et al., successor to M&T Mortgage Corporation filed a complaint (PC054471) on the note and deed of trust, which led to the entry of a default judgment for “judicial foreclosure and deficiency.” Plaintiff alleges “the Loan merged into the Judgment an no longer existed.” Plaintiff also maintains that the judgment remains in possession of Wilmington Trust, NA, et al., and denies any assignment of the judgment.

Notwithstanding the lack of assignment, Plaintiff alleges from 2016 to 2020, Defendant Second Chance Home Loans contacted Plaintiff regarding payment on the loan. Plaintiff subsequently made payments until discovering the default judgment in 2020. Plaintiff also alleges a series of improper assignments of the deed of trust by defendants Allied Loan Servicing Corporation and Melissa Bolling, which led to the erroneous assignment of the Deed of Trust to Second Chance Home Loans.

Meanwhile, in January 2017, Defendant Sandor Lau represented ownership of the loan, and offered to purchase the property. Lau also allegedly threatened enforcement of the note via foreclosure. In June 2018, defendants “forced” plaintiff to hire an attorney for purposes of filing a Chapter 13 bankruptcy, which led to a finding by the Bankruptcy Court entitling Defendants to $69,976.17 to be paid over 60 months. On September 2020, Defendants recorded a Notice of Default.

On June 5, and October 9, 2020, Plaintiff, in pro per, filed a complaint and first amended complaint. On December 4, 2020, the parties stipulated to the filing of a second amended complaint. Counsel for Plaintiff substituted into the case on January 29, 2021.

On January 29, 2021, Plaintiff filed a verified[1] second amended complaint for Money Had and Received, Intentional Misrepresentation, Negligent Misrepresentation, Declaratory Relief, Violation of California Fair Debt Collection Act, Violation of Federal Fair Debt Collection Practices Act, Intentional Infliction of Emotional Distress, Negligent Infliction of Emotional Distress, Unjust Enrichment, Cancellation of Instrument, Unfair Competition – Business and Professions Code section 17200, and Tort of Another. On March 11, 2021, all defendants—Second Chance Home Loans, Allied Servicing Corporation, Homecoming Property, LLC, Stewardship Properties, LLC, Sandor Lau, William Syros, Sheila White, and Melissa Bolling—filed an unverified answer to the second amended complaint. On November 24, 2021, the court denied the motion of Plaintiff for summary judgment/summary adjudication on all 12 causes of action in the second amended complaint.

RULING: Denied.

Request for Judicial Notice: Granted.

The court takes judicial notice of the recorded items, but not the content for the truth of the matter asserted in any and all recorded deed documents. (Poseidon Development, Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal.App.4th 1106, 1117.)

Defendants, Second Chance Homes Loans, LLC, Allied Servicing Corporation, Homecoming Property, LLC, Stewardship Properties, LLC, Sandor Lau, William Syrios, Sheila White, and Mellissa Bolling moves for summary judgment on the second amended complaint on grounds that Defendants are the valid assignee’s of the mortgage loan and never engaged in unlawful collection efforts. Plaintiff in opposition challenges the assignment of the deed of trust from Second Chance, and maintains Plaintiff lacked of actual or constructive notice of the default judgment foreclosing the second deed of trust. Defendants in reply contend the opposition is devoid of admissible evidence.

The purpose of a motion for summary judgment or summary adjudication “is to provide courts with a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.”  (Aguilar v. Atl. 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 pleadings frame the issues for motions, “since it is those allegations to which the motion must respond. (Citation.)”  (Scolinos v. Kolts (1995) 37 Cal. App. 4th 635, 640-641; FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 382-383; Jordan-Lyon Prods., LTD. v. Cineplex Odeon Corp. (1994) 29 Cal.App.4th 1459, 1472.) “On 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 v. D.B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519.) A defendant moving for summary judgment “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.”  (Code Civ. Proc., § 437c, subd. (p)(2).) “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.” (Ibid.)

“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 inference that may be drawn form that evidence, in the light most favorable to the party opposing summary judgment.” (Avivi, 159 Cal.App.4th at 467; see also Code Civ. Proc., § 437c, subd. (c).) “An issue of fact can only be created by a conflict in the evidence.  It is not created by speculation, conjecture, imagination or guesswork.” (Lyons v. Security Pacific National Bank (1995) 40 Cal.App.4th 1001, 1041 (citation omitted).)

Like the prior motion for summary judgment brought by Plaintiff, the court again is presented with questions regarding the proper assignment of the second deed of trust, the enforcement of the default judgment, whether merger occurred, and whether efforts to collect on the purportedly assigned deed of trust and/or judgment were proper. Defendants bring the motion on grounds that the second deed of trust was properly assigned to Second Chance Home Loans through a documented chain of recorded transfers.

The execution of the second deed of trust is not in dispute. [Req. Jud. Not., Ex. 1.] Defendants present the chain of assignment of the deed of trust as follows: from MERS (as nominee of M&T Mortgage Corporation) to Dreambuilder Investments, LLC on May 8, 2013 with Allied Servicing Corporation appearing as the loan servicer [Req. Jud. Not., Ex. 2.]; On the same date, Dreambuilders Investments, LLC to Wilmington Trust, N.A., et al. [Req. Jud. Not., Ex. 3]; May 6, 2016, Wilmington Trust, NA assigned the note to JH Capital V.I., Inc. a Virgin Islands Corporation [Req. Jud. Not., Ex. 4]; A July 7, 2016 transfer from JH Capital to NPL Capital, LLC [Req. Jud. Not., Ex. 5.]; and, NPL Capital to Second Chance transfer dated March 2, 2016. [Req. Jud. Not., Ex. 7.] A “Corrective Assignment of Deed of Trust” documents dated March 29, 2017 stating the JH Capital V.I., et al., transfer to NPL Capital was effective September 1, 2015 [Req. Jud. Not., Ex. 6.].

Plaintiff specifically challenges the assignment from NPL Capital to Second Chance in that the JH Capital to NPL Capital assignment is dated July 7, 2016, while the NPL Capital to Second Chance predates this transfer with a March 2, 2016 date. While defendant Sanford Lau presents evidence that the deed of trust was acquired in a sales agreement dated February 29, 2016 with NPL Capital [Declaration of Sanford Lau, Ex. A], March 2, 2016 is still 127 days, or four months, five day earlier than July 7, 2016. Lau also presents an Allonge to the Note executed by JH Portfolio on favor of NPL Capital in support of the assignment, but the Allonge is undated and redacted, and therefore of no assistance in establishing proof of valid assignment. [Id., Ex. C.]

Defendants in reply reiterate the chain of title and effect of the transfer without acknowledgment of the date disparity over the assignment of a deed of trust predating any assigned possession of the deed of trust.

The enforceability of an assignment, whether recorded or not, remains undisputed law. (Wilson v. Pacific Coast Title Ins. Co. (1951) 106 Cal.App.2d 599, 602; Miller & Star, 5 Cal. Real Est. § 13:49 (4th ed.).) The court notes that both the JH Capital to NPL Capital and NPL Capital to Second Chance were recorded on August 26, 2016. 3:03 p.m. [Declaration of Dean Asher, Compendium of Exhibits, Ex. H, K.] Nevertheless, recordation only provides constructive notice to the third persons, and in no way otherwise rectifies the date disparities presented in the chain of title evidence. (Civ. Code, § 2934.)

The court therefore finds the 127-day unaccounted for gap in time for the chain of documents undermines the represented, absolute basis of authority for the validity of the assignments. Defendants insufficiently establish a fully chronologically accounted for chain of title leading to the ultimate assignment of the note to defendant Second Chance Home Loans for purposes of the motion for summary judgment. (Sciarratta v. U.S. Bank National Assn. (2016) 247 Cal.App.4th 552, 564.) Triable issues of material fact exist as to whether the gap in assignment dates, e.g. the assignment of the deed of trust predating any actual assignment of the deed of trust, renders the assignment void, not merely voidable, due to lack of valid assignment. (Mendoza v. JPMorgan Chase Bank, N.A. (2016) 6 Cal.App.5th 802, 811; see Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 929.)

The motion for summary judgment is therefore denied. Nothing in this ruling otherwise makes a declaration on whether the date disparity renders the deeds of trust void or voidable, but only that Defendants fail to establish a complete defense to the claim for purposes of summary judgment.

Defendants made no alternative motion for summary adjudication. Because Defendants fail to successfully challenge all 12 causes of action within the operative complaint, the court need not substantively consider the second argument on merger.

Notwithstanding, the court briefly addresses the arguments. Defendants next deny any merger of the deed of trust with the judgment as a result of the default judgment in Wilmington Trust v. Hardison, et al. (PC053371). Consistent with the prior motion for summary judgment, the court still finds the judgment remains with Wilmington Trust, and has never been assigned.[2] Plaintiff otherwise lacks any fundamental challenge to the merger arguments.

Therefore, again consistent with the prior ruling, the court finds no merger of the second deed of trust with the judgment due to the lack of any foreclosure proceeding. Even considering the validity of this argument however, nothing in the motion for summary judgment establishes how the lack of merger affirmatively supports summary judgment on the entire complaint. The court therefore additionally denies the motion on this basis.

Trial remains set for January 27, 2023.

Plaintiff to give notice.