Judge: Virginia Keeny, Case: 20STCV31440, Date: 2023-03-03 Tentative Ruling

Case Number: 20STCV31440    Hearing Date: March 3, 2023    Dept: W

SHASHIKYAN, ET AL. V. PLM LOAN MANAGEMENT SERVICES INC., ET AL.

MOTION FOR JUDGMENT ON THE PLEADINGS

Date of Hearing:        March 3, 2023                       Trial Date:       N/A

Department:              W                                            Case No.:        20STCV31440

Moving Party:            Defendant U.S. Bank Trust, N.A., as Trustee for the LSF9 Master Participation Trust

Responding Party:     Plaintiff Tigran Shashikyan

Meet and Confer:      Yes. (Goldstein Decl. ¶2.)

BACKGROUND

On December 11, 2020, Plaintiffs Tigran Shashikyan and Mariam Shashikyan filed a verified first amended complaint against Defendants PLM Loan Management Services, Inc., AA Consulting & Management, Inc., Quality Loan Service Corporation, Larisa Kirakosian, Lan Tran, Bassam Mustafa, Ahlam Mustafa, Nabil Abudayeh, Damon Bowers, Private Capital Investments, Inc., U.S. Bank Trust, N.A., and Persevere Lending Inc. asserting causes of action for (1) fraud, (2) quiet title, and (3) injunctive relief. Plaintiffs named Renew Financial Group, LLC as Doe 1, Ygrene Energy Fund California LLC as Doe 2, and Ygrene Energy Fund, Inc. as Doe 3.

This action regards certain real property, commonly known as 13546 Sarah St., Sherman Oaks, CA 91423 (the “Property”). Plaintiffs reside at and own interest in the Property. Plaintiffs allege in 2006, Mariam obtained a mortgage on the property (the “USB DOT”). Later, Mariam had difficulties paying the monthly mortgage payment and the loan went into foreclosure. In 2015, Mariam was struggling to reinstate her loan. During this time, Kirakossian, QLSC, AACM, Tran, the Mustafas, Abudayeh and PCI, Bowers, and PLM conspired to fraudulently transfer title to AACM through a Trustee’s Deed Upon Sale (“Void DOT”), recorded on November 4, 2015. Knowing that there was a fraudulent Trustee’s Deed Upon Sale executed on the title of the property, US Bank kept it a secret from plaintiffs and fraudulently induced them into creating a new loan modification. Plaintiffs learned about Defendants’ fraudulent activity only when Plaintiffs’ current lender, U.S. Bank, disputed validity of the Deed of Trust recorded by the other Defendants in Case No. LC106464.

There, the court held that the fraudulent Trustee’s Deed Upon Sale was void ab initio. Nonetheless, the court found that the investor’s deed of trust represented the first and senior lien against the property to US Bank’s deed of trust. Plaintiffs did not participate in the action, since they were told by US Bank that they would handle everything. U.S. Bank appealed and the Court of Appeals reversed the decision. This court subsequently entered judgment in favor of U.S. Bank, determining that U.S. Bank has a valid senior encumbrance against Plaintiff’s real property, that the fraudulent deed and all fraudulently recorded title documents arising from it were void ab initio and ordering these recorded documents be cancelled nunc pro tunc.

On March 10, 2021, Quality Loan filed a joinder. On May 14, 2021, Plaintiffs dismissed AA Consulting & Management, Inc., et al. One year later, Plaintiffs dismissed Defendants Lan Tran, Bassam Mustafa, Ahlam Mustafa, Nabil Abudayeh, Damon Bowers, Private Capital Investments, Inc. and Persevere Lending, Inc.

On January 11, 2023, Plaintiff dismissed Defendant PLM Loan Management Services, Inc.

[Tentative] Ruling

Defendant U.S. Bank Trust, N.A., as Trustee for the LSF9 Master Participation Trust’s Motion for Judgment on the Pleadings is GRANTED WITHOUT LEAVE TO AMEND.

REQUEST FOR JUDICIAL NOTICE

Defendant U.S. Bank Trust, N.A., as Trustee for the LSF9 Master Participation Trust requests this court take judicial notice of the following documents: (1) Notice of Trustee’s Sale, recorded on September 10, 2015, as Instrument Number 20151120588, in the Official Records of Los Angeles County, California (Exh. A); (2) Notice of Default and Election to Sell Under Deed of Trust, recorded on April 3, 2017, as Instrument Number 20170361487, in the Official Records of Los Angeles County, California (Exh. B); (3) Notice of Trustee’s Sale, recorded on July 11, 2017, as Instrument Number 20170767940, in the Official Records of Los Angeles County, California (Exh. C); (4) Complaint, filed on November 13, 2017, in Los Angeles Superior Court, Case No. LC106464, U.S. Bank Trust, N.A., as Trustee for LSF9 Master Participation Trust v. Mariam Shashikyan, et al. (Exh. D); (5) Judgment, entered on April 4, 2022, in Los Angeles Superior Court, Case No. LC106464, U.S. Bank Trust, N.A., as Trustee for LSF9 Master Participation Trust v. Mariam Shashikyan, et al. (Exh. E); (6) Judgment, recorded on April 7, 2022, as Instrument Number 20220389535, in the Official Records of Los Angeles County, California (Exh. F); (7) Notice of Ruling, filed on June 7, 2021, in Los Angeles Superior Court, Case No. LC106464, U.S. Bank Trust, N.A., as Trustee for LSF9 Master Participation Trust v. Mariam Shashikyan, et al. (Exh. G); (8) Dismissal, filed on May 3, 2021, in Los Angeles Superior Court, Case No. LC106464, U.S. Bank Trust, N.A., as Trustee for LSF9 Master Participation Trust v. Mariam Shashikyan, et al. (Exh. H); (9) Reconveyance, recorded on June 1, 2022, as Instrument Number 20220586002, in the Official Records of Los Angeles County, California (Exh. I); and (10) Notice of Default, recorded on May 19, 2022, as Instrument Number 20220545765, in the Official Records of Los Angeles County, California (Exh. J). 

The court grants Defendant’s request. (See Evid. Code §452(c),(d); Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 265; Yvanova v. New Century Mortgage Corp. (2016) 62 Cal. 4th 919, 924, fn. 1.)

discussion

Defendant U.S. Bank Trust, N.A., as Trustee for the LSF9 Master Participation Trust moves the court for judgment on the pleadings as to the First Amended Complaint and as to the sole remaining cause of action for fraud brought by Plaintiff Mariam Shashikyan against U.S. Bank.

The elements of fraud by concealment are: “(1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with intent to defraud, (4) the plaintiff must have been unaware of the fact and would have not acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression, the plaintiff must have sustained damage.” (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 748.) Allegations of fraud must be pleaded with particularity. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645; see also Murphy v. BDO Seidman (2003) LLP, 113 Cal.App.4th 687, 692.)

Defendant first argues Plaintiff’s fraud claim is moot due to the judgment in the Prior Action. Defendant contends because the Judgment in the Prior Action was declared void ab initio and cancelled the investor defendants’ purported lien and the encumbrance was withdrawn from the public record, the Judgment moots the alleged dangers of and damage from an unlawful foreclosure. Even though the fraudulent deed has been declared void ab initio, such a finding would not automatically moot Plaintiff’s claims that Defendant concealed the existence of the fraudulent deed and as a result, Plaintiff entered into a loan modification with U.S. Bank.

Defendant further argues the alleged concealment is immaterial. Defendant contends the Fraudulent Deed and U.S. Bank’s alleged failure to disclose it did not materially affect Plaintiff’s obligation to pay back the money she admittedly owed on U.S. Bank’s Loan. Moreover, any purported “change of direction” on Plaintiff’s part regarding entering a modification of her defaulted loan could only have worsened her ability to save her property, not benefitted it as U.S. Bank did by continuing to work with her despite her default. While the concealment was not material to her obligation to pay back the $650,000, the concealment may have been material to Plaintiff’s decision to modify her loan. Regardless of the materiality of the concealment, as discussed below, the court finds Plaintiff cannot establish fraud against Defendant U.S. Bank.

Next, Defendant argues they did not occupy a fiduciary relationship with Plaintiff and has no duty to disclose the alleged fraudulent deed. Defendant contends it is well settled law in California that financial institutions owe no fiduciary duties to borrowers. (Nymark v. Heart Fed. Sav. & Loan Ass’n (1991) 231 Cal.App.3d 1089, 1093, n.1.) Moreover, the Court of Appeal in the Prior Action held that U.S. Bank, which did not create and was not complicit in the fraud, was not obliged to protect others who may be injured by the fraudsters, did not have a duty to act and that recourse lies against the fraudulent defendants who occasioned the loss.

In opposition, Plaintiff argues she has sufficiently alleged all elements of fraud against U.S. Bank and U.S. Bank is seeking to turn this motion into a motion for summary judgment. Plaintiff relies on this court’s Statement of Decision and claims the debt incurred by Kirakosian taking loans out against the subject property have imposed a financial burden upon Plaintiff and is the express result of Defendant U.S. Bank’s concealment of the fraudulent TDUS. However, based on the Court of Appeal decision, the court finds Plaintiff cannot establish Defendant was under a duty to disclose the fraudulent deed to Plaintiff. The Court of Appeal has stated U.S. Bank “has no legal duty to protect others who might be injured by a fraudster” nor can U.S. Bank “be bound by the acts of miscreants who had no relationship with Bank.” (U.S. Bank Trust, N.A. v. Tran (Cal. Ct. App., Oct. 1, 2021, No. B307390) 2021 WL 4487338, at *5.) As a result, U.S. Bank was not under a duty to disclose any fraudulent encumbrance to Plaintiff.

Defendant further argues Plaintiffs failed to allege specific facts indicating fraudulent intent, reliance, or damages. Because Defendant U.S. Bank had no duty to disclose the fraudulent deed, the court need not reach Defendant’s remaining arguments. Plaintiff has failed to establish every element of Plaintiff Miriam’s fraudulent concealment claim. Moreover, Plaintiff has failed to establish amendment would not be futile.

Accordingly, Defendant’s Motion for Judgment on the Pleadings is GRANTED WITHOUT LEAVE TO AMEND.