4dca | FORECLOSURE FRAUD | by DinSFLA

Tag Archive | "4dca"

RIGBY vs WELLS FARGO | FL 4DCA “Bank failed to establish that it had standing to foreclosure upon the note”

RIGBY vs WELLS FARGO | FL 4DCA “Bank failed to establish that it had standing to foreclosure upon the note”


DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

January Term 2012

DAVID RIGBY and KATHLYN RIGBY,
Appellants,

v.

WELLS FARGO BANK, N.A., AS TRUSTEE FOR OPTION ONE MORTGAGE LOAN TRUST 2007-FXD2 ASSET-BACKED CERTIFICATES, SERIES 2007-FXD2,
Appellee.

No. 4D10-3587

[April 4, 2012]

STEVENSON, J.

This appeal stems from a complaint of foreclosure filed b y the
appellee, Wells Fargo Bank, N.A., as trustee (“Bank”), against the
appellants David Rigby and Kathlyn Rigby. The trial court entered final
summary judgment. Because Bank failed to meet its burden on
summary judgment, we reverse.

The Bank file d its complaint on May 21, 2008, and attached a
mortgage that named Option One Mortgage Corporation (“Option One”)
as the lender. Subsequently, the Bank filed an assignment of mortgage,
from Option One to Bank, dated May 22, 2008, as well as the undated
original note containing a special endorsement in favor of Bank. The
parties proceeded to discovery and Bank sought an admission from the
Rigbys acknowledging that they had previously received notice that the
note and mortgage had been transferred to Bank. The Rigbys failed to
respond to this request. Bank then filed a motion for summary
judgment, attaching an affidavit wherein the affiant swore that Bank was
holder and owner of the mortgage. Based on this record, the trial court
entered summary judgment. A trial court’s entry of summary judgment
is reviewed de novo. See Frost v. Regions Bank, 15 So. 3d 905, 906 (Fla.
4th DCA 2009).

The Bank failed to establish that it had standing to foreclosure upon
the note. “A crucial element in any mortgage foreclosure proceeding is
that the party seeking foreclosure must demonstrate that it has standing
to foreclose.” McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d
170, 173 (Fla. 4th DCA 2012). To establish standing, the plaintiff must
submit the note bearing a special endorsement in favor of the plaintiff,
an assignment from payee to the plaintiff or an affidavit of ownership
proving its status as holder of the note. Servedio v. U.S. Bank Nat’l
Ass’n, 46 So. 3d 1105, 1107 (Fla. 4th DCA 2010). “A party must have
standing to file suit at its inception and may not remedy this defect by
subsequently obtaining standing.” Venture Holdings & Acquisitions Grp.,
LLC v. A.I.M. Funding Grp., LLC, 75 So. 3d 773, 776 (Fla. 4th DCA 2011).
The Bank has not shown that it was holder of the note at the time the
complaint was filed. The note containing a special endorsement in favor
of Bank was not dated. The assignment of mortgage, dated May 22,
2008, indicates that Bank did not acquire the mortgage until the day
after the complaint was filed. Finally, neither the affidavit, nor the
technical admissions made by the Rigbys, establishes the date on which
Bank acquired possession of the note and there is no evidence in the
record establishing that an equitable transfer of the mortgage occurred
prior to the date the complaint was filed. See McLean, 79 So. 3d at 174
(reversing final summary judgment of foreclosure because appellee bank
failed to establish standing where mortgage was assigned to bank three
days after lawsuit was filed; note contained undated special endorsement
in favor of bank; and affidavit in support of summary judgment failed to
indicate that bank became equitable owner of note and mortgage prior to
date lawsuit was filed).

Reversed.

WARNER and CONNER, JJ., concur.

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUDComments (0)

ELSTON / LEETSDALE vs CWCAPITAL | FL 4DCA “did not file any evidence, affidavits or other documents, supporting…it was authorized …on behalf of the trust”

ELSTON / LEETSDALE vs CWCAPITAL | FL 4DCA “did not file any evidence, affidavits or other documents, supporting…it was authorized …on behalf of the trust”


DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

January Term 2012

ELSTON/LEETSDALE, LLC, a Delaware limited liability company,
Appellant,

v.

CWCAPITAL ASSET MANAGEMENT LLC, solely in its capacity as
Special Servicer on behalf of U.S. BANK, N.A., Successor to STATE
STREET BANK AND TRUST COMPANY, as Trustee for the registered
holders of J.P. MORGAN CHASE COMMERCIAL MORTGAGE
SECURITIES CORP., MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 2001-C1BC1,
Appellee.

No. 4D11-3151

[April 4, 2012]

POLEN, J.

Elston/Leetsdale, LLC (Elston) appeals the trial court’s non-final
order, requiring it to make payments to CWCapital Asset Management
LLC, solely in its capacity as special servicer on behalf of U.S. Bank,
N.A., successor to State Street Bank and Trust Company, as trustee for
the Registered Holders of J.P. Morgan Chase Commercial Mortgage
Securities Corp., Mortgage Pass-Through Certificates, Series 2001-
C1BC1 (CW) during the pendency of the action. Because CW did not
properly plead standing, we reverse.

The facts are as follows. Elston executed a promissory note as
evidence of a loan made by First Union National Bank; to secure
payment, Elston executed a mortgage and security agreement, along with
an assignment of leases and rents. First Union assigned its rights in the
loan documents to Morgan Guaranty Trust Company of New York, which
then assigned its right, title and interest in the loan to State Street Bank
and Trust Company, as Trustee for J.P. Morgan Chase Commercial
Mortgage Securities Corp., Series 2001-C1BC1 (the trust). Presently, the
trust is the current owner and holder of all the loan documents subject
to this appeal.

CW, the special servicer for the trust, filed a verified complaint, in its
own name, for foreclosure. The complaint alleged that Elston defaulted
on the loan, and the trust elected to accelerate and declare immediately
due and owing the entire unpaid principal balance together with accrued
interest. In response to CW’s motions, the trial court ordered Elston to
show cause as to why payments should not b e ma d e during the
pendency of the foreclosure action. Elston then moved to dismiss the
complaint, arguing that CW failed to properly allege standing to pursue
enforcement of the security instruments. CW argued that it had
standing to bring the foreclosure action because it is duly authorized by
the trust to do so and, as special servicer for the loan, it is entitled to
take all required action to protect the interests of the trust. After a
hearing,1 the trial court entered a payment order, requiring Elston to pay
CW $42,404.91 per month during the pendency of the action. This
appeal followed.

Elston argues that the trial court erred b y ordering it to make
payments to CW because CW failed to properly allege standing. CW
argues that Elston has not furnished a sufficient record for this court to
review the trial court’s ruling.2 On the merits, CW argues that, as agent
and special servicer to the trust, which owns the loan documents at
issue, it has standing to foreclose.

“Whether a party is the proper party with standing to bring an action
is a question of law to be reviewed de novo.” FCD Dev., LLC v. S. Fla.
Sports Comm., Inc., 37 So. 3d 905, 909 (Fla. 4th DCA 2010) (quoting
Westport Recovery Corp. v. Midas, 954 So. 2d 750, 752 (Fla. 4th DCA
2007)).

Every action may be prosecuted in the name of the real party
in interest, but a personal representative, administrator,
guardian, trustee of an express trust, a party with whom or
in whose name a contract has been made for the benefit of
another, or a party expressly authorized by statute may sue
in that person’s own name without joining the party for
whose benefit the action is brought.

Fla. R. Civ. P. 1.210(a). “In its broadest sense, standing is no more than
having, or representing one who has, ‘a sufficient stake in an otherwise
justiciable controversy to obtain judicial resolution of that controversy.’”
Kumar Corp. v. Nopal Lines, Ltd., 462 So. 2d 1178, 1182 (Fla. 3d DCA
1985) (quoting Sierra Club v. Morton, 405 U.S. 727, 731 (1972)).

In the mortgage foreclosure context, “standing is broader than just
actual ownership of the beneficial interest in the note.” Mortgage Elec.
Registration Sys., Inc. v. Azize, 965 So. 2d 151, 153 (Fla. 2d DCA 2007).
“The Florida real party in interest rule, Fla. R. Civ. P. 1.210(a), permits
an action to be prosecuted in the name of someone other than, but
acting for, the real party in interest.” Id. (quoting Kumar, 462 So. 2d at
1183). “Thus, where a plaintiff is either the real party in interest or is
maintaining the action on behalf of the real party in interest, its action
cannot be terminated on the ground that it lacks standing.” Kumar, 462
So. 2d at 1183. See also BAC Funding Consortium Inc. ISAOA/ATIMA v.
Jean-Jacques, 28 So. 3d 936, 938 (Fla. 2d DCA 2010) (“The proper party
with standing to foreclose a note and/or mortgage is the holder of the
note and mortgage or the holder’s representative.”).

In securitization cases, a servicer may b e considered a party in
interest to commence legal action as long as the trustee joins or
ratifies its action. In re Rosenberg, 414 B.R. 826, 842 (Bankr. S.D. Fla.
2009) (emphasis added). In CWCapital Asset Management, LLC v.
Chicago Properties, LLC, 610 F.3d 497 (7th Cir. 2010), the Seventh
Circuit found that CW, as a special servicer to a loan, had standing to
bring an action in its own name against a mortgagor and landlord for
money paid by a tenant in settlement of a suit for unpaid rent. Id. at
499-500. Significantly, however, in opposition to the defendant’s motion
for judgment on the pleadings (based on CW’s lack of standing), CW filed
an affidavit of the trustee, which was not contradicted, ratifying the
servicer’s (CW’S) commencement of the lawsuit. Id. at 502 (emphasis
added). Additionally, the pooling and servicing agreement was placed in
evidence as additional evidence that CW’s principal granted CW authority
to enforce the debt instruments that CW neither owned nor held. Id. at
501.

In Juega v. Davidson, 8 So. 3d 488 (Fla. 3d DCA 2009), relied on by
the trial court, the Third District reversed an order of dismissal for lack
of standing, finding that because the plaintiff was an agent who had been
granted full authority to act for the real party in interest, there was no
violation of rule 1.210(a). Id. at 489. However, in Juega, there was
evidence in the trial court that the agent/plaintiff had been granted full
authority to act on the real party in interest’s behalf: The real party in
interest filed an affidavit in opposition to the motion to dismiss for lack of
standing, averring that Juega was pursuing the litigation for the real
party in interest’s benefit and ratifying all actions taken by Juega since
the inception of the lawsuit. Id. at 489. Finding the affidavit filed by the
real party in interest to be indistinguishable from the affidavit filed by the
principal in Kumar, the Third District held that “the facts stated in [the
affidavit] establish that the agent, Juega, has standing.” Id. at 490
(emphasis added).

Here, the caption of the verified complaint states that the underlying
action is brought by CW “solely in its capacity as special servicer on
behalf of U.S. Bank, N.A.” In the complaint, CW alleges, and verifies as
true, that it “has been and is duly authorized by the Trust to prosecute
this action as agent and special servicer for the Trust.” However, CW did
not file any evidence, affidavits or other documents, supporting its
allegation that it was authorized to prosecute the action on behalf of the
trust, as was done in Kumar, Juega and Chicago Properties. Although
CW’s complaint is verified, it is verified by the “SVP” for CW – not by the
real party in interest, the trust. CW relies on nothing more than its own
allegations and affidavit to support its argument that it has standing to
sue on behalf of the trust. This is insufficient evidence to prove that it is
authorized to sue on the trust’s behalf.

We affirm on the other issue raised by Elston, as we find that the trial
court properly determined that CW was not required to register as a
commercial collection agency or as a licensed mortgage broker under
Chapters 559 and 494, Florida Statutes.

Reversed and Remanded.

TAYLOR and HAZOURI, JJ., concur.
* *

[ipaper docId=88060508 access_key=key-1zi7bzuhrs7m5kl811n5 height=600 width=600 /]

 

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUDComments (0)

Bondi says court ruling puts foreclosure fraud investigations in jeopardy

Bondi says court ruling puts foreclosure fraud investigations in jeopardy


As if she didn’t know this…hmm

Miami Herald-

An appeals court has denied Attorney General Pam Bondi‘s request to allow the state Supreme Court to review a ruling she says limits her ability to fight foreclosure fraud. Because of this decision, seven pending cases are now threatened, Bondi said Thursday.

In December, the state’s 4th District Court of Appeals ruled that Bondi does not have the authority to investigate a law firm for alleged fraud under the Florida Deceptive and Unfair Trade Practices Act because attorneys’ work on behalf of lenders did not constitute trade or commerce. She asked the court to certify that its decision in the  Law Offices of David Stern, P.A. v. State of Florida case passes upon a question of great public importance so that she could appeal to the Supreme Court.

[MIAMI HERALD]

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUDComments (0)

KIMMICK vs U.S. BANK | FL 4DCA Reverses SJ, Atty Fees “Acceleration Letter, Affirmative Defenses, Trial Modification, Waivers”

KIMMICK vs U.S. BANK | FL 4DCA Reverses SJ, Atty Fees “Acceleration Letter, Affirmative Defenses, Trial Modification, Waivers”


BARBARA KIMMICK a/k/a BARBARA WALDON KIMMICK, Appellant,

v.

U.S. BANK NATIONAL ASSOCIATION, as Trustee for the GSAA Home Equity Trust 2007-7 Asset Backed Certificates, Series 2007-7; UNKNOWN TENANT NO. 1; UNKNOWN TENANT NO. 2; and ALL UNKNOWN PARTIES CLAIMING INTERESTS BY, THROUGH, UNDER OR AGAINST A NAMED DEFENDANT TO THIS ACTION, OR HAVING OR CLAIMING TO HAVE ANY RIGHT, TITLE OR INTEREST IN THE PROPERTY HEREIN DESCRIBED, Appellees.

No. 4D10-4158.

District Court of Appeal of Florida, Fourth District. 
January 18, 2012.
Robert P. Bissonnette of Robert P. Bissonette, P.A., Fort Lauderdale, for appellant.Roy A. Diaz and Diana B. Matson of Smith, Hiatt & Diaz, P.A., Fort Lauderdale, for appellee U.S. Bank National Association.HAZOURI, J.

Barbara Kimmick appeals from the granting of U.S. Bank’s amended motion for summary final judgment of foreclosure and attorneys’ fees, which was based upon the affidavit of indebtedness, the mortgage, and the promissory note. Kimmick asserts there were genuine issues of material fact precluding the granting of the summary judgment. We agree and reverse.

Kimmick filed an affidavit in opposition to the motion for summary judgment. She stated that she has resided at the subject property for twenty years and in February of 2009, she lost her job. She continued paying her mortgage from her savings through July of 2009. She then stated:

4. On or about August 6, 2009, I contacted my lender, Bank of America, and explained that I was experiencing financial hardship due to the loss of my job and that I had exhausted my personal savings thereafter in paying the subject note and mortgage from February 2009 to July 2009.

5. I requested assistance from Bank of America in paying my mortgage and, over the phone, Bank of America, by and through its representative, Bethany, calculated a new and reduced mortgage payment in the amount of $506.85 and that I was to start paying the new amount immediately.

6. Bank of America, by and through Bethany, further stated to me that after three (3) month’s payment of the $506.85, they would review my payment history and, if I had consistently met my payment obligations, that they would grant me a permanent mortgage modification at that amount.

7. In reliance on Bank of America’s representations above, I faithfully paid Bank of America the monthly sum of $506.85 for six (6) months from August 2009 through January 2010. A true copy of my Bank of American Payment Overview reflecting and evidencing the foregoing is attached hereto as Exhibit “A”.

8. Importantly, the Bank of America Payment Overview, on its face, clearly states that my six (6) months of reduced mortgage payments was for “mortgage remodification” [emphasis supplied].

9. Thereafter, on January 11, 2010, this foreclosure action was filed against me claiming that I defaulted in the subject mortgage of this action an failing to pay my mortgage payments due commencing September 1, 2009.

10. However, I could not possibly have been in default of the subject mortgage because, as evidenced an Exhibit “A” attached, Bank of America agreed to accept and was accepting monthly mortgage payments from me from August 2009 until January 2010 — when this foreclosure action was unilaterally filed. I have also paid for insurance and real estate taxes on the subject property.

11. Accordingly, Plaintiff is equitably stopped from maintaining this action not only an accepting monthly mortgage payments from me but also by bootstrapping and manufacturing the alleged basis for my mortgage default herein. Thus, Plaintiff has filed the instant action in bad faith without any investigation prior thereto.

Exhibit A is a printout from Kimmick’s online bank account showing the six payments to Bank of America Home Loans from her account.

U.S. Bank filed an affidavit of the assistant secretary of BAC Home Loans Servicing in which he states that the records show that the September 1, 2009, payment was not made. It further states:

7. There has been no payment after the date of October 16, 2009. The borrower has not qualified for a loan modification under the HAMP guidelines and the borrower is not paying on a loan modification currently.

At the summary judgment hearing, Kimmick’s counsel presented the facts from her affidavit to the court. He asserted equitable estoppel. He also argued that where an affirmative defense is pleaded, and the plaintiff does not negate it, the plaintiff is not entitled to summary judgment.

In response to Kimmick’s affidavit U.S. Bank referred the court to the pre-acceleration letter sent to the borrower in September and October which counsel stated they said: “The default will not be considered cured unless BAC Home Loan Servicing, LP receives good funds in the amount of $3,153.77 on or before November 18, 2009. BAC Home Loan Servicing, LP reserves the right to accept or reject a partial payment of the total amount due without waiving any of its rights herein or otherwise. For example, if less than the full amount that is due is sent to us, we can keep the payment and apply it to the debt but still proceed to the foreclosure since the default would not have been cured.” Kimmick’s counsel did not deny that Kimmick received the letter but that they had told her to pay a reduced amount and which the bank accepted. U.S. Bank acknowledged that it received five of six of Kimmick’s payments.

The trial court entered its Summary Final Judgment of Foreclosure which did not address any of Kimmick’s affirmative defenses.

“Summary judgment is proper if there is no genuine issue of material fact and if the moving party is entitled to a judgment as a matter of law.” Volusia Cnty. v. Aberdeen at Ormond Beach, L.P., 760 So. 2d 126, 130 (Fla. 2000). The “party moving for summary judgment must factually refute or disprove the affirmative defenses raised, or establish that the defenses are insufficient as a matter of law.” Leal v. Deutsche Bank Nat’l Trust Co., 21 So. 3d 907, 909 (Fla. 3d DCA 2009) (citing Kendall Coffey, Foreclosures in Florida 493 (2008) (citing Stop & Shoppe Mart, Inc. v. Mehdi, 854 So. 2d 784 (Fla. 5th DCA 2003); Manassas Inv., Inc. v. O’Hanrahan, 817 So. 2d 1080 (Fla 2d DCA 2002))). See also Knight Energy Servs., Inc. v. Amoco Oil Co., 660 So. 2d 786, 788 (Fla. 4th DCA 1995) (“Before a plaintiff is entitled to a summary judgment of foreclosure, the plaintiff must either factually refute the alleged affirmative defenses or establish that they are legally insufficient to defeat summary judgment.”).

Kimmick argues that U.S. Bank waived its right to foreclose based upon the representations made to her by the agent she spoke to at Bank of America. The affirmative defense was stated as follows:

24. For her Twelfth Affirmative Defense, KIMMICK states that Plaintiff has waived its rights to foreclosure by the actions of Plaintiff’s agent and loan servicer for the subject mortgage, to-wit: Bank of America, agreeing to and actually accepting reduced mortgage payments from KIMMICK for at least six consecutive months.

In Destin Savings Bank v. Summerhouse of FWB, Inc., 579 So. 2d 232 (Fla. 1st DCA 1991), the court set forth the following principles:

Waiver is defined as an intentional relinquishment or abandonment of a known right or privilege, or conduct that warrants an inference of the intentional relinquishment of a known right. In order to establish a valid waiver, the following elements must be satisfied: (1) the existence at the time of the waiver of a right, privilege, advantage, or benefit that may be waived; (2) the actual or constructive knowledge thereof; and (3) an intention to relinquish that right, privilege, advantage or benefit.

Id. at 235 (citations omitted). In Barnes v. Resolution Trust Corp., 664 So. 2d 1171 (Fla. 4th DCA 1996), this court held:

An acceleration clause in a mortgage confers upon the mortgagee a contract right of constitutional dimensions. Courts are obligated to protect the validity of such contracts and may impair the mortgagee’s right to foreclose only in limited situations. Specifically, courts will bar acceleration and foreclosure as follows:

Foreclosure on an accelerated basis may be denied when the right to accelerate has been waived or the mortgagee estopped to assert it, because of conduct of the mortgagee from which the mortgagor (or owner holding subject to a mortgage) reasonably could assume that the mortgagee, for or upon a certain default, would not elect to declare the full mortgage indebtedness to be due and payable or foreclose therefore; or where the mortgagee failed to perform some duty upon which the exercise of his right to accelerate was conditioned; or where the mortgagor tenders payment of defaulted items, after the default but before notice of the mortgagee’s election to accelerate has been given (by actual notice or by filing suit to foreclose for the full amount of the mortgage indebtedness) or where there was intent to make timely payment, and it was attempted, or steps taken to accomplish it, but nevertheless the payment was not made due to a misunderstanding or excusable neglect, coupled with some conduct of the mortgagee which in a measure contributed to the failure to pay when due or within the grace period.

Id. at 1172-73 (citations omitted) (emphasis supplied).

Kimmick also asserts that U.S. Bank waived acceleration when its agent told Kimmick that she could make the lower payments for several months, possibly get a modification, and then U.S. Bank would not proceed with an acceleration.

U.S. Bank asserts that this court can affirm the judgment with respect to the affirmative defense of waiver for a different reason. In both the note and the mortgage, there is the same provision which states:

Borrower not released; Forbearance an Lender Not a Waiver. Extension of the time for payment or modification of amortization of the sums secured an this Security Instrument granted by Lender to Borrower or any Successor in Interest of Borrower shall not operate to release the liability of Borrower or any Successors in Interest of Borrower. Lender shall not be required to commence proceedings against any Successor in Interest of Borrower or to refuse to extend time for payment or otherwise modify amortization of the sums secured an this Security Instrument by reason of any demand made by the original Borrower or any Successors in Interest of Borrower. Any forbearance by Lender in exercising any right or remedy including, without limitation, Lender’s acceptance of payments from third persons, entities or Successors in Interest of Borrower or in amounts less than the amount then due, shall not be a waiver of or preclude the exercise of any right or remedy.

U.S. Bank argues that this “No Waiver” provision allows it to accept prior late or reduced payments without losing its right to enforce its rights and remedies. Kimmick, however, is asserting that U.S. Bank waived this provision by representing to her that she could make reduced payments, which were timely, and meet the requirements for a permanent mortgage modification.

Therefore, there remain genuine issues of material fact as to the issues raised by the affirmative defense of the loan modification. We reverse and remand for further proceedings consistent with this opinion.

Reversed and remanded.

MAY, C.J., and DAMOORGIAN, J., concur.

Not final until disposition of timely filed motion for rehearing.

[ipaper docId=79169923 access_key=key-y84z6a45fct9yn8wo9o height=600 width=600 /]

 

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUDComments (0)

Attorney General Pam Bondi Asks Fourth District Court of Appeal to Certify Important Foreclosure Investigation Case for Florida Supreme Court Review

Attorney General Pam Bondi Asks Fourth District Court of Appeal to Certify Important Foreclosure Investigation Case for Florida Supreme Court Review


NOTE: Below in her request appears a reference to a link @ #4 Nevada v. LPS, but where is her lawsuit against LPS??

Attorney General Pam Bondi today filed a motion asking the Fourth District Court of Appeal to certify that its recent decision in Law Offices of David Stern, P.A. v. State of Florida passes upon a question of great public importance. In Stern, the Fourth DCA held that the Attorney General’s Office lacked authority under the Florida Deceptive and Unfair Trade Practices Act (“FDUPTA”) to subpoena records of the Stern firm as part of an investigation into possible misconduct in the firm’s handling of foreclosure cases.

Applicable court rules require certification from the Fourth DCA before this office may appeal the Stern decision to the Florida Supreme Court. The Attorney General’s motion asks the Fourth DCA to certify that its decision in Stern passes upon the following question of great public importance: whether the creation of invalid assignments of mortgages by a law firm and subsequent use of such documents by the firm in foreclosure litigation on behalf of the purported assignee is an unfair and deceptive trade practice which may be the subject of an investigation by the Office of the Attorney General.

.
source:  http://www.myfloridalegal.com

[ipaper docId=76789463 access_key=key-2dd5psfp0y694n3qwlkh height=600 width=600 /]

 

 

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUDComments (1)

McLean v. JPMorgan Chase | FL 4DCA Reversed “lacked any evidence that Chase had standing to foreclose at the time the lawsuit was filed”

McLean v. JPMorgan Chase | FL 4DCA Reversed “lacked any evidence that Chase had standing to foreclose at the time the lawsuit was filed”


DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

July Term 2011

ROBERT McLEAN,
Appellant,

v.

JP MORGAN CHASE BANK NATIONAL ASSOCIATION, not individually but solely as Trustee for the holders of STRUCTURED ASSET MORTGAGE INVESTMENTS II, INC., MORTGAGE PASS-THROUGH
CERTIFICATES, SERIES 2006-ARS,
Appellee.

No. 4D10-3429

[ December 14, 2011 ]

 [ipaper docId=75725680 access_key=key-2mvyag3q7camwerbx1bc height=600 width=600 /]

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUDComments (0)

FL 4DCA Says FL AG lacked authority under FDUTPA to issue the subpoena, Reversed

FL 4DCA Says FL AG lacked authority under FDUTPA to issue the subpoena, Reversed


DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

July Term 2011

LAW OFFICE OF DAVID J. STERN, P.A.,
Appellant,

v.

STATE OF FLORIDA, DEPARTMENT OF LEGAL AFFAIRS,
Appellee.

No. 4D10-4708

[December 14, 2011]

 [ipaper docId=75682304 access_key=key-1ddqsno5cz2v49d8a02s height=600 width=600 /]

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUDComments (0)

Duke v. HSBC – Fla. 4th DCA “Genuine issues of material fact remain in dispute regarding the owner and holder of the note and mortgage”

Duke v. HSBC – Fla. 4th DCA “Genuine issues of material fact remain in dispute regarding the owner and holder of the note and mortgage”


DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
July Term 2011

RODGER and LINA DUKE,
Appellants,

v.

HSBC MORTGAGE SERVICES, LLC,
Appellee.

No. 4D09-5183

[November 23, 2011]

POLEN, J.

Appellants, Rodger and Lina Duke (“the Dukes”), appeal the trial
court’s order granting final summary judgment of foreclosure in favor of
appellee, HSBC Mortgage Services, Inc. (“HSBC”). We reverse the trial
court’s order and hold that the record reflected genuine issues of
material fact, making summary judgment improper.

In May 2009, appellee, HSBC, brought an action against appellants,
the Dukes, to foreclose on a mortgage on real property in Palm Beach
County, Florida. The mortgage, as attached to the complaint, showed
that the “borrower” was the Dukes and the “lender” was First NLC
Financial Services, LLC (“First NLC”). The mortgage further showed that
Mortgage Electronic Registration Systems, Inc. (“MERS”) “is a separate
corporation that is acting solely as a nominee for Lender and Lender’s
successors and assigns.” HSBC’s complaint indicated that the mortgage
was assigned to it, and that it was the rightful owner and holder of the
note and mortgage. The Dukes alleged that HSBC did not attach an
assignment of mortgage to their complaint; however, a notice of
assignment was filed with the court on August 26, 2009, with a copy of
the assignment dated June 1, 2009, attached. HSBC alleged that the
original note and mortgage had been lost and were not in HSBC’s
custody or control.

On July 10, 2009, and July 17, 2009, the Dukes were served by
publication in the Palm Beach Daily Business Review. When the Dukes
failed to respond to the service by publication, HSBC moved for default.
On the same date as the motion for default, HSBC also moved for
summary judgment as to “the existence of a valid mortgage and
promissory note and [HSBC’s] right to a Judgment of Foreclosure.” On
September 11, 2009, the Dukes filed a motion for additional time to file a
response to the foreclosure complaint. Shortly thereafter, on September
30, 2009, default was entered against the Dukes. In November of 2009,
a n agreed order on motion for additional time to file response was
entered, allowing the Dukes to file their response to the foreclosure
complaint on or before November 12, 2009.

On November 18, 2009, a hearing was held on HSBC’s motion for
summary judgment. At the hearing, the original note was unable to be
located. The Dukes argued that the original note did not contain any
endorsements proving that the note and mortgage were assigned to
HSBC, thus summary judgment should not be granted because of an
issue of material fact precluding such a determination. However, the
trial court entered final summary judgment of foreclosure on November
18, 2009, and set a sale date of December 21, 2009. This appeal
followed.

The standard of review on an order “granting summary judgment is de
novo.” McLeod v. Bankier, 63 So. 3d 858, 860 (Fla. 4th DCA 2011).
Summary judgment is granted only when no genuine issues of material
fact exist and the party moving for summary judgment is, as a matter of
law, entitled to judgment. Id. Florida Rule of Civil Procedure 1.510(c)
governs summary judgment motions and proceedings. The rule states,
in relevant part:

The motion shall state with particularity the grounds upon
which it is based and the substantial matters of law to be
argued and shall specifically identify any affidavits, answers
to interrogatories, admissions, depositions, a n d other
materials as would be admissible in evidence (“summary
judgment evidence”) on which the movant relies. The movant
shall serve the motion at least 20 days before the time fixed
for the hearing, and shall also serve at that time a copy of
any summary judgment evidence on which the movant relies
that has not already been filed with the court. . . . The
judgment sought shall be rendered forthwith if the pleadings
and summary judgment evidence on file show that there is
no genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law.

Fla. R. Civ. P. 1.510(c).

The Dukes argued that at the time the foreclosure complaint was
filed, the mortgage was held by First NLC, not appellee, HSBC. In its
complaint, HSBC alleged it owned and held the note and mortgage at the
time the complaint was filed. “When exhibits are attached to a
complaint, the contents of the exhibits control over the allegations of the
complaint.” BAC Funding Consortium Inc. v. Jean-Jacques, 28 So. 3d
936, 938 (Fla. 2d DCA 2010). Here, HSBC alleged in its complaint that it
“now owns and holds the Note and Mortgage,” but an assignment was
not attached to the complaint, supporting HSBC’s position. Instead, the
mortgage attached to the complaint showed First NLC as the lender,
creating discrepancies between the complaint and the attached exhibit.
Thus, at the time of the argument on the summary judgment motion,
genuine issues of material fact existed as to whether HSBC was the
proper owner and holder of the note and mortgage where First NLC was
named on the mortgage and evidence of an assignment was not included.

We therefore reverse the trial court’s order granting summary
judgment because genuine issues of material fact remain in dispute
regarding the owner and holder of the note and mortgage at the time the
complaint was filed.

Reversed.

GROSS and CONNER, JJ., concur.

* * *

Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm
Beach County; Meenu T. Sasser, Judge; L.T. Case No. 502009CA018957
XXXXMB.

Elsa M. Figueras of E. Figueras & Associates, P.A., Davie, and Peter J.
Snyder of Peter J. Snyder, P.A., Boca Raton, for appellants.
Enrico G. Gonzalez, Temple Terrace, for appellee.

Not final until disposition of timely filed motion for rehearing.

[ipaper docId=73762369 access_key=key-1x8tbk3ivm52gphti7kw height=600 width=600 /]

 

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUDComments (0)

VENTURE HOLDINGS & ACQUISITIONS GROUP, LLC vs. A.I.M. FUNDING GROUP | FL 4DCA, (3) Consolidated Reversals “A.I.M. did not file the original promissory note”

VENTURE HOLDINGS & ACQUISITIONS GROUP, LLC vs. A.I.M. FUNDING GROUP | FL 4DCA, (3) Consolidated Reversals “A.I.M. did not file the original promissory note”


Great job! FL Atty Carol C. Asbury

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
July Term 2011

VENTURE HOLDINGS & ACQUISITIONS GROUP, LLC and VINCENZO GURRERA,
Appellants,

v.

A.I.M. FUNDING GROUP, LLC,
Appellee.
No. 4D10-832

REAL INVESTMENTS, LLC and ALEXANDER GONZALEZ,
Appellants,

v.

A.I.M. FUNDING GROUP, LLC,
Appellee.
No. 4D10-1159

REAL INVESTMENTS, LLC and ALEXANDER GONZALEZ,
Appellants,

v.

A.I.M. FUNDING GROUP, LLC,
Appellee.
No. 4D10-1848

[ November 23, 2011 ]

PER CURIAM.

In these consolidated appeals, appellants challenge three separate
final summary judgments of foreclosure entered in favor of appellee,
A.I.M. Funding Group, LLC. Appellants raise several arguments on
appeal, two of which merit discussion: (1) A.I.M., having assigned the
promissory note as collateral for a loan, was not the proper party in
interest to file suit, and (2) the trial court erred in granting summary
judgment for A.I.M. without receiving the original promissory note or
accounting for its absence. We find that because A.I.M. did not file the
original promissory note or account for its absence before the court
entered summary judgment, we must reverse the summary judgment
orders in each of the cases. We further find that A.I.M. lacked standing
to foreclose at the time it filed its complaints, but that some parties
waived the defense of lack of standing. Any remaining issues are
rendered moot by our decision and we decline to address them.

Factual Background

In April 2007, Venture Holdings & Acquisitions Group, Inc. and
Vincenzo Gurrera, individually, entered into a loan agreement with A.I.M.
and gave A.I.M. a mortgage on certain real property. Gurrera, Venture’s
president, signed the promissory note as a guarantor.

Likewise, Real Investments LLC entered into two loans with A.I.M, one
in January 2008 and another in May 2008. In connection with these
loans, Real gave A.I.M. a mortgage on two properties. Alexander
Gonzalez, Real’s president, signed the promissory notes as a guarantor.
There is no dispute that the borrowers failed to remain current on
their payments and defaulted on all three loans. Accordingly, A.I.M. filed
mortgage foreclosure actions on the three properties.

In Case No. 09-19636, A.I.M. sought to foreclose o n Venture’s
property. Gurrera filed a proper answer, but Venture did not. A.I.M.
moved for default against Venture and the court granted the motion.
This default has not been contested in this appeal.

In Case Nos. 09-018086 and 09-18089, A.I.M. sought to foreclose on
the two properties owned by Real. In Case No. 09-018086, Gonzalez filed
a proper answer, but Real did not. A.I.M. moved for a default against
Real and the court granted the motion. This default has not been
contested in this appeal. In Case No. 09-18089, however, both Real and
Gonzalez answered the complaint.

In each of its complaints, A.I.M. alleged that it “now owns and holds
the Mortgage Note and Mortgage.” Prior to initiating suit, A.I.M. assigned
its interest in the properties as collateral for a loan. This was indicated
by an allonge attached to each promissory note. The assignment was
still in effect when A.I.M. filed suit.1 The circuit court, in each case,
determined that no issues of genuine fact were raised by the defendants.
In each case summary judgment was entered against the defendants and
in favor of A.I.M. These consolidated appeals followed.

Analysis

“The standard of review of an order granting summary judgment is de
novo.” Allenby & Assocs., Inc. v. Crown St. Vincent Ltd., 8 So. 3d 1211,
1213 (Fla. 4th DCA 2009). We examine the record in the light most
favorable to the non-moving party. Id. The moving party must
conclusively show the absence of any genuine issue of material fact. Id.
An assignment of a promissory note or mortgage, or the right to
enforce such, must pre-date the filing of a foreclosure action. Jeff-Ray
Corp. v. Jacobson, 566 So. 2d 885, 886 (Fla. 4th DCA 1990). A party
must have standing to file suit at its inception and may not remedy this
defect by subsequently obtaining standing. Progressive Exp. Ins. Co. v.
McGrath Cmty. Chiropractic, 913 So. 2d 1281 (Fla. 2d DCA 2005). “The
assignee of a mortgage and note assigned as collateral security is the real
party in interest, that he holds the legal title to the mortgage and note,
and that he, not the assignor is the proper party to file a suit to foreclose
the mortgage.” Laing v. Gainey Builders, Inc., 184 So. 2d 897 (Fla. 1st
DCA 1966); see also A & B Discount Lumber & Supply, Inc. v. Mitchell,
799 So. 2d 301, 307-08 (Fla. 5th DCA 2001).

Here, before A.I.M. filed any of the foreclosure actions below, A.I.M.
assigned the promissory note and mortgage to a third party as collateral
for a loan. Thus, A.I.M. did not have standing to foreclose on any of the
properties at the time it filed suit. However, “th e entry of default
precludes a party from contesting the existence of the plaintiff’s claim
and liability thereon.” Fla. Bar v. Porter, 684 So. 2d 810, 813 n.4 (Fla.
1996) (citations omitted). Real, in Case No. 09-018086, was found to be
in default. Venture in Case No. 09-19636, was found to be in default.
Neither party may contest A.I.M.’s standing at the inception of the suit.
See Glynn v. First Union Nat’l Bank, 912 So. 2d 357, 358 (Fla. 4th DCA
2005) (holding that a homeowner waived any claim that the bank lacked
standing to foreclose where the homeowner never filed a motion or an
answer in the trial court).

But even a party in default does not admit that the plaintiff in a
foreclosure action possesses the original promissory note. See Lenfesty
v. Coe, 16 So. 277, 278 (Fla. 1894). “The decree pro confesso cannot be
extended to a confession of ownership of the note in complainant up to
the time of the master’s report and the confirmation thereof by the court,
and the authorities above cited sustain the view that a production of the
note or securities at the hearing is essential to show complainant’s right
to judgment then.” Id. A.I.M., in order to be entitled to summary
judgment, must establish that it is the proper holder of the promissory
note. Id.

In this case, A.I.M. failed to produce the original promissory note,
failed to account for its absence, and failed to present evidence to
otherwise establish it was the proper holder of the note. The allonge
established that the note was indorsed to a third party. A.I.M.’s failure to
produce the original promissory note, or account for its absence, created
a genuine issue of material fact. Lenfesty, 16 So. at 278. For this reason
alone, the summary judgments were improper in each of the cases.2

Accordingly, in Case No. 09-18089, we reverse the final summary
judgment and remand with directions that the action be dismissed in its
entirety without prejudice.

In Case No. 09-19636, we reverse the summary judgment and vacate
the final judgment of foreclosure. With regard to appellant Vincenzo
Gurrera only, we direct that the action be dismissed without prejudice.
With regard to Venture, however, we do not direct dismissal of the action.

In Case No. 09-018086, we reverse the summary judgment and vacate
the final judgment of foreclosure. With regard to appellant Alexander
Gonzalez only, we direct that the action be dismissed without prejudice.
With regard to Real, however, we do not direct dismissal of the action.
While A.I.M. is free to file the original promissory note and to move for
summary judgment in the actions that have not been dismissed as to
Venture and Real, we caution that the absence of Gurrera and Gonzalez
from those proceedings would leave those parties’ interests unaffected by
any judgment.

Reversed and Remanded.

TAYLOR, HAZOURI and LEVINE, JJ., concur.

* * *

Consolidated appeals from the Circuit Court for the Seventeenth
Judicial Circuit, Broward County; Ana I. Gardiner, Judge(Carol, please
check the judges in the other cases) ; L.T. Case Nos. 09-018086 CACE,
09-18089 08, and 09-19636 CACE.

Carol C. Asbury, Fort Lauderdale, for appellants.

Thomas D. Oates of the Law Offices of Oates & Oates, P.A., Pompano,
for appellee.

Not final until disposition of timely filed motion for rehearing.

[ipaper docId=73749444 access_key=key-1w2ts257limxmnpzdczp height=600 width=600 /]

 

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUDComments (0)

WOODRUM v. WELLS FARGO | FL 4DCA Reverses “1.510(c) allows the court to consider affidavits when determining whether a genuine issue of material fact exists”

WOODRUM v. WELLS FARGO | FL 4DCA Reverses “1.510(c) allows the court to consider affidavits when determining whether a genuine issue of material fact exists”


DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

July Term 2011

FAYTHE P. WOODRUM, TIMOTHY P. WOODRUM and DAWN M.
WOODRUM,
Appellants,

v.

WELLS FARGO MORTGAGE BANK, N.A., as successor by merger to
WACHOVIA BANK, N.A.,
Appellee.

No. 4D10-3538

[November 9, 2011]

PER CURIAM.

The Appellants, the Woodrums, appeal the trial court’s entry of a final
summary judgment of foreclosure in favor of Wells Fargo Mortgage Bank,
N.A. They argue that entry of summary judgment was error where the
record did not refute affirmative defenses raised by one of the Appellants
in an affidavit in opposition to the motion for summary judgment. We
agree and reverse.

The bank filed a mortgage foreclosure complaint, to which the
Woodrums failed to file an answer. Instead of moving for entry of a
default, the bank filed a motion for summary judgment. In response, one
of the Appellants, Faythe P. Woodrum, filed an affidavit in opposition to
the motion, which raised numerous affirmative defenses.

The standard of review of an order granting summary judgment is de
novo. E. Qualcom Corp. v. Global Commerce Ctr. Ass’n, 59 So. 3d 347,
350 (Fla. 4th DCA 2011) (citation omitted). “[I]f a plaintiff moves for
summary judgment prior to the defendant’s filing an answer, she must
conclusively demonstrate that the defendant cannot assert a genuine
issue of material fact.” Miles v. Robinson ex. rel. Estate of Kight, 803 So.
2d 864, 865 (Fla. 4th DCA 2001) (citation omitted).

The bank argues o n appeal that where a n answer is overdue,
affirmative defenses raised in a n affidavit opposing the motion for
summary judgment cannot be considered by the trial court. The bank
offers no case law supporting its position. Florida Rule of Civil Procedure
1.510(c) allows the court to consider affidavits when determining whether
a genuine issue of material fact exists. Additionally, a party may plead or
defend at any time before a default is entered. Fla. R. Civ. P. 1.500(c).
Because the bank failed to refute the affirmative defenses or show
they were legally insufficient, it was error for the trial court to grant
summary judgment. See Frost v. Regions Bank, 15 So.3d 905 (Fla. 4th
DCA 2009).

Reversed and remanded.

TAYLOR, HAZOURI and LEVINE, JJ., concur.
* * *
Appeal from the Circuit Court for the Seventeenth Judicial Circuit,
Broward County; Victor Tobin, Judge; L.T. Case No. 09-43276 CACE 18.

Philippe Symonovicz of Law Offices of Philippe Symonovicz, Fort
Lauderdale, for appellants.

Todd A. Armbruster of Moskowitz, Mandell, Salim & Simowitz, P.A.,
Fort Lauderdale, for appellee.

Not final until disposition of timely filed motion for rehearing

[ipaper docId=72347281 access_key=key-1p0xee2g3we4ypcu98qv height=600 width=600 /]

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUDComments (1)

Foreclosure Ruling Irks Banks

Foreclosure Ruling Irks Banks


Since they can’t find someone with real knowledge, they probably are stuck because the majority of the originating companies are long gone and so are the employees…just as planned.

Palm Beach Post-

WEST PALM BEACH — An appeals court ruling in favor of Wellington homeowners in foreclosure is causing “calamitous confusion,” according to bank attorneys who say it could snarl hundreds of thousands of pending foreclosure cases.

The bank is asking for a rehearing and clarification of the Sept. 7 decision by the 4th District Court of Appeal, which said a foreclosure affidavit submitted by a bank employee was hearsay because the person relied on computerized information and did not have personal knowledge of the case.

The lack of personal knowledge of foreclosure documents is the foundation of the robo-signing controversy that continues to delay foreclosure proceedings.

The bank is not challenging the court’s decision in Gary and Anita Glarum vs. LaSalle Bank, but it said the ruling has been misinterpreted to mean that the person relying on computerized records must be the one who actually entered them into the computer or the direct custodian of the record.

[PALM BEACH POST]

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUDComments (0)

WISCONSIN 4DCA Reverses, Remands Summary Judgment “Materials were insufficient to establish that BAC was the holder of the note”

WISCONSIN 4DCA Reverses, Remands Summary Judgment “Materials were insufficient to establish that BAC was the holder of the note”


BAC Home Loan Servicing, L.P. f/k/a Countrywide Home Loans Servicing L.P., Plaintiff-Respondent,
v.
Michael J. Williams and Nicole J. Williams, Defendants-Appellants.

No. 2010AP2334.
Court of Appeals of Wisconsin, District IV.

Opinion Filed: September 29, 2011.
Before Lundsten, P.J., Sherman and Blanchard, JJ.

¶ 1 PER CURIAM.

Michael and Nicole Williams (collectively, Williams) appeal a summary judgment order that granted BAC Home Loan Servicing (BAC) a judgment of foreclosure against them. Williams raises multiple arguments challenging the judgment of foreclosure, and further contends the circuit court erred in denying the counterclaims by an earlier order. We conclude that the circuit court properly dismissed the counterclaims, but that the summary judgment materials were insufficient to establish that BAC was the holder of the note upon which the foreclosure was based. Accordingly, we reverse the judgment of foreclosure and remand for further proceedings.

BACKGROUND

¶ 2 On January 25, 2008, Williams executed a promissory note in favor of One Choice Mortgage, LLC, secured by a mortgage on certain residential property in Sauk County. On August 7, 2009, BAC filed this action, seeking to foreclose on the property without deficiency, pursuant to Wis. Stat. § 846.101 (2009-10).[1]

¶ 3 BAC alleged in its complaint that it was the current holder of the note and mortgage, and that Williams had failed to make contractually required payments. Williams filed an answer, subsequently amended, admitting that Williams had failed to make payments, but raising a series of affirmative defenses. Williams also set forth a series of counterclaims seeking damages for the alleged failure of BAC (and/or its predecessors in interest) to comply with several federal administrative code provisions and for negligence, product liability, lender liability, and strict liability. BAC moved to dismiss the counterclaims and further sought summary judgment on the foreclosure.

¶ 4 The summary judgment materials included certified copies of the original note and mortgage, which were both issued to One Choice Mortgage through its nominee Mortgage Electronic Registration Systems, Inc., and an uncertified photocopy of an “Assignment of Mortgage” form. This form stated that Mortgage Electronic Registration Systems, Inc. “assigns to BAC … the mortgage executed by [Williams] to Mortgage Electronic Registration Systems Inc., as mortgagee on the 25th of January, 2008, together with the previously transferred note secured thereby ….” The assignment form was accompanied by an affidavit from a BAC employee. The employee averred that she was a custodian of BAC’s business records, having

possession, control and responsibility for the accounting and other mortgage loan records relating to the defendants’ mortgage loan which are created and kept and maintained in the ordinary course of business as a regular business practice and are prepared at or near the time of the transaction or event by a person with knowledge.

The affidavit further stated that the employee had personally inspected the records relating to Williams, and had personal knowledge of how such records generally were created and kept and maintained.

¶ 5 The circuit court dismissed the counterclaims and granted summary judgment on the foreclosure, and Williams appeals.

STANDARD OF REVIEW

¶ 6 This court reviews summary judgment decisions de novo, applying the same methodology and legal standard employed by the circuit court. Brownelli v. McCaughtry, 182 Wis. 2d 367, 372, 514 N.W.2d 48 (Ct. App. 1994).

We first examine the complaint to determine whether it states a claim, and then we review the answer to determine whether it joins a material issue of fact or law…. [Next,] we examine the moving party’s affidavits to determine whether they establish a prima facie case for summary judgment. If they do, we look to the opposing party’s affidavits to determine whether there are any material facts in dispute that entitle the opposing party to a trial.

Frost v. Whitbeck, 2001 WI App 289, ¶6, 249 Wis. 2d 206, 638 N.W.2d 325 (citations omitted), aff’d, 2002 WI 129, 257 Wis. 2d 80, 654 N.W.2d 225.

DISCUSSION

Summary Judgment on the Foreclosure

¶ 7 Although Williams raises multiple arguments, we conclude that one issue is dispositive as to whether summary judgment was properly granted on BAC’s foreclosure action. Specifically, we agree with Williams that BAC failed to make a prima facie case that it was in fact the current holder of the promissory note.

¶ 8 We first question whether the form assigning the mortgage to BAC, and making reference to a “previously transferred note” was actually the effective instrument transferring the promissory note to BAC. If the note had in fact been previously transferred, it would seem that the prior document would be necessary to establish that transfer, and should have been included in the summary judgment materials. In any event, as discussed below, even assuming that the document assigning the mortgage to BAC also assigned the promissory note or could properly be used to document the assignment by reference, we conclude that the assignment document was insufficiently authenticated to satisfy the summary judgment standard.

¶ 9 Affidavits in support or in opposition to a motion for summary judgment “shall be made on personal knowledge and shall set forth such evidentiary facts as would be admissible in evidence.” Wis. Stat. § 802.08(3). In order to be admissible in evidence, a document must be authenticated by “evidence sufficient to support a finding that the matter in question is what its proponent claims.” Wis. Stat. § 909.01. Certain documents may be self-authenticating, including certified copies of public records such as recorded instruments, and certified domestic records of regularly conducted activity. Wis. Stat. § 909.02(4) and (12). The rule on self-authentication for records of regularly conducted activity parallels the hearsay exception for such records, allowing admission of

a memorandum, report, record, or data compilation, in any form, of acts events, conditions, opinions, or diagnoses, made at or near the time by, or from information transmitted by, a person with knowledge, all in the course of a regularly conducted activity, as shown by the testimony of the custodian or other qualified witness.

Cf. Wis. Stat. §§ 908.03(6) and 909.02(12).

¶ 10 A records custodian seeking to authenticate a record must be qualified to testify both that the record at issue was made by a person with knowledge or from information transmitted by a person with knowledge, and that this was done in the course of a regularly conducted activity. Palisades Collection LLC v. Kalal, 2010 WI App 38, ¶20, 324 Wis. 2d 180, 781 N.W.2d 503. Being qualified means that the custodian possesses sufficient personal knowledge to testify about such things as who recorded or transmitted the information and the contemporaneousness of the record in relation to the events it purports to document. See id., ¶16.

¶ 11 We first note that the copy of the mortgage assignment form included in the summary judgment materials here was not certified, and therefore would not be admissible as a self-authenticated public record, even if it were recorded. Next, we question whether a form assigning a mortgage or promissory note from one party to another based upon consideration, constitutes “a memorandum, report, record, or data compilation” so as to qualify as a record of regularly conducted activity, subject to the self-authentication rule.

¶ 12 Even assuming for the sake of argument only that such a signed, notarized, and recorded instrument could be considered a “record” of regularly conducted activity, we are not persuaded that the BAC employee’s affidavit established that she was qualified to authenticate the assignment form here. The employee’s affidavit makes conclusory assertions parroting the statutory language that she has personal knowledge that the records in her custody are prepared in the ordinary course of business at or near the time of the transaction or event by a person with knowledge of the underlying transactions. However, it does not include any specific assertions to explain where the copy of the assignment form attached to her affidavit came from—for instance, whether it was made from the original, and if so, by whom. The fact that the employee may have been in a position to know how BAC prepared its account statements, which we would agree qualify as ordinary business records, does not mean that she was in a position to authenticate an uncertified copy of an instrument that she did not see executed.

¶ 13 Because the copy of the document purportedly assigning to BAC Williams’ mortgage—and by reference, the promissory note—was not properly authenticated, it did not meet the standard of admissible evidence required for summary judgment materials under Wis. Stat. § 802.08(3). Therefore, BAC failed to make a prima facie case that it had standing to foreclose based upon Williams’ failure to pay according to the terms of the promissory note. In light of BAC’s failure, we do not need to address whether any of the affirmative defenses asserted in Williams’ answer would also have created material disputes for the circuit court. Accordingly, we reverse the circuit court’s summary judgment decision and remand with directions that the matter proceed with discovery[2] and trial on BAC’s foreclosure claim.

Williams’ Counterclaims

¶ 14 Williams filed counterclaims alleging violations of 12 U.S.C. §§ 2605(b), 2605(c), 2605(e), 2605(e)(3), negligence, product liability, lender liability, and strict liability for alleged violations of the Truth in Lending Act.

¶ 15 Williams first argues that the circuit court violated due process by dismissing all counterclaims without providing an adequate opportunity to submit additional evidence. Williams correctly points out that when matters outside the pleadings are presented on a motion to dismiss, the motion shall be treated as one for summary judgment. Wis. Stat. § 802.06(2)(b). However, as we explained above, the first step in summary judgment methodology is to examine the sufficiency of the pleadings. If the pleadings do not state a claim upon which relief can be granted, there is no need for further analysis. Therefore, any error the circuit court may have committed in refusing to allow Williams to submit additional materials in response to BAC’s motion to dismiss was rendered harmless once the court determined that Williams’ pleadings in fact failed to state a claim, and the circuit court did not violate Williams’ due process rights by dismissing the counterclaims based on the pleadings alone.

¶ 16 Williams next contends that the circuit court applied the wrong standard in considering whether to dismiss the counterclaims because it did not mention the oft-cited language that a claim should be dismissed only if it is “quite clear” that under no circumstances could the plaintiff prevail. Instead, the circuit court cited Doe v. Archdiocese of Milwaukee, 2007 WI 95, ¶12, 303 Wis. 2d 34, 734 N.W.2d 827, for the proposition that “[d]ismissal of a claim is improper if there are any conditions under which the [pleading party] could recover.” The minor difference in language is a distinction without a difference. In short, we are satisfied the circuit court properly understood that it was to liberally construe the pleadings when testing their sufficiency.

¶ 17 Turning to the merits, Williams challenges the circuit court’s conclusion that the counterclaims of negligence, product liability, and strict liability were barred by the economic loss doctrine. Williams complains that the circuit court did not adequately explain why the economic loss doctrine applied to these claims, and why Williams did not qualify for an exception. The economic loss doctrine “preclud[es] contracting parties from pursuing tort recovery for purely economic or commercial losses associated with the contract relationship.” Kaloti Enterprises, Inc. v. Kellogg Sales Co., 2005 WI 111, ¶27, 283 Wis. 2d 555, 699 N.W.2d 205 (citations omitted). Contrary to Williams’ assertions, neither the status of being a consumer nor a lack of knowledge about the economic loss doctrine relieves a party from its constraints. Williams correctly points out that there is a limited exception to the economic loss doctrine when a contract was induced by fraud. See Digicorp, Inc. v. Ameritech Corp., 2003 WI 54, ¶¶51-52, 262 Wis. 2d 32, 662 N.W.2d 652. That exception does not apply here, however, because the instances of fraud Williams alleges in the complaint—namely, an erroneous real estate appraisal and a misrepresentation about whether a damages clause should apply to the APR rate—were allegedly committed by persons who were not employees of BAC or otherwise parties to the action.[3] In sum, Williams’ claims of negligence, product liability, and strict liability clearly lie in tort, and were plainly associated with contractual relationships arising out of a series of mortgages. The court did not need to say more to dispose of counterclaims six, seven and nine.

¶ 18 Williams presents no argument that the circuit court erred in the dismissal of the other counterclaims.

¶ 19 Finally, Williams contends the circuit court should have imposed sanctions on BAC based upon what Williams views as inaccurate statements in BAC’s filings to the court. However, the challenged statements appear simply to be legal propositions or characterizations that Williams disagrees with. The circuit court was well within its discretion to determine that there had been no ethical violation warranting sanctions.

By the Court.—Judgment reversed and cause remanded.

This opinion will not be published. See Wis. Stat. Rule 809.23(1)(b)5.

[1] All references to the Wisconsin Statutes are to the 2009-10 version unless otherwise noted.

[2] Williams complains that the circuit court ignored discovery requests, but does not specify what specific materials were sought. We therefore do not address any particular discovery matter in this appeal.

[3] Williams also contends that the circuit court should have granted Williams’ motion to add the appraiser and real estate broker to the action. As BAC points out, however, that motion was not filed until after the counterclaims had already been dismissed, and the alleged misconduct related to prior, satisfied mortgages that were not the subject of the current foreclosure action.

[ipaper docId=67388212 access_key=key-1xgqsstj4l3xoy1elc2i height=600 width=600 /]

 

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUDComments (0)

FL 4DCA Reverses & Remands “Certificate of Title, Remands for an Evidentiary Hearing” REGNER v. AMTRUST

FL 4DCA Reverses & Remands “Certificate of Title, Remands for an Evidentiary Hearing” REGNER v. AMTRUST


DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

July Term 2011

CHRISTOPHER REGNER and KARIN REGNER,
Appellants,

v.

AMTRUST BANK,
Appellee.

No. 4D11-1281

September 28, 2011]

GERBER, J.

The defendants, whose home was sold at a foreclosure sale, appeal
the circuit court’s order denying their verified motion to vacate the
certificate of title issued after the sale. The court denied the motion even
though it recognized that the bank had not offered any evidence in
opposition to the motion. The defendants argue that the court erred in
denying their motion because the clerk of court issued the certificate of
title while their objections to the sale were pending and because the
court did not conduct an evidentiary hearing on their objections.
We agree with the defendants’ arguments a n d reverse.
Compare § 45.031(5), Fla. Stat. (2010) (“If no objections to the sale are
filed within 10 days after filing the certificate of sale, the clerk shall file a
certificate of title . . . .”), with § 45.031(8), Fla. Stat. (2010) (“If timely
objections to the bid are served, the objections shall be heard by the
court.”); see also Opportunity Funding I, LLC v. Otetchestvennyi, 909 So.
2d 361, 362 (Fla. 4th DCA 2005) (“The Clerk of the Court lacks authority
to issue a certificate of title . . . when an objection to a foreclosure sale is
timely filed.”). “For the court to ‘hear’ objections, it must provide both
notice and an opportunity for any interested party to address those
objections.” U.S. Bank Nat’l Ass’n v. Bjeljac, 43 So. 3d 851, 853 (Fla. 5th
DCA 2010) (citations omitted). Further, “‘it is reversible error for a trial
court to deny a party an evidentiary hearing to which [the party] is
entitled.’” Avi-Isaac v. Wells Fargo Bank, N.A., 59 So. 3d 174, 177 (Fla.
2d DCA 2011) (quoting Sperdute v. Household Realty Corp., 585 So. 2d
1168, 1169 (Fla. 4th DCA 1991)).

We remand for an evidentiary hearing on the defendants’ claims that:
(1) they did not receive notice of the sale; (2) the bank breached the
parties’ settlement agreement by wrongfully rejecting the defendants’
final redemption payment; a n d (3) the bank’s purchase price was
inadequate. See Bennett v. Ward, 667 So. 2d 378, 382 (Fla. 1st DCA
1995) (“Th e failure to give adequate notice of a judicial sale may
effectively deprive the mortgagor of the right to redeem the property.”);
Indian River Farms v. YBF Partners, 777 So. 2d 1096, 1098-99 (Fla. 4th
DCA 2001) (remanding for evidentiary hearing on whether mortgagor’s
assignee timely exercised its right of redemption before the issuance of
the certificate of title); Blue Star Invs., Inc. v. Johnson, 801 So. 2d 218,
219 (Fla. 4th DCA 2001) (“[T]o vacate a foreclosure sale, the trial court
must find (1) that the foreclosure sale bid was grossly or startlingly
inadequate; and (2) that the inadequacy of the bid resulted from some
mistake, fraud or other irregularity in the sale.”) (citations and internal
quotations omitted).

On remand, the defendants bear the burden to establish their claims.
See Richardson v. Chase Manhattan Bank, 941 So. 2d 435, 437 (Fla. 3d
DCA 2006) (“On remand [the mortgagor] bears the burden to establish at
the evidentiary hearing that she did not receive notice of the rescheduled
sale and must also show what harm, if any, she suffered by reason of not
being notified of the sale.”). The defendants shall be entitled to testify at
the evidentiary hearing if they so request. See Sperdute, 585 So. 2d at
1169 (“Neither the submission of affidavits nor argument of counsel is
sufficient to constitute an evidentiary hearing. Since the purpose of an
evidentiary hearing is to allow a party to ‘have a fair opportunity to
contest’ the factual issues, this purpose is not effectuated if a party is not
allowed to testify.”) (citation omitted).

Reversed and remanded.

WARNER and POLEN, JJ., concur.
* * *
Appeal of non-final order from the Circuit Court for the Seventeenth
Judicial Circuit, Broward County; Michael L. Gates, Judge; L.T. Case No.
09-58312CACE.

Charles D. Franken of Charles D. Franken, P.A., Plantation, for
appellants.

Vivian Lasaga of Spear and Hoffman, P.A., Miami, for appellee.

Not final until disposition of timely filed motion for rehearing.

[ipaper docId=66893544 access_key=key-kt8p1x6z49wlga8ku29 height=600 width=600 /]

 

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUDComments (0)

FREEMAN v. TONEY, 608 So. 2d 863 (Fla. 4th DCA 1992) “to address the issue of whether good cause was shown for failure to prosecute.”

FREEMAN v. TONEY, 608 So. 2d 863 (Fla. 4th DCA 1992) “to address the issue of whether good cause was shown for failure to prosecute.”


608 So.2d 863 (1992)

Nebuchadnezzar FREEMAN and
Helen Freeman, Appellants,

v.

Keith Leroy TONEY and Orkin Exterminating Company, Inc., Appellees.

No. 90-2201.

District Court of Appeal of Florida, Fourth District.

October 21, 1992.

Gary Marks of Law Office of Gary Marks, Fort Lauderdale, for appellants.

Robert H. Schwartz of Gunther & Whitaker, P.A., Fort Lauderdale, for appellees.

DOWNEY, Judge.

This case is before the court on remand from the Supreme Court of Florida wherein that court quashed the holding of this court in Toney v. Freeman, 600 So.2d 1099 (Fla. 1992), and directed this court “to address the issue of whether good cause was shown for failure to prosecute.”

The facts of the case can be gleaned from our decision in Freeman v. Toney, 591 So.2d 200 (Fla. 4th DCA 1991), and the decision of the supreme court cited above.

As good cause for failure to prosecute appellant contended below that, due to the departure of a lawyer from the firm representing appellant, they did not receive the order issued by the trial court requesting advice regarding the status of the case until after the time limit for compliance. Be that as it may, it does not constitute good cause for the failure to prosecute within one year as required by the rule.

As appellees contend, good cause requires some contact with the opposing party and some form of excusable conduct or occurrence which arose other than through negligence or inattention to the pleading deadline. Appellees note that a change of attorneys is not good cause, nor are claims that counsel changed offices, suffered several secretarial changes and simply overlooked the case. Since no good cause was shown herein, appellees submit that the order of dismissal must be upheld.

In Barton-Malow Co. v. Gorman Co. of Ocala, Inc., 558 So.2d 519, 521 (Fla. 5th DCA 1990), the court held that “good cause requires some contact with the opposing party and some form of excusable conduct or occurrence which arose other than 864*864 through negligence or inattention to pleading deadlines.” See also Togo’s Eatery of Florida, Inc. v. Frohlich, 526 So.2d 999 (Fla. 1st DCA 1988) (good cause which will avoid dismissal for failure to prosecute must include contact with the opposing party and some form of excusable conduct other than negligence or inattention to pleading deadlines).

Based upon this record, appellants have failed to show an abuse of discretion in the dismissal for lack of prosecution. Accordingly, we affirm the order appealed from.

OWEN, WILLIAM C., JR., and WALDEN, JAMES H., Senior Judges, concur.

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUDComments (0)

GLARUM v. LASALLE BANK | FL 4DCA Reverses SJ “Home Loan Services Inc.’s Ralph Orsini Affidavit Fail”

GLARUM v. LASALLE BANK | FL 4DCA Reverses SJ “Home Loan Services Inc.’s Ralph Orsini Affidavit Fail”


DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

July Term 2011

GARY GLARUM and ANITA GLARUM,
Appellants,

v.

LASALLE BANK NATIONAL ASSOCIATION, as Trustee for
Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed Certificates, Series 2006-FFI, FIRST WELLINGTON, INC., a dissolved
corporation, WELLINGTON SHORES HOMEOWNERS ASSOCIATION,
GREENVIEW SHORES NO.2 AT WELLINGTON HOMEOWNERS
ASSOCIATION, GREENVIEW SHORES HOMEOWNERS ASSOCIATION,
FIRST FRANKLIN FINANCIAL CORPORATION, and any unknown
heirs, devisees, grantees, creditors, and other unknown persons or
unknown spouses claiming by, through and under any of the abovenamed
parties,
Appellees.

No. 4D10-1372

[September 7, 2011]

PER CURIAM.

This appeal presents two issues. First, we consider whether the trial
court improperly granted a summary judgment of foreclosure in favor of
LaSalle Bank. We also consider whether the trial court erred in
sanctioning appellants’ counsel for filing frivolous pleadings pursuant to
section 57.105, Florida Statutes. We reverse the trial court’s entry of
summary judgment in favor of LaSalle in part, as LaSalle’s summary
judgment evidence was insufficient to establish the amount due to
LaSalle under the note and mortgage. We likewise reverse the entry of
sanctions against appellants’ counsel as improper. However, we find no
merit in appellants’ contention that LaSalle lacked standing to seek
foreclosure.

Appellants admitted in their answer that they had not made payments
according to the terms of the note, and as such, they were in default.
Appellants, however, denied LaSalle’s allegations regarding the amount
of the default. To establish the amount of appellants’ indebtedness for
summary judgment, LaSalle filed the affidavit of Ralph Orsini, a “specialist”
at the loan servicer, Home Loan Services, Inc. Orsini claimed
in the affidavit that appellants were in default of their payment
obligations and owed in excess of $340,000 on the note. In opposition to
the motion for summary judgment, appellants filed Orsini’s deposition,
wherein Orsini explained that he derived the $340,000 figure from his
company’s computer system. However, Orsini did not know who entered
the data into the computer, and he could not verify that the entries were
correct at the time they were made. To calculate appellants’ payment
history, Orsini relied in part on data retrieved from Litton Loan Servicing,
a prior servicer of appellants’ loan.

Florida Rule of Civil Procedure 1.510(c) requires a party moving for
summary judgment to “identify any affidavits, answers to interrogatories,
admissions, depositions, and other materials as would be admissible in
evidence.” If this evidence, taken in the light most favorable to the nonmoving
party, shows no genuine issue of material fact, the moving party
is entitled to judgment as a matter of law. Volusia Cnty. v. Aberdeen at
Ormond Beach, L.P., 760 So. 2d 126, 130 (Fla. 2000).

We find that Orsini’s affidavit constituted inadmissible hearsay and,
as such, could not support LaSalle’s motion for summary judgment.
Pursuant to section 90.803(6)(a), Florida Statutes, documentary evidence
may be admitted into evidence as business records if the proponent of
the evidence demonstrates the following through a record’s custodian:
(1) the record was made at or near the time of the event; (2)
was made by or from information transmitted by a person
with knowledge; (3) was kept in the ordinary course of a
regularly conducted business activity; and (4) that it was a
regular practice of that business to make such a record.
Yisrael v. State, 993 So. 2d 952, 956 (Fla. 2008).

Orsini did not know who, how, or when the data entries were made
into Home Loan Services’s computer system. He could not state if the
records were made in the regular course of business. He relied on data
supplied by Litton Loan Servicing, with whose procedures he was even
less familiar. Orsini could state that the data in the affidavit was
accurate only insofar as it replicated the numbers derived from the
company’s computer system. Despite Orsini’s intimate knowledge of how
his company’s computer system works, he had no knowledge of how that
data was produced, and he was not competent to authenticate that data.
Accordingly, Orsini’s statements could not be admitted under section
90.803(6)(a), and the affidavit of indebtedness constituted inadmissible
hearsay. Because LaSalle presented no competent evidence to show
$422,677.85 in damages, the amount of the judgment to which LaSalle is
entitled remains at issue. Therefore, we reverse the entry of judgment in
favor of LaSalle and remand for further proceedings.

The trial court also entered sanctions against appellants’ counsel for
filing a “form affidavit” from an expert, Rita Lord, who opined on the
ability of lay persons to distinguish between original and high-quality
copies of promissory notes. Lord did not represent in the affidavit that
she reviewed the papers at issue in this case. Nevertheless, the trial
court was distressed by appellants’ counsel’s habit of filing “the same
affidavit in ten different cases, when [Lord] hasn’t seen the documents in
this case.” The court awarded LaSalle its reasonable attorney’s fees for
having to file a motion to strike Lord’s affidavit.

We note that LaSalle moved for sanctions under section 57.105,
Florida Statutes. That statute permits a trial court to award a
“reasonable attorney’s fee” to the “prevailing party” where the plaintiff’s
claim was frivolous or to a party to compensate for the opposing party’s
dilatory conduct. § 57.105(1)-(2), Fla. Stat. The trial court did not find
that appellants’ claims were frivolous, a n d th e trial court did not
conclude that Lord’s affidavit was filed to cause unreasonable delay.
Thus, section 57.105 could not serve as a basis for the award of
attorney’s fees to LaSalle.

To the extent that the trial court may have been exercising its
inherent authority to sanction parties or their attorneys, we also find
error. “[A] trial court possesses the inherent authority to impose
attorneys’ fees against an attorney for bad faith conduct.” Moakley v.
Smallwood, 826 So. 2d 221, 226 (Fla. 2002). To impose attorney’s fees
as a sanction under its inherent authority, the trial court must make an
“express finding of bad faith conduct” that is “supported by detailed
factual findings describing the specific acts of bad faith conduct that
resulted in the unnecessary incurrence of attorneys’ fees.” Id. at 227.
The trial court did not make any specific findings of bad faith on the
record, and the sanctions order must be reversed without prejudice. See
Finol v. Finol, 912 So. 2d 627, 629 (Fla. 4th DCA 2005). “Upon remand,
should the court be asked to reconsider the issue, any future hearing
and order must comply with the requirements of Moakley.” Id.

In summary, we reverse the judgment of foreclosure and the entry of
sanctions against appellants’ counsel a n d remand for further
proceedings consistent with this opinion.

Reversed and remanded.

CIKLIN, LEVINE, JJ., and THORNTON, JOHN W., JR., Associate Judge, concur.

* * *

Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm
Beach County; Meenu Sasser, Judge; L.T. Case No. CA08-028930 AW.

Thomas Ice of Ice legal, P.A., Royal Palm Beach, for appellant.

Thomasina F. Moore and Dennis W. Moore of Butler & Hosch, P.A.,
Orlando, for appellee LaSalle Bank National Association.

Not final until disposition of timely filed motion for rehearing

[ipaper docId=64200208 access_key=key-2gbo7ur1dwfuhkdraayd height=600 width=600 /]

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUDComments (1)

MERS v. JACOBY | CA 4DCA Div. 1 Affirms JGMT “QUIET TITLE, Foreclosure Sale, Companion case Nacif v. White-Sorenson”

MERS v. JACOBY | CA 4DCA Div. 1 Affirms JGMT “QUIET TITLE, Foreclosure Sale, Companion case Nacif v. White-Sorenson”


COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE

STATE OF CALIFORNIA

MORTGAGE ELECTRONIC REGISTRATION SYSTEMS et al.,

Plaintiffs, Cross-defendants and             Appellants,

v.

SCOTT JACOBY,

Defendant, Cross-complainant and             Respondent.

D054010

(Super. Ct. No. GIC828794)

APPEAL from a judgment of the Superior Court of San Diego County, Judith F. Hayes, Judge.  Affirmed.

Scott Jacoby purchased property previously owned by J. Ross White-Sorensen at a court-ordered judicial foreclosure sale.  White-Sorensen and several entities with interests in two extinguished deeds of trusts brought an action against Jacoby, seeking to invalidate the sale and/or obtain declaratory relief providing that Jacoby holds the property subject to these deeds of trust.  Jacoby cross-complained seeking to quiet title to the property and for a judgment that he is the owner of unencumbered title to the property.

The court granted Jacoby’s summary judgment motion on the claims against him and on his affirmative quiet title claim.  White-Sorensen and two entities named on the extinguished deeds of trust appeal from the judgment.[1] We affirm.

FACTUAL AND PROCEDURAL SUMMARY

Overview

This appeal arises from an action filed by Linda Nacif against White-Sorensen resulting in a default judgment against White-Sorensen.  In the default judgment, the court found Nacif proved her claims and ordered a judicial foreclosure sale of White-Sorensen’s property.  The final judgment stated the proceeds of the sale shall be paid to Nacif for the judgment amount ($209,187 plus interest), and any surplus shall be paid to junior secured lenders who recorded interests after Nacif recorded her lis pendens.  Accredited was a lienholder who had recorded two deeds of trust securing loans to White-Sorensen after Nacif filed her lis pendens.

At the court-ordered judicial foreclosure sale conducted by the San Diego County Sheriff’s Office (Sheriff), Jacoby was the highest bidder at $222,524.  Pursuant to the court’s judgment, the Sheriff paid this amount to Nacif and there was no remaining surplus.  The Sheriff transferred title of the property to Jacoby, and Accredited’s later-recorded deeds of trust were extinguished, leaving Accredited with unsecured notes against White-Sorensen.  (Code Civ. Proc., § 701.630.)[2]

As explained in more detail below, White-Sorensen and the Accredited parties then filed claims against Jacoby seeking to set aside the sale or seeking an order that Jacoby purchased the property subject to Accredited’s deeds of trust.  Jacoby filed a cross-complaint seeking to quiet title to his property.

Jacoby moved for summary judgment, arguing his purchase at the court-ordered sale was conclusive and could not be challenged.  In opposing the motion, the Accredited parties argued the facts showed that before he bid on the property Jacoby had notice of their deeds of trust and that they were in the process of challenging the default judgment in the Nacif action.  The trial court found that even assuming Jacoby was aware of these facts, Jacoby was entitled to quiet title to the property because the statutes provide a judicial foreclosure sale to a party other than the judgment creditor is “absolute” and “may not be set aside for any reason.”  (§ 701.680, subd. (a).)  The court further found Jacoby did not purchase the property subject to Accredited’s deeds of trust because these instruments were not recorded when Nacif commenced her action and recorded the lis pendens.  The court thus granted Jacoby summary judgment.  As explained below, we agree with the court’s conclusions and affirm the judgment.

We note that we are concurrently filing an opinion in a companion case involving appellants’ disputes with Nacif.  (Nacif v. White-Sorensen (August 8, 2011, D056993 (Nacif II).) We also previously filed an opinion involving Accredited’s claims against Nacif.  (Accredited Home Lenders, Inc. v. Nacif (July 26, 2007, D048938) (Nacif I).) For clarity, we have made an effort to include facts in this opinion only to the extent they are relevant to the issues and/or appellate contentions asserted in this (the Jacoby) case.  A more detailed background of the underlying factual circumstances can be found in the Nacif I and Nacif II opinions.

Summary of Events Leading to Judicial Foreclosure Sale

In April 2004, Nacif filed an action against White-Sorensen, claiming White-Sorensen breached a contract to repay a loan and sought to impose an equitable mortgage on his property (the White-Sorensen property).  On the same day, Nacif recorded a lis pendens on the White-Sorensen property, giving notice of her equitable mortgage claim affecting the property.

Five months later, in September 2004, Accredited recorded two deeds of trust on the White-Sorensen property securing Accredited’s $675,000 loan to White-Sorensen.  The deeds of trust identified First American as the trustee and MERS as the nominee and nominal beneficiary.  White-Sorensen obtained this refinancing loan to fund a settlement with Nacif.  Although Nacif and White-Sorensen signed a settlement agreement in August 2004, Nacif later amended her complaint and continued her action against White-Sorensen based on allegations that he engaged in fraud in inducing her to agree to the settlement.  White-Sorensen then defaulted on the amended complaint.

In June 2005, the court entered a $209,187 default judgment against White-Sorensen on Nacif’s amended complaint.  The court also imposed an equitable mortgage on the White-Sorensen property and ordered the property sold at a foreclosure sale.  The amended final judgment, dated July 8, 2005, stated that all interests in the White-Sorensen property recorded “subsequent to the filing of notice of the pendency of this action” would be extinguished after the sale of the property.  (Italics added.)  Specifically, the judgment stated:  “[A]fter delivery of a deed by the levying officer to the purchaser at the sale, [White-Sorensen] and . . . all persons claiming to have acquired any estate or interest in the property subsequent to the filing of notice of the pendency of this action with the county recorder, are forever barred and foreclosed from all equity of redemption in, and claim to, the property and every part of it.”  (Italics added.)

Two weeks later, on July 22, 2005, the trustee on Accredited’s deeds of trust recorded a notice of trustee’s sale on the White-Sorensen property, based on claims that White-Sorensen had failed to make required payments on the $675,000 refinance loan.

On August 5, 2005, Nacif recorded an abstract of the July 8, 2005 final judgment, giving notice that the court had determined her judgment lien was superior to all interests in the property recorded after April 2004.

On August 12, 2005, the superior court issued a writ of execution on the July 8, 2005 final judgment.

On September 2, 2005, the Sheriff received instructions to levy upon the White-Sorensen property with a copy of the writ of sale.  One week later, on September 9, the Sheriff recorded a Notice of Levy and a copy of the writ of sale.

At some point between August 2005 and October 2005, Accredited learned of Nacif’s abstract of judgment which indicated that all liens (including Accredited’s deeds of trust) would be extinguished by the court-ordered judicial foreclosure sale.  Based on this information, Accredited retained White-Sorensen’s former counsel (S. Todd Neal) to “immediately file a Complaint for Declaratory Relief against Nacif on behalf of Accredited and MERS to protect the priority of the deeds of trust.”

In November 2005, Accredited filed a separate lawsuit against Nacif seeking a declaration that its deeds of trust had priority over Nacif’s July 8, 2005 final judgment.  In January 2006, Accredited filed a motion in Nacif’s case against White-Sorensen, seeking to vacate the entry of default and default judgment against White-Sorensen and for leave to intervene in this action.  Superior Court Judge Linda Quinn presided over the Nacif/White-Sorensen action.

While Accredited’s motions were pending in the Nacif/White-Sorensen action, on February 23, 2006, the Sheriff held a judicial foreclosure sale.  Jacoby, a third party, offered the highest bid at $222,524.  Based on Jacoby’s bid, the Sheriff determined Jacoby was the purchaser of the property.  One of Accredited’s attorneys (Neal) did not receive prior notice of the precise date of the sale.

Two weeks after the sale, on March 10, 2006, Judge Quinn issued a tentative ruling granting Accredited’s motion to set aside the White-Sorensen entry of default and default judgment, and granting Accredited’s motion for leave to file a complaint in intervention.

On March 15, 2006, the Sheriff recorded a “Sheriff’s Deed Under Execution” reflecting the conveyance of the White-Sorensen property to Jacoby.

On March 22, 2006, Judge Quinn confirmed the tentative ruling and entered an order vacating the default and the default judgment against White-Sorensen to permit Accredited to litigate its claims against Nacif.  Nacif appealed.  In her appeal, Nacif conceded Accredited’s rights to litigate its disputes with her in the Nacif/White-Sorensen action, but argued that Judge Quinn erred in vacating the entry of default and default judgment with respect to White-Sorensen.  (Nacif I, supra, D048938.)

Claims Between Appellants and Jacoby

While Nacif’s appeal was pending, in May 2006, Accredited, White-Sorensen and MERS filed a complaint in intervention against Jacoby, seeking declaratory relief that the “Sheriff [never had], and did not pass, good title” of the White-Sorensen property to Jacoby; Jacoby was “not a good faith purchaser for value”; and Jacoby did not acquire any valid interest in the property.  These parties alternatively sought a declaration that Jacoby’s ownership of the property was subject to Accredited’s deeds of trust.  The next month, Jacoby filed a cross-complaint seeking to quiet title against the Accredited parties and White-Sorensen, and seeking to confirm the validity of the Sheriff’s sale.

While these pleadings were pending, in July 2007, this court filed its decision reversing in part and affirming in part the court’s order vacating the entry of default and default judgment.  (Nacif I, supra, D048938.) We held the court properly vacated the judgment because the judgment affected Accredited’s rights, and the court would be required to determine the appropriate remedies (if any) as between Accredited and Nacif.  (Ibid.)  However, we reversed the portion of the judgment vacating the entry of default as to White-Sorensen, explaining that an entry of default has independent significance and is not void merely because the default judgment is later vacated.  (Ibid.)

Summary Judgment Proceedings

In March 2008, Jacoby moved for summary judgment on the intervention complaint and on his cross-complaint against White-Sorensen and the Accredited parties.  In support, he presented the evidence summarized above pertaining to the official actions leading to his purchase of the White-Sorensen property at the Sheriff’s sale.  Jacoby argued that because he was a third party purchaser at a court-ordered judicial foreclosure sale pursuant to a court judgment, the sale was final and was not subject to challenge “for any reason.”  (See § 701.680, subd. (a).)

In opposing the summary judgment, appellants did not dispute the chronology of events presented by Jacoby, but submitted additional facts in an attempt to create a basis for an exception to the general finality rules pertaining to judicial foreclosure sales.

First, appellants argued that the sale could be set aside because Jacoby was not a good faith purchaser based on facts showing:  (1) an appraisal in 2004 (about 18 months before the sale) valued the White-Sorensen property at $690,000 and Jacoby purchased the property for $222,524; (2) before the sale Jacoby knew of Nacif’s lis pendens and that Accredited had two deeds of trust on the property; and (3) before the sale Jacoby asked Nacif’s attorney about the priority of Accredited’s liens, and Nacif’s attorney responded that the Accredited parties had filed a motion challenging the White-Sorensen default judgment.

Second, appellants presented the declaration of one of their attorneys (Neal), who stated that “Nacif proceeded with [the foreclosure] sale [without] provid[ing] any notice to me that a sale of the property was pending.”  (Italics added.)

Third, appellants presented the declarations of White-Sorensen and Neal Melton (Accredited’s mortgage broker/agent), who each discussed the events leading to the court’s July 8, 2005 amended default judgment against White-Sorensen, including Nacif’s execution of the 2004 settlement agreement with White-Sorensen and her failure to repay the settlement funds before filing her amended complaint against White-Sorensen.  Melton also asserted that “Accredited would not have refinanced the property without Ms. Nacif’s written assurances that the lis pendens would be released upon payment of the $115,000.”

Court’s Ruling on Jacoby’s Summary Judgment Motion

After considering the parties’ memoranda and supporting submissions, the court granted summary judgment in favor of Jacoby.  The court found the applicable statutes are “crystal clear” that when a third party purchases property at a judicial foreclosure sale, the sale “may not be set aside ‘for any reason.’ ”  The court also rejected appellants’ arguments that Jacoby held the property subject to Accredited’s deeds of trust, finding these arguments were not legally supported.  The court thereafter entered a judgment that Jacoby is the “owner of unencumbered title” of the White-Sorensen property, and that the opposing parties had “no right, title, estate, lien or interest in the Property adverse to” Jacoby.

White-Sorensen and the Accredited parties filed an appeal.  This court later stayed the appeal after Accredited advised the court it had filed for bankruptcy.  About one year later, Accredited and appellants requested that Accredited be dismissed from the appeal and “MERS and First American be substituted as appellants in Accredited’s place.”  We granted the request that Accredited be dismissed from the appeal, but denied the request that MERS and First American be substituted in Accredited’s place.  We found that the documents presented did not support a basis for a substitution in the case, but noted that MERS and First American were existing appellants in the appeal.

DISCUSSION

I.  Standard of Review

Jacoby moved for summary judgment on his affirmative pleadings and on the claims asserted against him.

When a defendant moves for summary judgment, the defendant “bears the burden of persuasion that there is no triable issue of material fact and that [the party] is entitled to judgment as a matter of law.”  (Aguilar v. Atlantic Richfield Co.Aguilar).)  A defendant satisfies this burden by showing one or more elements of the cause of action cannot be established or that there is a complete defense to that cause of action.  (Ibid.) (2001) 25 Cal.4th 826, 850 (

When a plaintiff or cross-complainant moves for summary judgment on its claims, the party bears the burden of proving each element of the cause of action entitling the party to judgment on that cause of action.  “[I]f a plaintiff who would bear the burden of proof by a preponderance of evidence at trial moves for summary judgment, [the plaintiff] must present evidence that would require a reasonable trier of fact to find any underlying material fact more likely than not—otherwise, he would not be entitled to judgment as a matter of law, but would have to present his evidence to a trier of fact.”  (Aguilar, supra, 25 Cal.4th at p. 851.)

If the moving party fails to present sufficient, admissible evidence to meet its initial burden, the court must deny the summary judgment motion.  This rule applies even if the opposing party does not object to the moving party’s evidence, presents defective declarations, or fails to present a sufficient counter showing.  (Rincon v. Burbank Unified School Dist. (1986) 178 Cal.App.3d 949, 954-956.)  However, once a party meets its initial summary judgment burden, ” ‘the burden shifts to the [opposing party] . . . to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto.’ ”  (Aguilar, supra, 25 Cal.4th at p. 849.)  The opposing party may not rely upon the mere allegations or denials of its pleading to show the existence of a triable issue of material fact.  (Ibid.; see Chaknova v. Wilbur-Ellis Co. (1999) 69 Cal.App.4th 962, 974-975.)

We review a summary judgment de novo.  (Buss v. Superior Court (1997) 16 Cal.4th 35, 60.) We assume the role of the trial court and redetermine the merits of the motion.  In doing so, we view the factual record in the light most favorable to appellants, the parties opposing the summary judgment.  (See Garcia v. W&W Community Development, Inc. (2010) 186 Cal.App.4th 1038, 1041.)  We strictly scrutinize the moving party’s papers so that all doubts as to the existence of any material triable issues of fact are resolved in favor of the party opposing summary judgment.  (Barber v. Marina Sailing, Inc. (1995) 36 Cal.App.4th 558, 562.)  “Because a summary judgment denies the adversary party a trial, [the motion] should be granted with caution.”  (Colores v. Board of Trustees (2003) 105 Cal.App.4th 1293, 1305.)

II.  No Legal Basis to Set Aside Jacoby’s Purchase of White-Sorensen Property

Under section 701.680, a judicial foreclosure sale to a party other than the beneficiary is “absolute” subject only to the debtor’s right of redemption, and the sale “may not be set aside for any reason.”  (§ 701.680, subd. (a), italics added; see Arrow Sand & Gravel, Inc. v. Superior Court (1985) 38 Cal.3d 884, 890 (Arrow Sand) [a judicial foreclosure “sale ‘is absolute and may not be set aside for any reason’ “]; Amalgamated Bank v. Superior Court (2007) 149 Cal.App.4th 1003, 1018-1019 [“By purchasing the property at the sheriff’s auction, [the third party] became fee owner, subject only to the [debtor’s] right of redemption”]; First Federal Bank of California v. Fegen (2005) 131 Cal.App.4th 798, 800-801 [“the sale is ‘absolute and may not be set aside for any reason’ “]; Gonzalez v. Toews (2003) 111 Cal.App.4th 977, 981 [“section 701.680 is crystal clear—it states that [judicial foreclosure] sales are absolute and may not be set aside ‘for any reason’ unless the judgment creditor was the purchaser”]; see also 1 Bernhardt, Cal. Mortgages, Deeds of Trust, and Foreclosure Litigation (Cont.Ed.Bar 4th ed. 2011) § 3.84, pp. 237-238 [a judicial foreclosure sale “has finality and may not be set aside for any reason”]; 1 Greenwald & Asimow, Cal. Practice Guide:  Real Property Transactions (The Rutter Group 2010) ¶ 6:544.10, p. 6-112.11 [“judicial foreclosure sale to a party other than the beneficiary is ‘absolute,’ subject only to the trustor’s right of redemption”].)

The only exception to this rule is that a judgment debtor may challenge the sale if: (1) “the purchaser at the sale [was] the judgment creditor” and (2) “the sale was improper because of irregularities in the proceedings, because the property sold was not subject to execution, or for any other reason . . . .”  (§ 701.680, subds. (a), (c)(1); see First Federal Bank of California v. Fegen, supra, 131 Cal.App.4th at pp. 800-801.)  This exception is inapplicable here because the purchaser at the sale was a third party (Jacoby) and not the judgment creditor (Nacif).

In seeking to avoid this rule, respondents rely on two cases that were decided long before section 701.680 was enacted.  (See Riley v. Martinelli (1893) 97 Cal. 575; Hansen v. G & G Trucking Co. (1965) 236 Cal.App.2d 481.)  In 1982, the Legislature enacted section 701.680 as part of a comprehensive revision to the enforcement of judgments law, seeking to protect the purchaser’s title and ensure the finality of judicial foreclosure sales, and thus encourage fair bidding at judicial foreclosure sales.  (See Arrow Sand, supra, 38 Cal.3d at pp. 890-891; Amalgamated Bank v. Superior Court, supra, 149 CalApp.4th at p. 1018; Gonzalez v. Toews, supra, 111 Cal.App.4th at p. 980.)  Because the pre-1982 law did not contain provisions similar to section 701.680 barring all challenges to judicial foreclosure sales, Riley and Hansen, decided in 1893 and 1965, are unhelpful here.

Appellants alternatively contend the sale may be set aside because Jacoby was not a good faith purchaser based on facts showing that an appraisal in 2004 valued the property at $690,000 and Jacoby purchased the property for $222,524.  However, under section 701.680, subdivision (a), a court cannot set aside a judicial foreclosure sale to a third party based on the equities of the situation, including a substantial disparity between the fair market value and the sums successfully bid.  (See Amalgamated Bank v. Superior Court, supra, 149 Cal.App.4th at pp. 1008, 1009, 1018 [citing section 701.680, court declined to set aside a third party’s $2,000 successful bid for 57 acres of property with an approximate value of $6 million].)

Appellants additionally contend that if Jacoby had conducted a reasonable investigation, he would have discovered that appellants had intervened in the action and had moved to set aside the equitable judgment.  However, as recognized by the California Supreme Court, there is no exception to section 701.680, subdivision (a) based on facts showing the purchaser was aware of an existing challenge to the underlying judicial foreclosure judgment.  (See Arrow Sand, supra, 38 Cal.3d at pp. 887-891.)  In Arrow Sand, the issue was whether the fact that an appealing defendant has no statutory right to record a lis pendens pertaining to an appeal of a judicial foreclosure judgment violates the defendant’s equal protection rights because the applicable statutes permit plaintiffs and cross-complainants to record a lis pendens.  (Id. at p. 887.)  Relying on section 701.680, subdivision (a), the high court found no denial of equal protection because a lis pendens giving notice of an appeal of a judicial foreclosure judgment has no practical effect.  (Arrow Sand, supra, at pp. 890-891.)  The court explained that section 701.680, subdivision (a) “completely eliminate[s] the possibility that judicial sales [can] be set aside on reversal of the underlying judgment . . . .”  (Id. at p. 890.)  Thus, “unless a defendant titleholder seeks and receives a statutory stay of enforcement or supersedeas from a higher court, the judicial sale may proceed” (id. at p. 891), and thus “[a] recorded notice of lis pendens would not serve to vitiate the title of a purchaser at a judicial foreclosure sale” (id. at p. 887).  Under this holding, the fact that a third party purchaser knew of an existing challenge to a judicial foreclosure judgment is not a valid basis to later set aside the court-ordered judicial foreclosure sale.

We also reject appellants’ argument that they had a right to set aside the sale because the legislative history of section 701.680, subdivision (a) suggests the purpose of this code section was to limit a debtor’s right of redemption and there is no showing the statute was intended to limit challenges to a third party purchase.  In interpreting statutory language, the goal is to determine the legislative intent.  (See Esberg v. Union Oil Co. (2002) 28 Cal.4th 262, 268.)  To determine legislative intent, we must turn first to the words of the statute, giving them their usual and ordinary meaning.  (Ibid.)  When the language of a statute is clear, a court should enforce the statute according to these terms.  (Ibid.)  A court looks to legislative history only when the statute is ambiguous.  (Ibid.; see Niles Freeman Equipment v. Joseph (2008) 161 Cal.App.4th 765, 780.)

Here, the statutory language is clear:  section 701.680, subdivision (a) bars all challenges to a third party purchase at a judicial foreclosure sale.  (See Amalgamated Bank v. Superior Court, supra, 149 Cal.App.4th at p. 1018.)  Thus, even if the legislative history shows the Legislature was concerned primarily with the prior rule that provided debtors with expansive redemption rights and enacted the new legislation to limit these rights, this does not mean the Legislature did not also intend to bar other types of challenges to a purchase at a judicial foreclosure sale.  In this regard, appellants’ reliance on Yancey v. Fink (1991) 226 Cal.App.3d 1334 is misplaced.  Although the Yancey court discussed section 701.680, subdivision (a) in the context of a debtor’s statutory redemption rights, this does not mean the statute is limited to this subject matter.

III.  Jacoby’s Interests Are Not Subject to Accredited’s Deeds of Trust

Appellants also contend the court erred in quieting title in favor of Jacoby because Jacoby’s interest in the property is subject to Accredited’s two deeds of trust under section 726, subdivision (c).  This code section states in relevant part:  “Notwithstanding Section 701.630, the sale of the encumbered real property . . . does not affect the interest of a person who . . . has a lien thereon, if the conveyance or lien appears of record in the proper office at the time of the commencement of the action and the person holding the recorded conveyance or lien is not made a party to the action.”  (Italics added.)  Section 701.630 provides that:  “If property is sold pursuant to [a judicial foreclosure sale], the lien under which it is sold [and] any liens subordinate thereto . . . on the property sold are extinguished.”

Under these statutes, the general rule is that a judicial foreclosure sale extinguishes the lien under which the property is sold and all subordinate liens.  (See Little v. Community Bank (1991) 234 Cal.App.3d 355, 360; Mitchell v. Alpha Hardware & Supply Co. (1935) 7 Cal.App.2d 52, 57.)  However, an exception to this rule applies if the subordinate lienholder was not made a party to the judicial foreclosure action and this lien “appear[ed] of record . . . at the time of the commencement of the action.”  (§ 726, subd. (c), italics added.)  If these requirements are satisfied, the purchaser holds the property subject to the subordinate liens.

In this case, the undisputed facts show Accredited’s deeds of trust were not recorded in April 2004 when Nacif first commenced her action against White-Sorensen.  Thus, the section 726, subdivision (c) exception does not apply.  Appellants nonetheless urge us to hold that this statutory exception governs because Nacif filed the amended complaint after Accredited’s deeds of trust were recorded.  They posit that because the amended complaint did not “relate back” to the original complaint, the amended complaint—and not the original complaint—should be the operative pleading for purposes of determining when the action commenced under the section 726 subdivision (c) exception.

This argument is unsupported.  First, there is no basis for superimposing a statute-of-limitations relation-back theory onto section 726, subdivision (c).  Section 726, subdivision (c) reflects a legislative judgment that a party who records a lien on property after the filing of a lis pendens has the means to protect itself.  A lis pendens imparts constructive notice of an underlying judicial foreclosure action (and of the named parties in the action) to all subsequent encumbrancers.  (See § 405.24.)  Thus, a subsequently-recording lienholder has the information necessary to protect his or her rights by intervening in the action and seeking a stay of the foreclosure sale and/or participating at the foreclosure sale.  (See Arrow Sand, supra, 38 Cal.3d at p. 891.)

Under the statutory language and this underlying legislative policy, the commencement of the judicial foreclosure action, and not the filing of an amended complaint, is the critical trigger date for determining a lienholder’s interests.  If a junior lienholder records an interest after a lis pendens is recorded, these parties “need not be joined as defendants as long as the plaintiff records and serves a lis pendens immediately on filing the complaint.  The lis pendens binds such persons as effectively as if they had been joined in the action.”  (1 Bernhardt, Cal. Mortgages, Deeds of Trust and Foreclosure Litigation, supra, § 3.34, p. 205.)

Moreover, even assuming the relation-back theory was relevant to the application of section 726, subdivision (c) in this case, the amended complaint did relate back to the original complaint, at least with respect to the judicial foreclosure claim.  Under the relation-back doctrine, an amendment relates back to an original claim for purposes of the statute of limitations if the amendment:  (1) rests on the same general set of facts; (2) involves the same injury; and (3) refers to the same instrumentality.  (Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 408-409; Barrington v. A. H. Robins Co. (1985) 39 Cal.3d 146, 150-151.) In determining whether the relation-back doctrine applies, the critical inquiry is whether the defendant had adequate notice of the claim based on the original pleading.  (See Garrison v. Board of Directors (1995) 36 Cal.App.4th 1670, 1678.)

In the original complaint, filed in April 2004, Nacif sued White-Sorensen for breach of contract and sought an order permitting her to foreclose on an equitable mortgage on the White-Sorensen property.  The caption on this original complaint stated:  “COMPLAINT TO FORECLOSE UNDER EQUITABLE MORTGAGE.”  The same day that she filed this complaint, Nacif recorded a lis pendens on the White-Sorensen property, giving notice of this foreclosure action.

In the amended complaint filed in November 2004, Nacif realleged her claims against White-Sorensen for breach of the loan agreement and again sought an equitable mortgage/judicial foreclosure of White-Sorensen’s property.  She also added new fraud allegations pertaining to the settlement.  The only substantive difference between the original complaint and the first amended complaint with respect to the equitable mortgage/judicial foreclosure cause of action, is that Nacif alleged she had been given a partial payment ($115,000), and thus that she was seeking only the remaining portion of the secured debt.

On this record, Nacif’s first amended complaint related back to the original complaint, at least with respect to the claim at issue here (the breach of contract claim seeking to impose an equitable mortgage and a judicial foreclosure sale).  The only factual difference between the complaints on this claim was the $115,000 payment made by White-Sorensen towards his debt.  Although this payment may have raised legal issues regarding Nacif’s ability to enforce the contract (see Myerchin v. Family Benefits, Inc. (2008) 162 Cal.App.4th 1526), this new legal issue did not preclude a finding that the Accredited parties had notice of the equitable mortgage claim when they recorded their deeds of trust.

Appellants argue that under the unique facts of this case, we should interpret section 726, subdivision (c) to mean that Nacif’s amended complaint was the “commencement” of the action because Nacif benefited from Accredited’s funding of her initial settlement with White-Sorensen and there were facts showing she wrongly refused to dismiss the complaint and withdraw the lis pendens.  However, under the statutory scheme, the issues regarding the propriety of Nacif’s conduct vis-à-vis Accredited does not affect the rights of Jacoby, who was a third party purchaser.  Moreover, the undisputed facts show that although Accredited may have disagreed with Nacif’s actions, the Accredited parties had actual knowledge of Nacif’s continuing lawsuit and judgment against White-Sorensen and of the fact that Nacif never withdrew the lis pendens.  Accredited’s counsel acknowledged in the proceedings below that based on this knowledge, the Accredited parties filed a declaratory relief action against Nacif and petitioned to intervene in Nacif’s continuing action against White-Sorensen before the judicial foreclosure sale took place.  Under these circumstances, the Accredited parties had the ability to protect themselves by filing for a stay of the judicial foreclosure sale and/or seeking some form of preliminary injunctive relief.

Finally, we find unavailing appellants’ challenge to the trial court’s statement at the conclusion of its summary judgment order that “the Accredited parties had ample notice of the pending judicial foreclosure sale, but took no action to protect its interests and did not seek a stay of the proceedings.”  Appellants assert that because in moving for summary judgment Jacoby did not specifically rely on the evidence that the Accredited parties had notice of the pending foreclosure sale, the court erred in relying upon this fact.  However, because the undisputed evidence established that Accredited had notice of the “pending judicial foreclosure sale” and had challenged the pending sale through a declaratory relief action, the court’s observation was appropriate.

Appellants argue that this notice finding contradicts statements in the Nacif I decision in which we observed that the trial court had a “sufficient factual basis” to conclude that Accredited did not unreasonably delay in filing its motion to vacate the default judgment and noted that the trial court could have credited evidence that Accredited denied receiving timely notice of the judgment or of the sale of the property.  (Nacif I, supra, D048938.)  These statements, however, were directed to Accredited’s notice of the precise date of the sale.  The fact that Accredited may not have had actual knowledge of the sale date is different from a conclusion that Accredited (and the parties asserting rights based on Accredited’s deeds of trust) knew or should have known that a sale was pending and they needed to act if they wanted to prevent a sale.  (Ibid.)  Moreover, our statement in the Nacif I decision was based on the limited record before us.  In the Nacif I opinion, we admonished that we were not intending to rule on any of the substantive issues pertaining to other matters in the case, including Nacif’s lis pendens and the effect of the lis pendens on the rights of the other parties.  (Ibid.)  Under these circumstances, we find unpersuasive appellants’ attempt to use a statement from the Nacif I opinion to suggest they had no notice of the pending foreclosure sale, when the undisputed facts show they did know of a pending sale and/or they had constructive knowledge of the pending sale based on recorded documents and their involvement in the lawsuit.

DISPOSITION

Judgment affirmed.  Appellants to bear respondent’s costs on appeal.

HALLER, Acting P. J.

WE CONCUR:

McINTYRE, J.

AARON, J.



[1] These two entities are nominee/beneficiary Mortgage Electronic Registration Systems (MERS) and trustee First American Title Company (First American).  The original creditor/beneficiary on the deeds of trust, Accredited Home Lenders, Inc., also appealed from the judgment, but later filed for Chapter 11 bankruptcy.  We have since granted Accredited’s motion to be dismissed from the appeal.  For ease of reference, we collectively refer to Accredited, First American, and MERS as the Accredited parties.  We collectively refer to White-Sorensen, First American, and MERS as appellants.

[2] All further statutory references are to the Code of Civil Procedure.

[ipaper docId=62142237 access_key=key-1unza0b8v2yrl8bn819r height=600 width=600 /]

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUDComments (0)

NACIF v. WHITE-SORENSON | CA 4DCA Div.1 REVERSED/REMAND “MERS and FIRST AMERICAN did not meet their s-jgmt burden to show they were real parties in interest as a matter of law with respect to Accredited’s claimed losses”

NACIF v. WHITE-SORENSON | CA 4DCA Div.1 REVERSED/REMAND “MERS and FIRST AMERICAN did not meet their s-jgmt burden to show they were real parties in interest as a matter of law with respect to Accredited’s claimed losses”


COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA

LINDA NACIF,

Plaintiff, Cross-Defendant, and             Appellant,

v.

J. ROSS WHITE-SORENSEN et al.,

Defendants, Interveners, and             Respondents.

D056993

(Super. Ct. No. GIC828794)

APPEAL from a judgment of the Superior Court of San Diego County, Linda B. Quinn and Judith F. Hayes, Judges.  Reversed and remanded with directions.

This now complicated case arose out of a simple matter:  Linda Nacif loaned $258,000 to her then-boyfriend, J. Ross White-Sorensen, who failed to repay the loan.  Nacif sued White-Sorensen and his companies (collectively White-Sorensen).  After White-Sorensen defaulted, the court entered judgment in Nacif’s favor and ordered White-Sorensen’s property sold at a foreclosure sale (White-Sorensen had agreed to secure the loan with property he owned).  A third party then purchased the property at the court-ordered sheriff’s sale.

The trial court thereafter vacated the default and default judgment, based solely on claims by White-Sorensen’s lender (Accredited Home Lenders, Inc. (Accredited)) that its rights were improperly extinguished upon the sale.  Nacif appealed.  In our prior unpublished opinion, we upheld the portion of the court’s order vacating the default judgment and remanded for the court to consider the unresolved claims between Accredited and Nacif.  (Accredited Home Lenders, Inc. v. Nacif (July 26, 2007, D048938) (Nacif I).)  But we expressly held the court erred in vacating the entry of default as to White-Sorensen, concluding there “was no legal or factual basis to vacate the entry of default as to [this party].”  (Ibid.) This court then remanded for the trial court “to resolve claims between Nacif and Accredited, and to enter a new default judgment as to White-Sorenson . . . after the resolution of those claims.”  (Ibid., italics added.)

On remand, the trial court disregarded this order and once again vacated the entry of default against White-Sorensen.  After permitting White-Sorensen to file a cross-complaint against Nacif, the court ultimately found in favor of White-Sorensen on each of Nacif’s claims against him and in favor of White-Sorensen on each of his affirmative claims against Nacif.  The trial court also granted summary judgment in favor of two parties who had intervened or had been brought into the action:  the trustee (First American Title Company (First American)) and a nominee/beneficiary (Mortgage Electronic Registration Systems, Inc. (MERS)) on the deeds of trust that secured Accredited’s loan to White-Sorensen.  The court also permitted these parties to amend the pleadings to be substituted in Accredited’s place after Accredited was dismissed from the action upon filing for bankruptcy.  The court awarded First American and MERS $675,000 against Nacif.

The court also granted the anti-SLAPP motion filed by White-Sorensen, MERS, and First American.  The court awarded these parties $300,000 in attorney fees as prevailing parties on their contract claims and on their anti-SLAPP motion.

Nacif appeals.  Respondents are White-Sorensen, MERS, and First American.  We determine the court erred in several ways.  We reverse and remand with directions.[1]

FACTUAL AND PROCEDURAL BACKGROUND

We summarize the facts in the light most favorable to Nacif, the party opposing the summary judgment and anti-SLAPP motions.  (See Garcia v. W&W Community Development, Inc. (2010) 186 Cal.App.4th 1038, 1041.)

I.  Background

Linda Nacif loaned $258,000 to White-Sorensen, who promised to repay the money and agreed to secure the loan with property he owned (the White-Sorensen property).  White-Sorensen then failed to pay the amounts owed.

In April 2004, Nacif sued White-Sorensen for breach of contract and sought an order permitting her to foreclose on an equitable mortgage on the White-Sorensen property.  The same day that she filed her complaint, Nacif recorded a lis pendens on the White-Sorensen property, giving notice of her equitable mortgage claim.

Four months later, in August 2004, the parties reached a settlement in which Nacif agreed to accept $115,000 and to remove the lis pendens once the funds were paid.  Nacif’s attorney prepared a stipulated judgment to reflect this agreement (the 2004 Settlement Agreement), which both parties signed.  The Settlement Agreement set forth the settlement amount, described Nacif’s agreement to release the lis pendens upon payment of the settlement funds, and contained a broad release in which both parties agreed to release each other for all known and unknown claims.  The Settlement Agreement also contained a provision that “If” a release of the lis pendens was required as a condition to funding White-Sorensen’s refinance, Nacif’s attorney would deliver the release to the refinance escrow officer with instructions that it may be recorded upon funding of the settlement amount.  (Italics added.)

To fund the settlement, White-Sorensen applied for a secured loan from Accredited to refinance his existing secured loans on the property.  As part of this loan application, White-Sorensen stated he had a monthly income of more than $34,000.  During the escrow on the refinance, White-Sorensen (and/or his agents) refused to disclose to Nacif the name of the lender, escrow company, or title company involved in the refinance transaction.  But in a letter to Nacif’s counsel, White-Sorensen’s counsel said the lender did not require the release of the lis pendens before the loan would be approved and merely required a payoff demand letter.  Nacif’s counsel told White-Sorensen’s counsel and a mortgage broker he would record a lis pendens release at the close of the settlement, but because he was concerned with the lack of disclosure of the identity of the lender and escrow company, he would exchange the release document only when the $115,000 funds were available.  When the escrow closed, neither the escrow company nor the lender requested the withdrawal of the lis pendens as a condition to the payoff demand.  Accredited recorded its two deeds of trust on the White-Sorensen property in September 2004.

After Nacif was paid the $115,000 and before releasing the lis pendens and dismissing her lawsuit against White-Sorensen, Nacif’s counsel discovered information leading him to believe that White-Sorensen had not been honest regarding his assets.  Nacif then filed a first amended complaint, realleging her claims against White-Sorensen for breach of the loan agreement and adding allegations of fraud, claiming she would not have agreed to the settlement if she had known these facts.  Nacif did not return the $115,000, but sought to recover only the balance of the loan principal plus interest.  Although White-Sorensen was served with, and had notice of, the amended complaint, he elected not to defend the action, and the court entered his default.

On June 30, 2005, after Nacif submitted a declaration supporting her claims, the court entered a default judgment against White-Sorensen in the amount of $209,187 (consisting of the remaining loan balance of $153,750 plus interest, costs, and attorney fees).  The court also imposed an equitable mortgage on the White-Sorensen property and ordered the property sold at a foreclosure sale.  The amended final judgment stated that all interests in the property recorded “subsequent to the filing of notice of the pendency of this action” would be extinguished after the sale of the property.  (Italics added.)

Several weeks later, on July 22, 2005, First American, Accredited’s trustee on its deeds of trust, recorded a Notice of Trustee’s Sale, based on Accredited’s claims that White-Sorensen had failed to make required payments on his $675,000 refinance loan.

Three weeks later, Nacif recorded an Abstract of Judgment, which reflected that her judgment lien was superior to Accredited’s deeds of trust.  Nacif advised Accredited and/or its agents of her priority lien and asserted a right to proceed with the sale.  Accredited objected to Nacif’s claim of priority.  After attempting to negotiate a resolution of its dispute with Nacif, Accredited filed a separate lawsuit in November 2005 against Nacif seeking to protect its priority interest in the White-Sorensen property.  The action was assigned to a different department of the superior court.

Two months later, in January 2006, Accredited filed a motion in the Nacif/White-Sorensen case to vacate the entry of default and default judgment and for leave to intervene in this action.  Accredited was represented by the same counsel who had previously represented White-Sorensen (S. Todd Neal).  White-Sorensen did not join in the motion to vacate the default or default judgment.

In its proposed intervention complaint, Accredited sought to protect its security interest in the White-Sorensen property.  Accredited claimed it had a lienhold interest totaling $675,000 and the default judgment extinguishing this interest would materially affect its rights.  (Nacif I, supra, D048938.)  Accredited asserted a right to intervene because it was not named in the underlying matter and therefore it had no opportunity to protect its interests.  (Ibid.)  Accredited requested various remedies, including a judicial determination that its secured equitable interest should be given first priority over Nacif’s equitable mortgage.  (Ibid.)  Accredited also asserted a breach of contract claim against Nacif.  (Ibid.)  Nacif did not oppose the motion for intervention, but objected to the motion to vacate the entry of default and default judgment against White-Sorensen.  (Ibid.)

While Accredited’s motions were pending, the White-Sorensen property was sold at a February 23, 2006 sheriff’s sale.  Accredited (and/or its agents) had actual notice of a pending foreclosure sale more than 90 days before the sale, but took no steps to delay or prevent the sale, other than to file its declaratory relief and intervention actions.  A third party (Scott Jacoby) purchased the property for $222,524 (the approximate amount of Nacif’s judgment against White-Sorensen) and these funds (minus administrative costs) were paid to Nacif.

In thereafter opposing Accredited’s motions to set aside White-Sorensen’s default, Nacif’s counsel argued that Accredited’s remedies were now limited to a damage action against Nacif because the property had been sold to a third party (after notice to Accredited), and these claims should have no effect on White-Sorensen’s default in the action.

In March 2006, the trial court granted Accredited’s motion for intervention and vacated the entry of default and judgment against White-Sorensen.  The parties then entered into a stipulation that Accredited would dismiss its second lawsuit against Nacif (which was pending in another superior court department) because all of the claims asserted in this second lawsuit were now contained in Accredited’s complaint-in-intervention.  (Nacif I, supra, D048938.)

Nacif then filed her notice of appeal.  Nacif appealed only from the portion of the court order vacating the default and default judgment, and did not challenge the court’s order granting Accredited’s motion to intervene in the action.  (Nacif I, supra, D048938.)

In July 2007, this court affirmed the portion of the order vacating the default judgment.  (Nacif I, supra, D048938.) We held the court properly vacated the judgment because the judgment affected Accredited’s rights, and the court would be required to determine the appropriate remedies (if any) as between Accredited and Nacif.  (Ibid.)  However, we reversed the portion of the order vacating the entry of default as to White-Sorensen, explaining that an entry of default has independent significance and is not void merely because the default judgment is later vacated.  (Ibid.)  We reasoned that although vacating the judgment was necessary to allow Nacif and Accredited to litigate their claims, it was not a proper basis to allow White-Sorensen to avoid the effect of his default, particularly because he had never moved to reopen the default.  (Ibid.)  In concluding there was no legal or factual basis to vacate the entry of default as to White-Sorensen, we rejected Accredited’s arguments that:  (1) White-Sorensen was not properly served in the underlying action; (2) Nacif’s first amended complaint was a “nullity” because Nacif did not receive specific permission to file it; and (3) the default was void because Nacif allegedly committed fraud in refusing to adhere to the terms of her settlement with White-Sorensen.  (Ibid.)

In so concluding, we emphasized that we were not ruling on any of the issues arising from the dispute between Nacif and Accredited, including whether Nacif’s lis pendens was a proper basis to subordinate Accredited’s trust deeds.  (Nacif I, supra, D048938.) We stated that “[b]ecause the parties have yet to litigate these issues before the trial court and it may depend on the resolution of disputed facts, it would be premature for us to address these issues here,” and we refused to consider the merits of amended intervention pleadings filed by Accredited and White-Sorensen while the appeal was pending.  (Ibid.)  We thus “remand[ed] for the court to resolve claims between Nacif and Accredited, and to enter a new default judgment as to White-Sorenson and [his company] after the resolution of those claims.”  (Ibid., italics added.)

II.  Proceedings on Remand

Unfortunately, as respondents acknowledge in their appellate brief, on remand the trial court “did not consider” our appellate opinion.  Instead, the court allowed White-Sorensen to relitigate the entry of default, which was not only contrary to our specific instructions but inconsistent with the law of the case doctrine.  The court also erroneously required Nacif to name MERS and First American in amended pleadings.  These errors led to a flurry of additional pleadings and motions, and ultimately to the court erroneously granting respondents’ summary judgment and anti-SLAPP motions without a proper showing they were entitled to this relief.  To explain these conclusions, we first summarize the three pleadings that were before the court on remand and then briefly describe the motion proceedings and the court’s rulings on respondents’ motions.  In the Discussion section, we shall more fully discuss the facts and arguments before the court when it made the rulings.

A.  The Three Pleadings Before the Court on Remand

1.  First Amended Intervention Complaint Against Nacif and Jacoby

While the Nacif I appeal was pending, Accredited, White-Sorensen, and MERS filed a first amended complaint in intervention.  The named defendants were Nacif and Scott Jacoby, the individual who purchased the White-Sorensen property at the court-ordered foreclosure sale.

This first amended intervention complaint asserted six causes of action against Nacif, each based primarily on allegations that Nacif breached the 2004 Settlement Agreement with White-Sorensen by failing to adhere to her promise to remove the lis pendens once she was paid the $115,000 in settlement funds.  The first cause of action sought a judicial declaration that Nacif “was not entitled to a default, a default judgment, or any equitable mortgage on the Property” and Accredited’s deeds of trust have priority over Nacif’s “right to an equitable mortgage.”  The second through fourth causes of action alleged breach of contract and fraud against Nacif.  The fifth cause of action alleged equitable subrogation and subordination.  The sixth cause of action sought to quiet title.

2.  Nacif’s Second Amended Complaint

Nacif’s first amended complaint against White-Sorensen (alone) was also before the trial court after the remand.  This was the same complaint upon which this court held the trial court had erred in vacating the entry of default against White-Sorensen.  (Nacif I, supra, D048938.)  Shortly after the remand, four parties (White-Sorensen, Accredited, MERS, and First American) moved for judgment on this complaint, arguing that Nacif’s failure to name these additional parties rendered the complaint defective as a matter of law because these other parties were “indispensible parties” on a foreclosure action.  Nacif vigorously opposed the motion, raising several arguments, including that:  (1) there was no need for her to name these other parties because they had already raised all of the issues in their amended intervention complaint; and (2) it would be improper to grant a judgment on the pleadings in favor of White-Sorensen because it was on this pleading that the Nacif I court explicitly held White-Sorensen had defaulted and that the default could not be vacated.

After a hearing, the trial court rejected these arguments, and granted the motion.  The court’s written order stated:  “The motion of Plaintiffs-in-Intervention Accredited Home Lenders, Inc., [MERS] and . . . White-Sorensen for Judgment on the Pleadings is GRANTED.  The court finds [these] moving parties are indispensible to the determination of plaintiff [Nacif]’s first amended complaint.”  (Italics added.)  The court provided Nacif 10 days’ leave to amend to add the necessary parties.  Nacif later unsuccessfully challenged this ruling in a writ petition in this court.

In Nacif’s second amended complaint (filed in response to the court’s order granting judgment on the pleadings), Nacif named White-Sorensen, Accredited, MERS, and First American.  As discussed more fully below, Nacif’s allegations against White-Sorensen were virtually identical to the allegations alleged in her first amended complaint.  To avoid any argument that she reopened White-Sorensen’s default, Nacif included a paragraph in the new pleading stating she “specifically denies any intention to allege any new or different causes of action against [White-Sorensen]” and “intends to preserve [his] status as [a] defaulted [party] . . . .”  With respect to the other named defendants, Nacif added a fraud cause of action against Accredited and sought declaratory relief against Accredited, MERS, and First American.[2]

3.  Cross-Complaint Against Nacif

The third pleading before the court was respondents’ cross-complaint against Nacif, filed after Nacif filed her second amended complaint.  The plaintiffs on this pleading—Accredited, MERS, White-Sorensen, and First American—alleged essentially the same six causes of action as were alleged in the first amended intervention complaint.

B.  Summary Judgment and Anti-SLAPP Motions

White-Sorensen, Accredited, MERS, and First American then sought summary judgment on each of the three pleadings before the court (Nacif’s second amended complaint, the first amended intervention complaint, and respondents’ cross-complaint).  These parties also filed an anti-SLAPP motion to strike Nacif’s second amended complaint.  We summarize the evidence and argument presented by respondents with respect to these pleadings.[3]

1. Summary Judgment Motion on Respondents’ Pleadings Against Nacif

On their own affirmative pleadings (cross-complaint and first amended intervention complaint), White-Sorensen, Accredited, MERS and First American argued they were entitled to recover as a matter of law on their contract, fraud, and equitable relief claims because the undisputed evidence showed:  Nacif is bound by her settlement with White-Sorensen because he paid her the $115,000; Nacif breached the 2004 Settlement Agreement by failing to release her lis pendens; and Nacif’s failure to release the lis pendens shows she made a material misrepresentation of fact without an intention to perform and misrepresented to White-Sorensen and Accredited that she would withdraw the lis pendens.

These parties argued they were entitled to damages of $675,000 as a matter of law based on: (1) a declaration filed by the mortgage broker involved in the Accredited refinance loan, who stated that a July 2004 appraisal valued the White-Sorensen property at $690,000; (2) Accredited’s deeds of trust showing it loaned $675,000 to White-Sorensen; and (3) evidence that the property had been sold to a third party.

2.  Summary Judgment Motion on Nacif’s Second Amended Complaint

In moving for summary judgment on Nacif’s second amended complaint, the defendants named in this pleading (White-Sorensen, Accredited, MERS and First American) argued that Nacif could not recover as a matter of law because the basis of her claims against White-Sorensen was legally flawed as she did not return the $115,000 she received as part of the settlement.  (See Myerchin v. Family Benefits, Inc. (2008) 162 Cal.App.4th 1526, 1529 [“a party offered a monetary settlement of a lawsuit may accept the money or reject it, but may not take the money and continue the lawsuit”].)  These defendants also argued Nacif would be unable to prove her claims against White-Sorensen or the other defendants based on Nacif’s deposition testimony in which she was unable to identify a factual basis for many of her claims.

White-Sorensen, Accredited, MERS, and First American alternatively moved to strike Nacif’s second amended complaint under the anti-SLAPP statute.  They argued that Nacif’s “entire suit” is based on White-Sorensen’s false statements made to induce Nacif to settle the action, and is thus subject to the anti-SLAPP statute.  They further argued Nacif would not prevail on any of her affirmative claims against them.

3.  Accredited’s Bankruptcy and Dismissal and Substitution of Parties

While these summary judgment and anti-SLAPP motions were pending, Accredited moved to stay the proceedings because it had filed for bankruptcy.  However, at a hearing conducted shortly thereafter, the counsel who was jointly representing Accredited, MERS, First American, and White-Sorensen stated that a stay was unnecessary because he would be submitting a motion to dismiss Accredited from the action.  He explained that Accredited had previously sold its interests in the White-Sorensen loan to other entities (not parties to this litigation), and these other entities are “comfortable that their interests are adequately protected by First American and MERS.”

In response, Nacif’s counsel strenuously objected, arguing in part that counsel has “just confirmed what I’ve been saying for three years, that he doesn’t have a client.  He has . . . three parties, none of whom own the right . . . which is the basis for being in this action.”  The trial judge dismissed these concerns, saying she was “not worried about” these issues.

The court thereafter provided Nacif’s counsel additional time to file responses to the summary judgment motion to cure procedural deficiencies in the initial opposition.  On the same day that Nacif filed the supplemental opposition, respondents moved to dismiss Accredited from the action and asked that they be permitted to amend their affirmative pleadings to substitute First American and MERS in place of Accredited as real parties in interest.  They argued that MERS could be substituted for Accredited because MERS was a named beneficiary on the White-Sorensen deeds of trust.  They sought First American’s substitution based on their counsel’s declaration and letters from a senior counsel of Wells Fargo and a vice president of Solace Financial, LLC, who claimed that these entities had current rights in the White-Sorensen notes and deeds of trust and that First American (as title insurer) was an subrogee/assignee for “collection” purposes to Accredited’s rights on White-Sorensen’s notes.

Based on these papers, the court granted the substitution request.  The court thus dismissed Accredited from the action and permitted First American and MERS to be “substituted in ACCREDITED’s stead” as plaintiffs on the first amended intervention complaint and on the cross-complaint.

4. Court’s Rulings on Summary Judgment and Anti-SLAPP Motions

The court then ruled against Nacif on respondents’ summary judgment and anti-SLAPP motions.

With respect to the summary judgment motion on Nacif’s second amended complaint, the court found in favor of White-Sorensen, MERS, and First American.  The court reasoned that the 2004 Settlement Agreement was valid and binding and thus constituted a “complete defense to [Nacif’s] second amended complaint.”  The court further found that Nacif’s retention of the $115,000 in settlement funds barred her from recovering the balance of the debt owed to her, relying on Myerchin, supra, 162 Cal.App.4th 1526.  The court alternatively granted these parties’ anti-SLAPP motion.  The court found the anti-SLAPP statute applied because the second amended complaint arose from the settlement agreement with White-Sorensen, and as “demonstrated in the summary judgment motion, plaintiff has not and cannot establish a probability of success on the merits.”

On the affirmative pleadings filed by White-Sorensen, MERS, and First American, the court found the undisputed facts showed these parties proved each of their claims against Nacif, including breach of contract, fraud, and equitable subrogation.  The primary basis for this ruling was the evidence showing Nacif failed to comply with the 2004 Settlement Agreement provision requiring her to release the lis pendens and that her attorney provided assurances to Accredited’s agent that she would withdraw the lis pendens once she received the settlement money.  The court further found that First American and MERS met their summary judgment burden to prove they were damaged in the amount of $675,000 and were entitled to recover this amount from Nacif plus prejudgment interest.

The court additionally granted White-Sorensen, MERS, and First American their requested equitable relief, including that:  (1) Nacif “was never entitled to a default or a default judgment against any Defendant,” including White-Sorensen; (2) Nacif was not “entitled to an equitable mortgage or other interest” on White-Sorensen’s property; and (3) the White-Sorensen property was and remains “clear of any equitable mortgage or other interest claimed by . . . [Nacif].”

The court later awarded attorney fees of $300,000 to White-Sorensen, MERS, and First American on their anti-SLAPP motion and as prevailing parties on the breach of contract action.

DISCUSSION

I.  Summary Judgment Motion

A.  Standard of Review

The court granted summary judgment against Nacif on respondents’ claims asserted against her and on Nacif’s affirmative pleadings.

When a defendant moves for summary judgment, the defendant “bears the burden of persuasion that there is no triable issue of material fact and that [the party] is entitled to judgment as a matter of law.”  (Aguilar v. Atlantic Richfield Co.Aguilar).)  A defendant satisfies this burden by showing one or more elements of the cause of action cannot be established, or that there is a complete defense to that cause of action.  (Ibid.)  This burden can be met by relying on the opposing party’s factually inadequate discovery responses if these responses show the plaintiff “will be unable to prove its case by any means.”  (Weber v. John Crane, Inc. (2006) 143 Cal.App.4th 1433, 1439; see Scheiding v. Dinwiddie Construction Co. (1999) 69 Cal.App.4th 64, 78-81; Union Bank v. Superior Court (1995) 31 Cal.App.4th 573, 589-590.) (2001) 25 Cal.4th 826, 850 (

When a plaintiff or cross-complainant moves for summary judgment on its claims, the party bears the burden of proving each element of the cause of action entitling the party to judgment on that cause of action.  “[I]f a plaintiff who would bear the burden of proof by a preponderance of evidence at trial moves for summary judgment, [the plaintiff] must present evidence that would require a reasonable trier of fact to find any underlying material fact more likely than not—otherwise, he would not be entitled to judgment as a matter of law, but would have to present his evidence to a trier of fact.”  (Aguilar, supra, 25 Cal.4th at p. 851.)

If the moving party fails to present sufficient, admissible evidence to meet its initial burden, the court must deny the summary judgment motion.  This rule applies even if the opposing party does not object to the moving party’s evidence, presents defective declarations, or fails to present sufficient counter showing.  (Rincon v. Burbank Unified School Dist. (1986) 178 Cal.App.3d 949, 954-956.)  However, once a party meets its initial summary judgment burden, ” ‘the burden shifts to the [opposing party] . . . to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto.’ ”  (Aguilar, supra, 25 Cal.4th at p. 849.)  The opposing party may not rely upon the mere allegations or denials of its pleading to show a triable issue of material fact exists.  (Ibid.)

We review a summary judgment de novo.  (Buss v. Superior Court (1997) 16 Cal.4th 35, 60.) We assume the role of the trial court and redetermine the merits of the motion.  In doing so, we strictly scrutinize the moving party’s papers so that all doubts as to the existence of any material, triable issues of fact are resolved in favor of the party opposing summary judgment.  (Barber v. Marina Sailing, Inc. (1995) 36 Cal.App.4th 558, 562.)  “Because a summary judgment denies the adversary party a trial, [the motion] should be granted with caution.”  (Colores v. Board of Trustees (2003) 105 Cal.App.4th 1293, 1305.)

In applying these principles to this case, we first consider the propriety of the summary judgment granted in favor of White-Sorensen on Nacif’s second amended complaint and on White-Sorensen’s affirmative pleadings against Nacif.  We then examine the summary judgment granted in favor of MERS and First American on these parties’ affirmative pleadings (cross-complaint and complaint in intervention) and on Nacif’s second amended complaint against these respondents.

B.  Summary Judgment in Favor of White-Sorensen

1.  Nacif’s Claims Against White-Sorensen

Nacif contends the court erred in granting summary judgment to White-Sorensen on Nacif’s second amended complaint.  We agree.

In August 2004, Nacif filed a first amended complaint against White-Sorensen.  White-Sorensen defaulted on those claims, and the court entered White-Sorensen’s default.  Although the trial court later vacated the entry of default, this court found the court erred and ordered the court to reinstate the entry of default.  (Nacif I, supra, D048938.) This ruling constitutes law of the case.

The law of the case doctrine provides that ” ‘the decision of an appellate court, stating a rule of law necessary to the decision of the case, conclusively establishes that rule and makes it determinative of the rights of the same parties in any subsequent retrial or appeal in the same case.’ ”  (Nally v. Grace Community Church (1988) 47 Cal.3d 278, 301.)  Under this doctrine, the holding in Nacif I that there was no legal or factual basis to set aside White-Sorensen’s entry of default was binding on the trial court on remand with respect to White-Sorensen.  Thus, the trial court erred in vacating White-Sorensen’s default after the remand and requiring Nacif to file a second amended complaint against this defendant.

White-Sorensen contends the court properly vacated the entry of default because Nacif voluntarily reopened the default by filing her second amended complaint.  The argument is unavailing because Nacif’s filing of the second amended complaint was not a voluntary act on the part of Nacif.

Nacif strongly opposed respondents’ motion for judgment on the pleadings on her first amended complaint, and specifically asserted that a court order requiring her to file a second amended complaint would be inconsistent with the Nacif I court’s decision affirming the entry of default against White-Sorensen.  For reasons that are not entirely clear, the trial court rejected these arguments and granted the motion, providing Nacif with 10 days to file a second amended complaint against White-Sorensen and the other moving parties.  Had Nacif failed to file a new pleading against White-Sorensen in response to the court’s directive, the court would have dismissed her action and she would have lost her rights in the default.  Under these circumstances, Nacif’s filing of the second amended complaint was in response to an erroneous ruling by the trial court and does not constitute an intention to reopen the default.

White-Sorensen argues the court’s ruling was proper because the other moving parties (Accredited and MERS) were indispensable parties.  However, even if the court was required to grant the motion of these parties, it was not required to grant the motion on the pleadings as to White-Sorensen.  Because White-Sorensen’s default had already been affirmed on appeal, the court was required to adhere to that ruling.

White-Sorensen alternatively contends Nacif reopened the default by adding new allegations in the second amended complaint.  (See Ostling v. Loring (1994) 27 Cal.App.4th 1731, 1744.)  The argument is not factually supported.

In the second amended complaint, only the first, second, and third causes of action name White-Sorensen as a defendant.  They are titled exactly the same as the causes of action in the first amended complaint, and contain identical factual allegations.  Moreover, at the outset of the second amended complaint, Nacif included a paragraph expressly stating that she was not intending “to allege any new or different cause of action against [White-Sorensen]” and intends to preserve the entry of default against White-Sorensen, and that she was filing the second amended complaint pursuant to the court’s ruling that she must do so.

White-Sorensen argues Nacif nonetheless reopened the default because she added two paragraphs in the “General Allegations” section of the complaint.  However, these paragraphs merely add brief background information regarding Nacif’s original loan to White-Sorensen and are not material to Nacif’s substantive claims against White-Sorensen.  White-Sorensen also contends Nacif reopened the default because she named other parties in the second amended complaint.  However, there is no authority that allegations against other parties reopens an entry of default, particularly where, as here, the court ordered the plaintiff to amend the complaint to add these parties.  Further, contrary to White-Sorensen’s assertions, the fact that Nacif mentioned White-Sorensen in the causes of action against other parties does not support a different result.  Because the joinder of these parties derive from White-Sorensen’s actions, it was reasonable for Nacif to identify White-Sorensen when alleging the claims against the other parties and does not suggest she was intending to reopen the lawsuit against him.

2.  White-Sorensen’s Affirmative Claims Against Nacif

Nacif also contends the court erred in granting summary judgment on White-Sorensen’s affirmative claims against her, including breach of contract, two types of fraud, declaratory relief, and equitable subrogation/subordination.  Each of these claims was based on White-Sorensen’s allegations that Nacif committed fraud and breached the 2004 Settlement Agreement by failing to withdraw the lis pendens and by filing the amended complaint seeking to rescind the settlement agreement.

We agree that the court erred in granting summary judgment to White-Sorensen on these claims.  White-Sorensen was barred from recovering on these affirmative claims by the prior entry of default.  Under the compulsory counterclaim rule, a defendant must assert all claims that arise “out of the same transaction, occurrence, or series of transactions or occurrences as the cause of action which the plaintiff alleges in his complaint.”  (Code Civ. Proc., §§ 426.10, subd. (c), 426.30, subd. (a); see Align Technology, Inc. v. Tran (2009) 179 Cal.App.4th 949, 959-960; Carroll v. Import Motors, Inc. (1995) 33 Cal.App.4th 1429, 1435-1436.)  “[I]f a party against whom a complaint has been filed and served fails to allege in a cross-complaint any related cause of action which (at the time of serving his answer to the complaint) he has against the plaintiff, such party may not thereafter in any other action assert against the plaintiff the related cause of action not pleaded.”  (Code Civ. Proc., § 426.30, subd. (a).)

In this case, White-Sorensen’s affirmative pleadings against Nacif arose from the same circumstances as those alleged by Nacif in her first amended compliant.  White-Sorensen failed to answer those allegations, and the court entered his default.  Although the trial court previously vacated the default, we reversed, holding there was no legal or factual basis for the court’s order setting aside the default.  (Nacif I, supra, D048938.)  We explained that once a court has entered a default, the defaulting party is precluded from reasserting claims or defenses that could have been raised in that action:  “Severe consequences attach to the entry of a default.  ‘A default cuts off the defendant from making any further opposition or objection to the relief which plaintiff’s complaint shows he is entitled to demand.’ . . .  Unless the default is set aside in a proper proceeding, the party may not thereafter file pleadings, move for a new trial, or demand notice of subsequent proceedings.”  (Ibid.)

Thus, once the trial court entered default on Nacif’s complaint against White-Sorensen, and this court reversed the vacation of that default, White-Sorensen was precluded from asserting affirmative claims that related to Nacif’s causes of action.  By failing to prosecute the causes of action on a cross-complaint in response to Nacif’s first amended complaint, White-Sorensen forfeited his right to assert related claims and cannot revive them merely because Accredited was given the opportunity to litigate its claims against Nacif.

To avoid this result, White-Sorensen argues that Nacif voluntarily reopened the default when she filed her second amended complaint.  However, as explained above, this argument is not supported by the record.

C.  Summary Judgment on Affirmative Claims Asserted by First American and MERS

MERS and First American asserted affirmative claims against Nacif in the cross-complaint and the first amended intervention complaint.  These claims included breach of contract, fraud, and equitable relief.  The court awarded these parties summary judgment based on their own claims and on their assertions they were entitled to recover for Accredited’s losses.  We preliminarily discuss the issue of these parties’ right to recover for Accredited’s losses because this issue is foundational with respect to their right to recover on their affirmative pleadings.  We then discuss the summary judgment with respect to each cause of action asserted by these parties.  In engaging in this analysis, we agree with respondents that they are not necessarily bound by White-Sorensen’s default with respect to their rights to recover for their own alleged losses.

1.  MERS’s and First American’s Rights to Recover for Accredited’s Losses

Generally, a civil action must be prosecuted by the real party in interest, “except as otherwise provided by statute.”  (Code Civ. Proc., § 367.)  A party claiming to have standing must assert his or her own legal rights and interests, and cannot rest any claim to recover upon the legal rights or interests of a third party.  (Property Owners of Whispering Palms, Inc. v. Newport Pacific, Inc. (2005) 132 Cal.App.4th 666, 672.)  Generally, the person possessing the right sued upon by reason of substantive law is the real party in interest.  (See Del Mar Beach Club Owners Assn. v. Imperial Contracting Co. (1981) 123 Cal.App.3d 898, 906.)

Based on their motion to amend the pleadings after Accredited filed for bankruptcy, the court permitted MERS and First American to substitute as real parties in interest for Accredited in their affirmative pleadings.  The court alsoAccredited’s claimed losses. found these parties were entitled to recover for Accredited’s losses as a matter of law.  We conclude the court erred in this latter ruling.  As explained below, these parties did not meet their summary judgment burden to show they were real parties in interest as a matter of law with respect to

MERS

In moving to substitute for Accredited and recover for Accredited’s losses, MERS relied solely on evidence that it was identified on the White-Sorensen deeds of trust as Accredited’s “nominee” and a “beneficiary.”  The deeds of trust state that MERS is a beneficiary “solely as nominee for Lender and Lender’s successors and assigns . . . .”

MERS is a private corporation providing a national electronic registration service that ” ‘tracks the transfer of ownership interests and servicing rights in mortgage loans.’ ”  (Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1151 (Gomes); see Ferguson v. Avelo Mortgage, LLC (2011) 195 Cal.App.4th 1618, 1625; Peterson, Foreclosure, Subprime Mortgage Lending, and the Mortgage Electronic Registration System (2010) 78 U. Cin. L.Rev. 1359 (hereafter Peterson).)  MERS’s purpose is to streamline the mortgage process by serving as the nominee and as mortgagee of record for its members, thereby eliminating the need to record mortgage transfers.  (Gomes, supra, 192 Cal.App.4th at p. 1151.)  MERS thus remains nominal mortgagee of record even if the loan is transferred numerous times to different creditors.  (Ibid.)  In providing this service, MERS generally has no financial interest in the mortgage loan; its revenue comes not from repayment of the loan, but from fees the lenders pay to MERS.  (Ibid.; Peterson, supra, 78 U. Cin. L.Rev. at p. 1371.)

Under California law, MERS’s status as a “nominee” on a deed of trust means that it has the right to initiate foreclosure proceedings as the lender’s agent.  (See Gomes, supra, 192 Cal.App.4th at pp. 1157-1158; see also Ferguson, supra, 195 Cal.App.4th at pp. 1625-1627.)  Although California courts have not yet determined the precise scope of MERS’s rights to act beyond this limited role (see Gomes, supra, at p. 1157, fn. 9), most federal courts have held that MERS’s identification as a beneficiary on a deed of trust does not confer full “beneficiary” (lender) status with respect to all matters relating to the note and the mortgage lending process.  (Ibid.; see Weingartner v. Chase Home Finance, LLC (D.Nev. 2010) 702 F.Supp.2d 1276, 1280.)

But regardless of the extent of MERS’s rights as a named nominal beneficiary under California law, MERS’s status as a beneficiary on the deeds of trust in this case did not support a finding it was entitled to recover for Accredited’s claimed losses.  As we conclude in the companion Jacoby appeal, at the time of the summary judgment motion, the deed of trust had been extinguished by the third party sale.  (Jacoby, supra, D054010; see Code Civ. Proc., § 701.630.)  Thus, the only remaining legal instrument was White-Sorensen’s promissory note owed to Accredited (or its successors in interest).  There was no showing MERS had any financial interest in Accredited’s loan or that it received an assignment of the loan or claim.  Without more, MERS’s mere identification as a nominee or beneficiary on a deed of trust that had been extinguished did not confer real party in interest status on MERS with respect to the lender’s affirmative breach of contract and tort claims against a third party.  There is no factual or legal basis in the summary judgment record for the court to have permitted MERS to recover for injuries suffered by Accredited based on Accredited’s contract and fraud claims against Nacif.

First American

First American brought the claims against Nacif solely in its role as the trustee on the two deeds of trust executed by White-Sorensen.  This status did not give First American standing to recover on a breach of contract claim on behalf of Accredited (the creditor/trustor).  Although a trustee of a trust is the real party in interest in litigation involving trust property (Nicholson v. Fazeli (2003) 113 Cal.App.4th 1091, 1102), a trustee on a deed of trust “is not a “trustee in the strict sense of the word” (Lupertino v. Carbahal (1973) 35 Cal.App.3d 742, 747).  It owes no fiduciary obligations, and is not a general agent of the trustor (debtor) or the beneficiary (creditor).  (Id. at pp. 747-748.)  Instead, the trustee has the authority to act “only so far as may be necessary to the execution of the trust.”  (Id. at p. 748.)  The trustee’s ” ‘only duties are:  (1) upon default to undertake the steps necessary to foreclose the deed of trust; or (2) upon satisfaction of the secured debt to reconvey the deed of trust.’ ”  (Heritage Oaks Partners v. First American Title Ins. Co. (2007) 155 Cal.App.4th 339, 345.)

In taking judicial notice of the relevant superior court files, we are aware that in moving to amend the pleadings, First American submitted its counsel’s declaration (with attached letters) asserting that, in addition to its role as trustee, First American served as the title insurer on White-Sorensen’s refinancing loan and that, as the title insurer, First American was subrogated to certain successor lenders’ rights.  However, the trial court’s decision to permit an amendment of the pleadings based on these claims did not relieve the parties of presenting admissible evidence in the context of moving for summary judgment that it was a proper party to recover on Accredited’s behalf.  Because a summary judgment deprives a party of a fundamental trial right, a summary judgment may be granted only if the moving party presents supporting facts showing it is entitled to a judgment in its favor as a matter of law.  (Code Civ. Proc., § 437c, subd. (c).)  Absent admissible, competent evidence in the summary judgment proceedings showing First American had a valid assignment or was subrogated to Accredited’s rights and that the scope of any such subrogation/assignment entitled First American to recover for Accredited’s losses, the court had no basis to grant summary judgment to First American based on claims that Nacif damaged Accredited’s rights.

Respondents’ Additional Real Party in Interest Arguments Are Without Merit

First American and MERS contend a trustee, nominee, and beneficiary on a deed of trust are indispensible parties in an action involving a foreclosure of the particular deed of trust.  (See Washington Mutual Bank v. Blechman (2007) 157 Cal.App.4th 662, 668.)  We agree with this principle, but it is inapplicable to establish real party in interest status in this case.  The judicial foreclosure had already taken place, and the Accredited deeds of trust extinguished.  (See Jacoby, supra, D054010.)  The fact that a trustee on Accredited’s deeds of trust may be an indispensible party in an action involving the foreclosure of that deed of trust does not establish First American or MERS were real parties in interest on contract and fraud claims asserted by the lender/creditor against a third party.

We also reject respondents’ arguments that Nacif waived her right to assert the standing issue because she did not “object to MERS and First American being substituted into Accredited’s place.”  The record makes clear that Nacif’s counsel objected to the substitution, and repeatedly argued that neither First American nor MERS were proper parties in the action.  Moreover, a party moving for summary judgment must establish all of the facts necessary to support a judgment in its favor even if the opposing party makes no objections to the moving party’s evidence and produces no evidence of its own.  (Rincon v. Burbank Unified School Dist., supra, 178 Cal.App.3d at pp. 954, 956.)  Because MERS and First American had no direct relationship with Nacif, it was incumbent on them to submit facts showing they had a right to recover for the lender’s claimed losses.

We now turn to examine the summary judgment with respect to each cause of action asserted by MERS and First American against Nacif.

2.  Breach of Contract Claim Asserted by First American and MERS

In their contract claims, First American and MERS alleged Nacif breached the 2004 Settlement Agreement by:  (1) refusing to withdraw the lis pendens after receiving the settlement funds; (2) refusing to acknowledge that the payment of $115,000 constituted payment of the settlement; and (3) filing the amended complaint after she had agreed to dismiss the claims with prejudice.[4] They alleged that as “a proximate cause of Nacif’s breach of the [Settlement] Agreement,” they were “damaged in an amount of at least the value of their [$675,000] loans which had previously been secured by [the] real property . . . .”  (Italics added.)

In moving for summary judgment on this claim, MERS and First American presented evidence showing the 2004 Settlement Agreement required Nacif to withdraw her lis pendens, she did not do this or return the settlement funds, and this conduct caused Accredited to lose its security interest in the property after Jacoby purchased the property at the foreclosure sale.  They further presented the declaration of a mortgage broker involved in the refinance who stated that the White-Sorensen property was appraised at approximately $690,000 when White-Sorensen’s loan was refinanced in July 2004.

This evidence did not meet respondents’ summary judgment burden to prove their contract claims as a matter of law.

First, neither party (nor Accredited) was a party to the contract (the 2004 Settlement Agreement) they claimed was breached.  Thus, to recover on a breach of contract claim, MERS and First American were required to establish they were third party beneficiaries of the contract.  (See Civ. Code, § 1559.)

To prove third party beneficiary status, the party must show the contracting parties intended to benefit the third party; it is not enough the third party would incidentally benefit from the party’s performance.  (Spinks v. Equity Residential Briarwood Apartments (2009) 171 Cal.App.4th 1004, 1022; Souza v. Westlands Water Dist. (2006) 135 Cal.App.4th 879, 891; Neverkovec v. Fredericks (1999) 74 Cal.App.4th 337, 348.)  ” ‘The fact that . . . the contract, if carried out to its terms, would inure to the third party’s benefit[,] is insufficient to entitle him or her to demand enforcement.’ ”  (Neverkovec, supra, 74 Cal.App.4th at p. 349.)  “On the other hand, ‘the third person need not be named or identified individually to be an express beneficiary.’  [Citations.]  ‘A third party may enforce a contract where he shows that he is a member of a class of persons for whose benefit it was made.’  [Citations.]”  (Spinks, supra, 171 Cal.App.4th at p. 1023.)  “Whether a third party is an intended beneficiary . . . to the contract involves construction of the parties’ intent, gleaned from reading the contract as a whole in light of the circumstances under which it was entered.”  (Jones v. Aetna Casualty & Surety Co. (1994) 26 Cal.App.4th 1717, 1725.)

“Generally, it is a question of fact whether a particular third person is an intended beneficiary of a contract.”  (Prouty v. Gores Technology Group (2004) 121 Cal.App.4th 1225, 1233.)  The burden of proof is on the nonsignatory party to establish third party beneficiary status.  (See Neverkovec v. Fredericks, supra, 74 Cal.App.4th at p. 349.)

In moving for summary judgment, MERS and First American relied on the terms of the 2004 Settlement Agreement as well as communications between Nacif’s counsel and a mortgage broker (Neal Melton) to establish they were third party beneficiaries of the contract.  This evidence was insufficient to meet their summary judgment burden.

First, the 2004 Settlement Agreement does not identify the refinancing lender (Accredited), and instead pertains exclusively to the settlement between Nacif and White-Sorensen.  The only portion of the agreement that relates to the refinancing loan is a sentence that states that Nacif’s counsel shall deliver a release of the lis pendens to the escrow officer “[i]f the release is required as a condition to funding a refinance . . . .”  (Italics added.)  However, the evidence showed that Accredited did not require the release as a precondition to funding the refinance and the escrow company did not require the release before paying the funds to Nacif.

With respect to the communications between Nacif’s counsel and mortgage broker Melton, respondents submitted Melton’s declaration who said he was Accredited’s agent during the refinancing process.  Melton said that because Accredited was “concerned about the lis pendens,” Melton requested written confirmation from Nacif’s counsel that the lis pendens would be removed.  According to Melton, Nacif’s attorney provided a copy of the 2004 Settlement Agreement to Melton, and “confirmed both orally, and in writing, that the lis pendens would be removed upon payment of the $115,000″ to Nacif.  Melton said Accredited relied on these assurances in agreeing to refinance the loan and Accredited would not have refinanced the property without these assurances.

To meet its summary judgment burden, a moving party must present evidence that “would require a reasonable trier of fact” to find in its favor.  (Aguilar, supra, 25 Cal.4th at p. 851.)  Under the terms of the 2004 Settlement Agreement, a reasonable trier of fact could conclude the purpose of the agreement was to resolve the parties’ dispute and that the lis pendens withdrawal requirement was intended to benefit White-Sorensen (to remove the cloud on his title) and to assist him to obtain funds, and not to directly benefit his refinancing lender.  The facts that the refinance loan was mentioned in the settlement agreement and that Nacif knew the lender would receive a benefit from Nacif’s promise to remove the lis pendens do not require a finding that Accredited was a third party beneficiary.  Viewing the 2004 Settlement Agreement in light of the totality of the circumstances, a trier of fact could find Accredited was not an intended beneficiary.  (See Sheppard v. Banner Food Products (1947) 78 Cal.App.2d 808, 812 [lender not a third party beneficiary of contract between buyer and seller even though lender relied on parties’ express assurances that sale would be completed].)[5]

Moreover, even assuming the evidence established the lender (Accredited) was an intended third party beneficiary, this does not confer third party beneficiary status on MERS or First American.  These parties presented no evidence to show that Nacif had any intent to benefit these parties, who were suing in their role as trustee of Accredited’s deeds of trust and as nominee and beneficiary on the deeds of trust.  Although a party may establish third party beneficiary status if the party was a member of a class of entities ” ‘for whose benefit [the contract] was made’ ” (Spinks, supra, 171 Cal.App.4th at p. 1023), the parties presented no evidence that Nacif intended to benefit a class of trustees or a nominee/beneficiary on a deed of trust.  In fact, at the time Nacif and White-Sorensen entered into the 2004 Settlement Agreement, the deeds of trust were not yet in existence.

We additionally conclude MERS and First American failed to meet their summary judgment burden on their contract claim because their submitted evidence would not require a trier of fact to find Nacif’s alleged breach of the 2004 Settlement Agreement caused them to suffer damages and the amount of those damages.  To recover on a breach of contract claim, each plaintiff moving for summary judgment must show “damages to plaintiff as a result of the breach.”  (CDF Firefighters v. Maldonado (2008) 158 Cal.App.4th 1226, 1239, italics added; Emerald Bay Community Assn. v. Golden Eagle Ins. Corp. (2005) 130 Cal.App.4th 1078, 1088.)  ” ‘Contractual damages are “the amount which will compensate the party aggrieved for all the detriment proximately caused thereby, or which, in the ordinary course of things, would be likely to result therefrom.”  [Citations.]’ ”  (Emerald Bay Community Assn., supra, 130 Cal.App.4th at p. 1088.)

MERS and First American alleged they suffered damages in the form of the impairment/loss of the security for the two loans to White-Sorensen, totaling $675,000, plus interest and attorney fees.  In support, they proffered the two deeds of trust securing the two loans (totaling $675,000) from Accredited to White-Sorensen.  They also relied on their counsel’s declaration, who summarily stated:  “Accredited, MERS and First American have accrued damages of $675,000 . . . by [Nacif’s] refus[al] to release the lis pendens and reactivating this action . . . .”  Respondents additionally presented mortgage broker Melton’s declaration, in which he stated that Accredited refinanced the White-Sorensen property by paying off two deeds of trust totaling $481,765.20 and then loaning White-Sorensen $675,000 secured by the two deeds of trust.  Melton further stated that “[a]n appraisal obtained in conjunction with the refinance of the property [in 2004] valued the property at approximately $690,000.”

This evidence does not establish these parties suffered damages resulting from Nacif’s breach of contract.  First, although they seek to be compensated for the loss of the security for the two loans totaling $675,000, there is no evidence that either owned the rights to the proceeds of the loan.  Essentially, the court awarded each of these parties $675,000 without any evidence they lost this amount or, more importantly, that they would have received this amount if Nacif had fulfilled the claimed contractual obligations.

Additionally, even if these parties could assert Accredited’s alleged loss as a basis for their claim, the record does not show Accredited was entitled to recover $675,000 as a matter of law.  Melton’s assertion that the property was appraised at $690,000 at the time of the refinancing (August 2004) does not necessarily mean it had this same value at the time of the foreclosure sale 18 months later (February 2006).  There was no competent evidence before the court showing the value of the property was at least $675,000 at the time it was sold, and thus that Nacif’s actions were a substantial factor in causing this amount of lost security.

Additionally, there was evidence showing Accredited had notice of a pending foreclosure sale and failed to take appropriate actions to prevent the sale and/or to timely assert its rights in the security.  Thus, a factual question exists as to the amount of damages caused by Nacif’s alleged breach of contract (as opposed to losses caused by Accredited’s conduct).  Although a moving party plaintiff does not have the burden to disprove the defendants’ affirmative defenses to prevail on a summary judgment motion (see Santa Ana Unified School Dist. v. Orange County Development AgencyCDF Firefighters v. Maldonado, supra, 158 Cal.App.4th at p. 1239; Department of Industrial Relations v. UI Video Stores, Inc. (1997) 55 Cal.App.4th 1084, 1097.) (2001) 90 Cal.App.4th 404, 411), Accredited’s conduct contributing to its losses is relevant to the causation element, and not merely to affirmative defenses such as mitigation of damages.  Because the amount of damages caused by Nacif’s conduct raises factual questions, it was not appropriate to grant summary judgment.  (See

3. Fraud Claims Asserted by First American and MERS

We similarly conclude the court erred in granting summary judgment on the fraud claims brought by First American and MERS.

MERS and First American asserted two fraud claims against Nacif.  First, they alleged Nacif falsely represented she would withdraw the lis pendens and dismiss her claims against White-Sorensen upon receipt of the settlement funds.  Second, they alleged promissory fraud, i.e., that Nacif made a promise to withdraw the lis pendens and dismiss the action without an intent to perform these promises.  With respect to both, they alleged the false promises induced White-Sorensen to pay her $115,000 and caused MERS to be nominated as the beneficiary under the deeds of trust.  They alleged that this fraud resulted in Nacif obtaining a fraudulent equitable mortgage and judgment of subordination and that she was unjustly enriched from the proceeds of the sheriff’s sale.

In moving for summary judgment on these claims, MERS and First American relied primarily on the evidence showing that during the escrow process, mortgage broker Melton spoke with Nacif’s attorney, and Nacif’s attorney confirmed that the lis pendens would be withdrawn upon payment of the $115,000 to Nacif.  Based on these assurances, Accredited funded the $115,000 settlement payment and paid it to Nacif’s attorney directly from escrow.  Melton said Accredited relied on Nacif’s attorney’s assurances and would not have refinanced the property without Nacif’s statements that the lis pendens would be released upon payment of the $115,000.

To prove a fraud cause of action, the plaintiff must show the defendant made a false representation or a nondisclosure of material fact to the plaintiff; the plaintiff had no knowledge of the falsity; the defendant had the intent to defraud; and the plaintiff justifiably relied on the representation (or nondisclosure).  (Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1239.)  Additionally, the plaintiff must show the “plaintiff has been damaged as a result of the defendant’s misrepresentation or concealment of fact.”  (Saunders v. Taylor (1996) 42 Cal.App.4th 1538, 1542.)  Without damages an alleged fraud is not actionable.  (Building Permit Consultants, Inc. v. Mazur (2004) 122 Cal.App.4th 1400, 1415.)

MERS and First American did not satisfy their summary judgment burden to establish that there were no triable issues of fact on these elements and that they were entitled to judgment as a matter of law.  First, there was no showing that Nacif made any misrepresentations to them.  At most, Nacif’s counsel made a false statement to Accredited’s agent (Melton).  The evidence did not show Melton was acting on behalf of the trustee or nominee/beneficiary on the deeds of trust.  Moreover, there was no evidence that Nacif owed any duty to these parties to disclose material information. Further, there was no showing the parties suffered a loss from the alleged fraud.  Neither First American nor MERS presented any evidence that they suffered damages. Additionally, even if these parties could recover for misrepresentations made to Accredited’s agent, the evidence did not compel a finding that Accredited justifiably relied on Nacif’s representations to its detriment.  The evidence showed that the lis pendens remained recorded at all times and the parties knew about (or were on inquiry notice of) the ongoing superior court action and the fact that the court-ordered sheriff’s sale had been scheduled.  The evidence also showed that Accredited did not require the lis pendens withdrawal as a condition of the refinancing, and that White-Sorensen represented on the loan application that he earned $34,000 per month.

On this record, a factfinder could reasonably infer that the promise to withdraw the lis pendens was not the primary (or even a relevant) factor in Accredited’s decision to lend money to White-Sorensen.  A jury could find that it was just as likely that Accredited agreed to loan White-Sorensen the funds because White-Sorensen’s income provided an adequate source of funds for loan repayment and/or Accredited understood it could immediately bundle the secured notes with other notes and sell the loan to other entities, regardless of the value of the security.  Further, a jury could reasonably find that Accredited knew about the pending judicial foreclosure and could have taken steps to prevent the sale, and thus Nacif’s representation about her intention to remove the lis pendens was not the sole or primary cause of Accredited’s loss.

Additionally, as with the breach of contract claim, the evidence on the summary judgment motion did not show as a matter of law that $675,000 was the amount of damages suffered by Accredited and/or MERS and First American.  Thus, they did not establish their right to recover on the fraud claim as a matter of law.  (See Department of Industrial Relations v. UI Video Stores, Inc., supra, 55 Cal.App.4th at p. 1097.)

4. Equitable Claims Brought by First American and MERS

Nacif also challenges the court’s summary judgment in favor of First American and MERS on their equitable subrogation and declaratory relief claims.  We agree the court erred in these rulings.

To the extent the equitable relief was based on the court’s findings on the breach of contract and fraud claims, we have concluded the court erred in granting summary judgment on these claims.  Further, to the extent the equitable relief pertains to priority of the deeds of trust and/or equitable mortgage, there was no basis to award this relief because these parties’ rights to assert priority issues based on the Accredited deeds of trust had been extinguished after the sale of the property to a third party.  (See Jacoby, supra, D054010.)  On the summary judgment record before us (and viewing the facts in the light most favorable to Nacif), Accredited had notice of the foreclosure sale, but took no timely action to prevent the sale or to offer a bid at the sale to preserve its rights.  Because Accredited no longer had an interest in the property at the time of the summary judgment motion, First American and MERS could not assert priority issues based on Accredited’s former deeds of trust.

D.  Nacif’s Second Amended Complaint Against First American and MERS

Nacif’s only cause of action against First American and MERS in her second amended complaint is a claim for declaratory relief, essentially seeking a declaration that the court should find in her favor on respondents’ claims against her.  For example, she sought a declaration that “none of the Defendants has standing to make the claims each has asserted because none of them any longer owns an interest in or otherwise has a legal claim related to the Deeds of Trust.”

On appeal, Nacif does not directly challenge the court’s grant of summary judgment in favor of these parties on these claims.  We thus affirm the court’s judgment with respect to these parties.  Because the same issues are raised in the intervention complaint and the cross-complaint, there is no need for these claims to be litigated in this pleading.

II.  Anti-SLAPP Motion

Nacif contends the court erred in granting respondents’ motion under Code of Civil Procedure section 425.16 (section 425.16) to strike Nacif’s second amended complaint against White-Sorensen, MERS, and First American.[6]

Section 425.16 authorizes a defendant to file a special motion to strike any cause of action arising from an act in furtherance of the defendant’s constitutional rights of free speech or petition for redress of grievances.  (Flatley v. Mauro (2006) 39 Cal.4th 299, 311-312.)  This anti-SLAPP statute seeks to encourage participation in matters of public significance and prevent chilling the exercise of constitutional rights through “abuse of the judicial process.”  (§ 425.16, subd. (a); Flatley v. Mauro, supra, at pp. 312-313.)  Courts must broadly construe the statute.  (§ 425.16, subd. (a).)

The analysis of an anti-SLAPP motion involves two steps.  “First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one ‘arising from’ protected activity.  (§ 425.16, subd. (b)(1).)  If the court finds such a showing has been made, it then must consider whether the plaintiff has demonstrated a probability of prevailing on the claim.”  (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 76.)  “Only a cause of action that satisfies both prongs of the anti-SLAPP statute — i.e., that arises from protected speech or petitioning and lacks even minimal merit — is a SLAPP, subject to being stricken under the statute.”  (Navellier v. Sletten (2002) 29 Cal.4th 82, 89.)  We review de novo an order granting a motion to strike.  (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 269, fn. 3.)

Under these principles, we conclude the court erred in granting respondents’ anti-SLAPP motion.

First, with respect to Nacif’s claims against White-Sorensen, the record showed Nacif had a probability of prevailing on those claims.  In fact, this court had already determined that Nacif had prevailed because of White-Sorensen’s default.  This ruling was law of the case.  (Nally, supra, 47 Cal.3d at p. 301.)  Thus, even if Nacif’s claims against White-Sorensen were subject to the anti-SLAPP statute, the court erred in granting the motion because Nacif met her burden to show a probability of prevailing on her claims.

Second, with respect to Nacif’s claim against MERS and First American (a single declaratory relief claim), this claim is not subject to the anti-SLAPP statute.  Nacif brought the declaratory relief claim against MERS and First American solely in response to arguments brought by these parties that they were indispensible parties.  In adding these parties in the second amended complaint, Nacif did not allege any wrongful conduct on the part of MERS or First American.  Instead, she merely sought declaratory relief that her actions in foreclosing on the equitable mortgage (that had been previously approved by the trial court) were proper and that neither MERS nor First American had a legal basis to challenge these actions.  This cause of action essentially mirrored the claims brought against her by First American and MERS.  On this record, Nacif’s claim did not arise from protected petitioning or free speech activity by MERS or First American.

III.  Judicial Notice

Nacif requested that this court take judicial notice of:  (1) the record, court docket, and Court of Appeal opinion in the Nacif I case; (2) the record on appeal, court docket, and court file in the Jacoby case; and (3) the petition, record, court docket, court file and disposition in Nacif’s earlier writ petition to this court in this case.  We grant the request with respect to our prior Nacif I opinion.  We deny the remainder of the request because the documents are either already contained in the existing appellate record or are not relevant to the specific appellate issues raised in this case.[7]

On our own motion, we have also taken judicial notice of documents contained in the superior court files in this case.  (Evid. Code, §§ 459, subd. (a), 452, subd. (d); see Litmon v. Superior Court (2004) 123 Cal.App.4th 1156, 1162, fn. 3; Becker v. McMillin Construction Co. (1991) 226 Cal.App.3d 1493, 1496, fn. 3.)  We have relied on those records only to the extent they are relevant to the appellate issues and discussed in this opinion.

IV.  Summary of Conclusions

Based on the law of the case doctrine and the compulsory counterclaim rules, the court erred in granting White-Sorensen’s summary judgment motion on Nacif’s second amended complaint and on White-Sorensen’s affirmative pleadings against Nacif.  The court further erred in granting White-Sorensen’s anti-SLAPP motion.  We thus reverse these rulings and instruct the court to find in favor of Nacif and against White-Sorensen on these motions.  The court is further ordered to reenter White-Sorensen’s entry of default as it was directed to do in Nacif I (see Nacif I, supra, D048938), and to enter a default judgment against White-Sorensen.

With respect to the affirmative claims brought by MERS and First American against Nacif, the court erred in granting summary judgment.  In reaching this conclusion, we have not intended to opine on whether these parties will ultimately prevail on their claims at trial.  Our conclusions are based solely on the summary judgment record before us.  Because a summary judgment in favor of a plaintiff is a particularly drastic procedure that eliminates a defendant’s right to defend itself at a trial, a moving party plaintiff must establish each element of the cause of action and show there are no triable factual issues with respect to each element.  (See Aguilar, supra, 25 Cal.4th at p. 851.)  Although MERS and First American produced some evidence supporting their claims, they did not meet their burden to show that each element has been established and thus that there was no defense to the claims.

With respect to Nacif’s second amended complaint against MERS and First American, Nacif did not challenge the summary judgment on this pleading.  We thus conclude the court properly granted summary judgment on this pleading.

DISPOSITION

The court is ordered to vacate the judgment entered on September 17, 2009 and enter new orders as follows:

(1)  The court shall vacate the summary judgment in favor of White-Sorensen on Nacif’s second amended complaint, and enter a new order denying White-Sorensen’s summary judgment motion with respect to this pleading.  The court shall also vacate its order granting the motion for judgment on the pleadings with respect to White-Sorensen, and enter a new order denying the motion for judgment on the pleadings with respect to White-Sorensen.  Thus, on remand Nacif’s first amended complaint is the operative pleading against White-Sorensen.  The court shall withdraw its order vacating the entry of default with respect to this pleading, and shall enter a new order reinstating the entry of default as to White-Sorensen on Nacif’s first amended complaint and enter judgment in Nacif’s favor.

(2)  The court shall enter a new order denying the summary judgment motion by White-Sorensen, MERS, First American on their cross-complaint filed on March 27, 2009.

(3)  The court shall enter a new order denying the summary judgment motion by White-Sorensen and MERS on their first amended intervention complaint filed on May 24, 2006.

(4)  The court shall enter an order granting the summary judgment motion filed by First American and MERS on Nacif’s second amended complaint.  The court shall dismiss Nacif’s claims against these parties, and dismiss Nacif’s second amended complaint.

(5)  The court shall vacate its order granting respondents’ anti-SLAPP motion and enter a new order denying this motion.

(6)  The court shall reinstate its order dismissing Accredited from the case.

(7)  The court shall vacate its attorney fees award in favor of respondents.

(8)  On remand, any further rulings in this case shall be consistent with the holdings in this opinion and in Nacif I.

Respondents are ordered to pay appellant’s costs on appeal.

HALLER, Acting P. J.

WE CONCUR:

McINTYRE, J.

AARON, J.



[1] The third party purchaser, Scott Jacoby, was brought into this action by Accredited and related parties.  The court had earlier granted Jacoby summary judgment.  In a companion appellate opinion filed today, we uphold this summary judgment.  (Mortgage Electronic Registration Systems, Inc. v. Jacoby (August 8, 2011, D054010) (Jacoby.) We discuss facts relevant to Jacoby in this opinion only to the extent they are relevant to the issues raised in this appeal.


[2] Nacif also named the mortgage broker and several other entities, but the court later granted a motion to strike these parties from the complaint and Nacif does not challenge this ruling on appeal.

[3] Because we have concluded respondents did not meet their summary judgment and anti-SLAPP burdens with respect to their affirmative pleadings, we focus primarily on their evidence and do not detail Nacif’s opposition.

[4] First American and MERS also alleged Nacif was liable because she “proceed[ed] with a sheriff’s sale of the property without proper notice to Accredited, MERS or First American.”  However, because these parties did not move for summary judgment based on this allegation, we omit it from our discussion of the propriety of the summary judgment on the contract claims.

[5] At oral argument, respondents’ counsel complained that Nacif had not specifically raised the third party beneficiary issue in the proceedings below.  However, it was respondents’ burden to show each element of their contract cause of action to prevail on summary judgment, and this burden obviously includes a third party beneficiary showing where, as here, there is no evidence MERS or First American had a contractual relationship with Nacif.  In any event, we have concluded the court erred in granting summary judgment in favor of these parties on numerous grounds, and our discussion of the third party beneficiary issue is also intended to assist the parties and court on remand.

[6] We reject respondents’ argument that Nacif’s appeal from the anti-SLAPP order was untimely.  Additionally, we are required to address the anti-SLAPP ruling regardless of our conclusions on the summary judgment motions because the court awarded respondents attorney fees for prevailing on the anti-SLAPP motion.  (See § 425.16, subd. (c)(1).)

[7] Although the court initially issued an order signed by the presiding justice denying the motion in its entirety, we later notified the parties that the merits panel would reconsider the order after a full review of the record and arguments.  (See Delmonico v. Laidlaw Waste Systems, Inc. (1992) 5 Cal.App.4th 81, 83, fn. 1 [a ruling on a motion by a single appellate justice may be reconsidered by merits panel].)   We deny respondents’ motion to strike Nacif’s reply brief based on our earlier ruling.

[ipaper docId=62142239 access_key=key-4s29d4rcb3txnssgr3b height=600 width=600 /]

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUDComments (3)

BOSCHMA v. Home Loan Center | CA 4DCA Div. 3 Reverses JGMT “Plaintiffs adequately alleged fraud and section 17200 causes of action, OPTION ARM “Teaser”

BOSCHMA v. Home Loan Center | CA 4DCA Div. 3 Reverses JGMT “Plaintiffs adequately alleged fraud and section 17200 causes of action, OPTION ARM “Teaser”


CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE

CLARENCE E. BOSCHMA et al.,
Plaintiffs and Appellants,

v.

HOME LOAN CENTER, INC.,
Defendant and Respondent.


The defining feature of an option adjustable rate mortgage loan (?Option ARM?) with a discounted initial interest rate (i.e., a ?teaser? rate) is, for a limited number of years, the borrower may (by paying the minimum amount required to avoid default on the loan) make a monthly payment that is insufficient to pay off the interest accruing on the loan principal. Rather than amortizing the loan with each minimum monthly payment (as occurs with a standard mortgage loan), ?negative amortization? occurs — a borrower who elects to make only the scheduled payment during the initial years of the Option ARM owes more to the lender than he or she did on the date the loan was made. After an initial period of several years in which negative amortization can occur, a borrower‘s payment schedule then recasts to require a minimum monthly payment that amortizes the loan.

In this case, plaintiffs1 sued defendant Home Loan Center, Inc., for: (1) fraudulent omissions; and (2) violations of Business and Professions Code section 17200 et seq. (section 17200). Plaintiffs, individual borrowers who entered into Option ARMs with defendant, allege defendant‘s loan documents failed to adequately and accurately disclose the essential terms of the loans, namely that plaintiffs would suffer negative amortization if they made monthly payments according to the only payment schedule provided to them prior to the closing of the loan. The court sustained defendant‘s demurrer to the second amended complaint without leave to amend, reasoning that the loan documentation adequately described the nature of Option ARMs. We reverse the ensuing judgment. Plaintiffs adequately alleged fraud and section 17200 causes of action.

[…]

[ipaper docId=62139793 access_key=key-k3ihuyhha0hnvdj2wac height=600 width=600 /]

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUDComments (0)

PARKER v. LASALLE BANK | FL 4DCA REVERSED/REMAND “SEWER SERVICE”

PARKER v. LASALLE BANK | FL 4DCA REVERSED/REMAND “SEWER SERVICE”


DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

July Term 2011

CATHERINE PAIGE PARKER, et. al.,
Appellants,

v.

LASALLE BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR THE REGISTERED HOLDERS OF THE STRUCTURED ASSET SECURITIES CORPORATION, STRUCTURED ASSET INVESTMENT LOAN TRUST, MORTGAGE PASS-THROUGH CERTIFICATES M SERIES 2003-BC8,
Appellee.

EXCERPT:

This case is more akin to Demars v. Village of Sandalwood Lakes
Homeowners Association, 625 So. 2d 1219 (Fla. 4th DCA 1993). In that
case, a homeowners association filed suit to foreclose o n a lien for
unpaid assessments and obtained judgment. The association attempted
personal service twice at the homeowner’s residence. A tenant at the
residence did not know how to contact the homeowner. To establish a
diligent search for constructive service, the association’s attorney called a
mortgage holder a n d th e power company. Neither would divulge
information over the phone, and the association’s attorney did not follow
up with a letter. The court held the association’s search did not meet the
standards of reasonable diligence because the attorney for the
association did not follow up on any of his inquiries. Therefore, the
constructive service was defective, rendering the judgment of foreclosure
voidable.

In this case, the record reflects only one return of service. According
to the affidavit of diligent search and inquiry, Harris next searched credit
information, directory assistance, motor vehicle records, the post office,
property tax records, national death records, and prison records to try
and locate Parker. However, the affidavit shows the search for Parker
was less than diligent. Regarding efforts to locate Parker at her last
known address (the subject property) is a statement that “Process Server
stated: Tenant occupied.” No indication exists as to when the process
server went to the premises or how h e determined it was “tenant occupied.”

Further, no indication exists that the process server inquired
of the tenant the whereabouts of Parker. Under the section of the
affidavit titled “Inquiry of Neighbors at Last Known Address,” it merely
states: “Unable to contact neighbors,” with no statement as to who made
attempt, or on what dates or any description of any attempt made.
Under the section “Freedom of Information Act Inquiry Made to US Postal
Service,” it says “Requested change of address or boxholder information
[at property address] on 2/19/09. Upon receipt of their response, will
promptly revert,” with no follow-up of any information received from the
post office.

“[P]roof of a few attempts at service of process are insufficient to prove
diligent search.” Demars, 625 So. 2d at 1221. In this case, personal
service was attempted only once. As in Demars, the affidavit of diligent
search filed in this case displays a pattern of failure to follow up on
inquiries and leads that could have revealed Parker’s location. Therefore,
we find LaSalle’s search did not meet the standards of reasonable
diligence. Further, this case is distinguishable from Reina in that Parker
was diligent in pursuing the motion to quash. Parker’s trial counsel filed
a special limited appearance to attack the service of process fourteen
days after entry of final judgment and filed an emergency motion to
quash six days later. Therefore, we reverse, finding the final judgment
entered in this case voidable, and remand for further proceedings.

Reversed and remanded.

WARNER and POLEN, JJ., concur.

[ipaper docId=62109063 access_key=key-n7iqfzh60o7h00a6tw7 height=600 width=600 /]

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUDComments (0)

FL 4DCA Reversed “Attorney’s Fee Provision in the Mortgage” | NUDEL v. FLAGSTAR BANK

FL 4DCA Reversed “Attorney’s Fee Provision in the Mortgage” | NUDEL v. FLAGSTAR BANK


DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

January Term 2011

TATYANA NUDEL,

v.

FLAGSTAR BANK, FSB, UNKNOWN SPOUSE OF TATYANA NUDEL,
MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. AS
NOMINEE FOR FLAGSTAR BANK, FSB, PALM BEACH COUNTY,
ADORNO & YOSS, LLP, UNKNOWN TENANT(S) IN POSSESSION, and
ALL OTHER UNKNOWN PARTIES

No. 4D10-3001

[May 18, 2011]

GROSS, C.J.

EXCERPT:

On June 30, 2009, Flagstar Bank sued Tatyana Nudel to foreclose a mortgage. According to the mortgage, Flagstar was defined as the  lender” which lent Nudel $220,000; Mortgage Electronic Registration Systems, Inc., (“MERS”) was the “mortgagee” under the instrument, acting as a “nominee” for Flagstar; and Nudel was the “[b]orrower.” Under section 22 of the mortgage, the “lender” Flagstar was entitled to reasonable attorney’s fees and costs in foreclosure proceedings. MERS assigned the mortgage to Flagstar on August 21, 2009.

Nudel moved to dismiss the complaint, arguing that Flagstar lacked standing because MERS did not assign the bank the mortgage until after the bank filed the complaint. See Fla. R. Civ. P. 1.140(b). The circuit court agreed, granted the motion, and dismissed the case without prejudice on March 29, 2010.1 Nudel moved for attorney’s fees and costs on April 15, relying in part on the attorney’s fee provision in the mortgage. The circuit court denied the motion for fees, accepting  Flagstar’s argument that Nudel had waived entitlement to fees under Stockman v. Downs, 573 So. 2d 835 (Fla. 1991), and Sardon Foundation v. New Horizons Service Dogs, Inc., 852 So. 2d 416 (Fla. 5th DCA 2003), because she had not sought attorney’s fees in her motion to dismiss.

[…]

For the purpose of determining a “prevailing party” under section 57.105(7), we see no reason to distinguish between a voluntary dismissal without prejudice and a court’s involuntary dismissal without prejudice. This same conclusion was reached in Bank of New York v. Williams, 979 So. 2d 347 (Fla. 1st DCA 2008), where the first district affirmed an award i f prevailing party attorney’s fees on facts similar to those in this case. There, the bank sued the defendant to foreclose a mortgage. Id. at 347. The defendant moved to dismiss because the bank failed to show that it owned the mortgage and promissory note and, thus, it lacked standing to sue. Id. The court dismissed a complaint and amended complaint  without prejudice; “[w]hen the Bank declined to file a second amended  complaint, the trial court dismissed the amended complaint with prejudice.” Id. The bank did not appeal this order, but instead instituted a new foreclosure action. Id. In the first action, the court awarded the defendant prevailing party attorney’s fees and costs. Id.

[ipaper docId=55906666 access_key=key-2889c4vcgcubofanrxtx height=600 width=600 /]

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUDComments (1)

FL 4th DCA COURT OF APPEALS REVERSES SUMMARY JUDGMENT: ALEJANDRE v. DEUTSCHE BANK TRUST COMPANY

FL 4th DCA COURT OF APPEALS REVERSES SUMMARY JUDGMENT: ALEJANDRE v. DEUTSCHE BANK TRUST COMPANY


JUDITH ALEJANDRE and SERGIO TERRON, Appellants,
v.
DEUTSCHE BANK TRUST COMPANY AMERICAS

f/k/a BANKER’S TRUST COMPANY, as TRUSTEE
and CUSTODIAN FOR NATIXIS 2007-HE2, Appellee.

No. 4D09-2280.

October 13, 2010 –

Joshua Bleil and Jessica Ticktin of The Ticktin Law Group, P.A.,
Deerfield Beach, for appellants.

No brief filed for appellee.

Judith Alejandre and Sergio Terron (Alejandre) appeal the summary judgment of foreclosure in favor of Deutsche Bank Trust Company. Alejandre asserts that the trial court erred in granting the summary judgment and that they had asserted affirmative defenses which were not denied by Deutsche, dealt with during the hearing on the motion for summary judgment or addressed in the final judgment. We agree and reverse.

Deutsche filed an amended complaint with the necessary documentation alleging that it was entitled to foreclose on the property in question. In Alejandre’s answer to the amended complaint, they asserted as affirmative defenses, the Real Estate Settlement Procedures Act (RESPA), the Truth in Lending Act (TILA), and unclean hands. In moving for summary judgment, Deutsche attached an affidavit stating that it had advanced to Alejandre, and is owed by Alejandre, the sum of $337,567.26. In its motion, however, it did not address any of the pending affirmative defenses. Nonetheless, the trial court granted Deutsche’s motion for summary judgment, prompting this appeal.

“The standard of review of the entry of summary judgment is de novo.” Craven v. TRG-Boynton Beach, Ltd.,925 So.2d 476, 479 (Fla. 4th DCA 2006). Further, [t]he law is well settled in Florida that a party moving for summary judgment must show conclusively the absence of any genuine issue of material fact, and the court must draw every possible inference in favor of the party against whom a summary judgment is sought.” Id. at 479-80. “Summary judgment cannot be granted unless the pleadings, depositions, answers to interrogatories, and admissions on file together with affidavits, if any, conclusively show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Frost v. Regions Bank,15 So.3d 905, 906 (Fla. 4th DCA 2009).

When a party raises affirmative defenses, “[a] summary judgment should not be granted where there are issues of fact raised by [the] affirmative defense[s] which have not been effectively factually challenged and refuted.” Cufferi v. Royal Palm Dev. Co.,516 So.2d 983, 984 (Fla. 4th DCA 1987). Thus, “`[i]n order for a plaintiff . . . to obtain a summary judgment when the defendant asserts affirmative defenses, the plaintiff must either disprove those defenses by evidence or establish the legal insufficiency of the defenses.’” Id. (quoting Bunner v. Fla. Coast Bank of Coral Springs, N.A.,390 So.2d 126, 127 (Fla. 4th DCA 1980)). In such instances, “[t]he burden is on the plaintiff, as the moving party, to demonstrate that the defendant could not prevail.” Id.

In Frost, a bank/mortgagee filed a foreclosure claim against a mortgagor. In response to that complaint, the mortgagors filed an answer that contained the affirmative defense of notice and opportunity to cure. The bank filed a motion for summary judgment. In opposition to that motion, the mortgagors did not file any papers or affidavits. At the hearing, the mortgagors contended that summary judgment was improper because the bank failed to address their affirmative defense. The trial court granted the bank’s motion for summary judgment. Frost, 15 So. 3d at 906.

On appeal, this court reversed. We stated that the bank failed to refute the mortgagors’ affirmative defense of lack of notice and opportunity to cure. The bank failed to meet this requirement because “[n]othing in the bank’s complaint, motion for summary judgment, or affidavits indicate that the bank gave the [mortgagors] the notice which the mortgage required. The bank also did not establish that the [mortgagors’] lack of notice and opportunity to cure defense was legally insufficient.” Id. at 906. This Court held that “[b]ecause the bank did not meet its burden to refute the [mortgagors’] lack of notice and opportunity to cure defense, the bank is not entitled to final summary judgment of foreclosure.” Id. at 906-07.

In the instant case, as in Frost, the trial court’s entry of summary judgment was improper. Here, as in Frost, Deutsche moved for summary judgment, but in that motion, it failed to address affirmative defenses raised by the mortgagor, Alejandre. Because Deutsche failed to address Alejandre’s affirmative defenses, it did not carry its burden on summary judgment. Therefore, the trial court’s entry of summary judgment was erroneous. We do not pass upon the merits of the affirmative defenses, as that is a matter to be addressed in further proceedings.

Reversed and Remanded for Further Proceedings Consistent with this Opinion.

TAYLOR and CIKLIN, JJ., concur.

ALEJANDRE v. DEUTSCHE BANK TRUST COMPANY

[ipaper docId=39355993 access_key=key-25v4r2e2o2xermvv7u0y height=600 width=600 /]

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in deutsche bank, foreclosure, foreclosure fraud, foreclosures, reversed court decisionComments (3)


GARY DUBIN LAW OFFICES FORECLOSURE DEFENSE HAWAII and CALIFORNIA
Chip Parker, www.jaxlawcenter.com
Kenneth Eric Trent, www.ForeclosureDestroyer.com
Advertise your business on StopForeclosureFraud.com

Archives