Gaines v. Fidelity National Title Ins., et al | CA - Instead, it rewards parties who, it would appear, have played a major and unlawful role in the theft of someone’s home

CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT

MILTON HOWARD GAINES,
Plaintiff and Appellant,

FIDELITY NATIONAL TITLE INSURANCE COMPANY et al.
Defendants and Respondents.

EXCERPT:

This case was one of hundreds, perhaps thousands of lawsuits that grew out of the financial meltdown. This litigation is almost the paradigm case: elderly plaintiffs – home owners with substantial equity in their house, mortgage payments two months in arrears – are approached by an employee of their lender with an unsolicited offer to refinance the mortgage based on the lender’s so-called, but false, “preapproval.” This is followed by a bait and switch that sends plaintiffs to the employee’s fiancé, who offers to help with a refinance. The fiancé ends up buying the house with a supposed offer to include lease-back and repurchase options which fail to materialize in the final documentation. In comes the line of assignees and transferees, including ultimate note holder Lehman Brothers, which will not survive the financial crisis. Meanwhile the “assister” pulls out $90,000 in cash from the deal without plaintiffs’ approval but with the aid of the escrow/title insurance company. Later he refinances the property and obtains another $150,000, for a tidy $240,000 fee for his “assistance.” Remarkably, the loan goes into default because the assister does not pay “his” mortgage, and plaintiffs pay an additional $25,000 to $30,000 to avoid foreclosure. Shortly before the lawsuit is filed, one of the plaintiffs dies. During its pendency, the other dies.

I acknowledge that some of these “facts” are allegations to be decided after trial. We do know that plaintiffs settled with Countrywide for $375,000, of which $200,000 represented lost equity, with the rest designated for noneconomic damages. This suggests that there was some fundamental merit to at least some of plaintiffs’ claims, that this was not a sham lawsuit, and this was a lawsuit that demanded the trial court’s exercise of discretion under section 583.340, subdivision (b) to avoid a miscarriage of justice. In my view the dismissal of this lawsuit under the circumstances described defeats the substantial ends of justice.

Instead, it rewards parties who, it would appear, have played a major and unlawful role in the theft of someone’s home.

I would reverse the trial court’s judgment in its entirety.

RUBIN, J.