2011-00108297-CU-BC

Joseph Mohamed vs. Stewart Title Guaranty Company

Nature of Proceeding:     Motion for Summary Judgment/Adjudication (Exhange Bank)

Filed By:   Coryell, Bryan D.

***  If oral argument is requested, the parties are directed to notify the clerk and
opposing counsel at the time of the request which of the 168 Undisputed
Material Facts offered by moving defendant and/or the 72 Additional Material
Facts offered by plaintiffs will be addressed at the hearing and the parties
should be prepared to point to specific evidence which is claimed to show the
existence or non-existence of a triable issue of material fact.  ***

Defendant Exchange Bank’s (“Bank”) motion for summary judgment or alternatively,
for summary adjudication of issues is DENIED in part and DROPPED in part as moot,
as follows.

Moving counsel is admonished because the notice of motion does not provide notice
of the Court’s tentative ruling system, as required by Local Rule 1.06.  Moving counsel
is directed to contact opposing counsel and advise him/her of Local Rule 1.06 and the
Court’s tentative ruling procedure and the manner to request a hearing.  If moving
counsel is unable to contact opposing counsel prior to hearing, moving counsel
is ordered to appear at the hearing in person or by telephone.

Both moving and opposing counsel are admonished for failing to comply with CRC
Rule 3.1110(b)(3)-(4); Rule 3.1113(d)-(e); Rule 3.1116(c), and Rule 3.1350(g) (which
requires all evidence (including declarations) which exceeds 25 pages to be included
in a single volume of evidence with a table of contents).

Moving counsel is also admonished for failing to comply with CRC Rules 3.1116(a)
and 3.1350(d)

Bank’s request for judicial notice is unopposed and is granted.

Plaintiffs’ request for judicial notice is granted but only as to the existence of the cited
documents, not the truth of their contents. (See e.g., Professional Engineers v. Dept.
of Transp. (1997) 15 Cal.4th 543, 590; Steed v. Department of Consumer Affairs
(2012) 204 Cal.App.4th 112, 120-121; see also, Bach v. McNelis (1989) 207
Cal.App.3d 852, 865 [“There exists a mistaken notion that this means taking judicial
notice of the existence of facts asserted in every document of a court file, including
pleadings and affidavits. … A court may take judicial notice of the existence of each
document in a court file, but can only take judicial notice of the truth of facts asserted
in documents such as orders, findings of fact and conclusions of law, and judgments.”
(Emphasis added).])

Bank’s objections to plaintiffs’ evidence in opposition are sustained.

Plaintiffs’ separate objections to the Ghisla Declaration are overruled and their
objections to Bank’s undisputed material facts (“UMF”) are also overruled because
objections are properly directed only at evidence, not UMF themselves. (See, CRC
Rules 3.1352, 3.1354.)  Additionally, to the extent plaintiffs have included in their
separate statement in response to Bank’s UMF purported objections to evidence (see,
Resp. to UMF Nos. 165, 167, 168), these are overruled because they fail to comply
with the express requirements of CRC Rule 3.1354(b)(1)-(3).

This litigation arises out of plaintiffs’ 2009 purchase of unimproved residential lots in
the Anatolia subdivision in the City of Rancho Cordova.  These lots were originally
developed by Sunridge-Anatolia LLC (“Sunridge”), which made substantial
improvements benefitting the lots and pursuant to an agreement with the City,  Sunridge obtained credits which could be applied against the fees ultimately paid to
the City to obtain building permits for the lots.  It appears that the fee credits generated
by Sunridge for its initial improvements are valued at in excess of three million dollars.
In 2007, Sunridge and CH (Anatolia) LP (“CHA”) became obligated by virtue of a
purchase agreement and a builder’s agreement (which was recorded) to purchase
from Sunridge these permit fee credits in three installments commencing once CHA
sought the first building permits for the lots.  Although CHA did seek a handful of
permits in 2007, CHA never actually purchased the permit fee credits from Sunridge
and then in June 2008 CHA lost the lots to Bank when it foreclosed on its second deed
of trust (recorded after the builder’s agreement).

In January 2009, Bank foreclosed on its first deed of trust (recorded before the
builder’s agreement) and Bank, consistent with the express terms of the recorded
builder’s agreement, took title to the lots free from the obligation to perform CHA’s
obligation to purchase the fee credits.  However, in light of language in the builder’s
agreement, there apparently remained some question whether a subsequent
purchaser of the lots would be obligated by virtue of the builder’s agreement to
purchase the fee credits from Sunridge once new permits were sought by that
purchaser, a question which gives rise to this dispute between plaintiffs and Bank.
Nevertheless, apparently aware of the builder’s agreement and CHA’s non-payment
for the permit fee credits, plaintiffs approached Bank regarding a possible purchase of
the lots but concerned about the potential obligation to purchase the fee credits from
Sunridge. Although Bank apparently doubted that the fee credit obligation survived the
foreclosure of the first deed of trust (recorded before the builder’s agreement) and
allegedly communicated this to plaintiffs, the latter’s ultimate acquisition of the lots from
Bank in April 2009 included the issuance of a title insurance policy by Stewart Title
Guaranty Company (“STGC”) which provided in pertinent part:

“The company [STGC] hereby insures the insured [plaintiffs] against loss or
damage the insured shall sustain by reason of the enforcement or attempted
enforcement of a claim that the insured must pay unpaid amounts under the
Builder’s Agreement referred to in Item 21 of Schedule B which accrued prior to
the date of the Trustee’s Deed recorded on January 20, 2009…”

Later in 2009 and thereafter, plaintiffs received letters from Sunridge which notified
them of the “obligation” to the purchase fee credits from Sunridge pursuant to the
builder’s agreement and from the City which indicated that without a fee credit transfer
signed by Sunridge, plaintiffs would have to pay the full amount of the fees due for new
building permits on the lots.  Plaintiffs provided these letters to Bank and to STGC
demanding that they resolve the fee credit issue on plaintiffs’ behalf but neither has
and this litigation ensued.

Plaintiffs’ Third Amended Complaint (“3AC”) originally alleged against Bank five (5)
causes of action (“COA”) for intentional misrepresentation, negligence, negligent
misrepresentation, financial elder abuse and intentional infliction of emotional distress,
with additional COA against other defendants.  On 10/1/2013 and after Bank filed this
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motion, plaintiffs dismissed with prejudice both their 3           and 8   COA against Bank.
Thus, the present motion for summary judgment/adjudication is DROPPED with
respect to the COA for negligence and intentional infliction of emotional distress and
the remainder of this ruling will be focused solely on the remaining three COA for
intentional and negligent misrepresentation as well as for financial elder abuse. Motion for Summary Judgment

Bank moves for summary judgment all three remaining COA on the ground that each
is barred by the statute of limitations, arguing that it commenced upon the close of
escrow on 4/28/2009, the “discovery rule” which otherwise tolls the statute of
limitations is inapplicable and plaintiffs failed to name Bank as a defendant until filing
the Second Amended Complaint (“2AC”) on 7/24/2012. (Mov. Memo. P&A, p.18:8-10;
p.19:2-p.20:13.)  As support for summary judgment, Bank offers 12 UMF (Nos. 157-
168) but if Bank fails to carry its initial burden under Code of Civil Procedure §437c(p)
(2) with respect to any one of these 12 UMF or if there is a triable issue of material fact
with respect to any UMF, then summary judgment must be denied as a matter of law.
(See, Nazir v. United Airlines, Inc. (2009) 178 Cal.App.4th 243, 252 (citing Weil &
Brown, Civil Procedure Before Trial, Ch.10:95.1) [moving party’s inclusion of facts in its
separate statement effectively concedes each fact’s “materiality,” whether intended or
not, and if there is a triable dispute relating to any one, the motion must be denied].)

Here, the Court concludes Bank failed to carry its initial burden of production under
Code of Civil Procedure §437c(p)(2).  Contrary to Bank’s suggestion, plaintiffs first
named Bank as a defendant in this action in their First Amended Complaint (“1AC”)
filed on 4/20/2012.  Thus, even if Bank were otherwise correct not only that the statute
of limitations did commence upon the upon the close of escrow on 4/28/2009 but also
that the “discovery rule” is inapplicable, both the intentional misrepresentation and the
financial elder abuse COA could not be considered untimely since even Bank agrees
these COA are governed by a three year statute of limitation and the 1AC was filed
less than three years after escrow closed.  This alone precludes summary judgment on
all remaining COA against Bank.  Additionally, the Court cannot agree that (1) the
statute of limitation commenced as a matter of law at the time escrow closed
particularly since Bank failed to demonstrate with admissible evidence that plaintiffs
had as of escrow close suffered any damages attributable to Bank’s alleged
misrepresentations or financial elder abuse or (2) plaintiffs will as a matter of law be
unable to invoke the benefits of the “discovery rule” given the facts of this case.
Because Bank failed to satisfy its initial burden of showing it is entitled to judgment as
a matter of law on all remaining COA, the motion of summary judgment must be
denied regardless of any evidence offered by plaintiffs in opposition.

Even if Bank had met its initial burden, summary judgment based on the statute of
limitations must still be denied.  As noted above, Bank offers UMF Nos. 157-168 as
support for summary judgment.  Plaintiffs concede that UMF Nos. 157-164 and 166
are undisputed but claim that Nos. 165, 167 and 168 are “disputed.”  While plaintiffs
contend that the evidence cited by Bank as support for all three of these UMF lack
foundation, these purported objections to Bank’s evidence fail to comply with CRC
Rule 3.1354 in several respects and are therefore overruled.  Moreover, inasmuch as
plaintiffs have failed to cite any evidence whatsoever in response to either UMF 165 or
UMF 167, they have failed to carry their affirmative burden of producing admissible
evidence which demonstrates the existence of a triable issue of material fact relative to
either of these two UMF.  However, the Court finds that plaintiffs have presented
admissible evidence sufficient to show a triable issue of material fact in connection
with UMF 168, particularly when the evidence in opposition must be construed liberally
and the evidence in support is construed narrowly. (See, e.g., DiLoreto v. Bd. of
Education (1999) 74 Cal.App.4th 267; Alvarez v. State of California (1999) 75
Cal.App.4th 903.)  UMF 168 asserts that Randy Schaber acted an agent for plaintiffs in
conjunction with their 2009 purchase of the undeveloped Anatolia lots and although  the evidence cited by Bank does support this assertion, plaintiffs have cited testimony
by plaintiffs which contradicts Bank’s agency assertion. (Pl. Depo. (Ex. A to Perkins
Decl.), p.98:13-p.99:5.)  Given that this evidence must be liberally construed while
Bank’s evidence must be narrowly construed, this Court holds that plaintiffs have
established a triable issue of material fact relating to UMF 168 and therefore, summary
judgment must be denied as a matter of law  regardless of the 72 AMF also set forth in
the opposition papers.  Still, the Court finds that plaintiffs’ AMF, particularly AMF Nos.
52-72, are sufficient to establish a triable issue of material fact relating to the question
whether the three remaining COA are or are not barred by the statute of limitations
especially since the evidence in opposition is construed liberally.

Motion for Summary Adjudication

Misrepresentation Claims.  Bank’s alternative motion for summary adjudication of the
intentional and negligent misrepresentation COA insists that plaintiffs cannot establish
any of the prima facie elements of these two COA and in support, Bank offers the
same 34 UMF (Nos. 1-34 and 69-102).  Thus, as noted above, if Bank has failed to
carry its initial burden under Code of Civil Procedure §437c(p)(2) with respect to any of
these 34 UMF and/or if there is a triable issue of material fact with respect to any of
them, summary adjudication must be denied as a matter of law as to both COA.

The Court concludes that Bank has failed to sustain its initial burden of production in
connection with UMF Nos. 2 and 13 (identical to UMF Nos. 70 and 81) in that the
evidence cited by Bank does not support these two UMF, respectively.  UMF 2
contends there is no evidence to support plaintiffs’ claim that Bank engaged in any
conduct with the intent to defraud plaintiffs but the sole evidence cited in support of this
UMF is Paragraph 11 of the Ghisla Declaration, which states in its entirety:

“11.  At no time did I intend to defraud or mislead [plaintiffs] in any manner in
conjunction with [Bank’s] sale of Anthology to them.  At all times, my only
concern was ensuring that [Bank] disclosed all relevant information in its
possession regarding Anthology, including all information relating to the
Builder’s Agreement, so that [plaintiffs] could conduct a thorough due diligence
investigation, which I understood and believed to be their responsibility based
on the terms of the Purchase and Sale Agreement between them and [Bank].
All of the information I conveyed to [plaintiffs] regarding Anthology, the Builder’s
Agreement, or otherwise, was conveyed solely to ensure that [Bank] complied
with its disclosure obligations and that [plaintiffs] were aware of, and had in their
possession, all relevant information regarding Anthology.”

This evidence may be sufficient to show that Mr. Ghisla himself had no intent to
defraud plaintiffs but it is insufficient to establish that there is “no evidence” to support
plaintiffs’ claim that Bank, or one of its other employees or agents, had any intent to
defraud.

Similarly, the evidence cited by Bank does not support UMF 13’s (and UMF 81’s
identical) statement that plaintiffs did not retain an attorney to advise them regarding
the purchase of the subject lots.  Instead, according to the cited testimony, Mr.
Mohamed ‘did not recall’ whether he retained an attorney with respect to this
transaction and did not state in the cited portion of the deposition that no attorney was
actually retained. (Pl. Depo. (Ex. A to Coryell Decl.), p.184.)  For these reasons, the
Court holds that Bank failed to carry its initial burden with respect to UMF Nos. 2 and
13 (identical to UMF Nos. 70 and 81) and thus, summary adjudication must be denied
as both the intentional and negligent misrepresentation COA regardless of any
evidence which may have been offered by plaintiffs in opposition.

But even if Bank were deemed to have met its initial burden in connection with all 34
UMF offered in support of summary adjudication of both misrepresentation claims, the
motion must still be denied as to both COA because plaintiffs have satisfied their
burden of producing admissible evidence sufficient to show a triable issue of material
fact relative to UMF Nos. 1-2, 9 and 34 as well as their identical counterparts (UMF
Nos. 69-70, 77 and 102) especially since plaintiffs’ evidence in opposition must be
construed liberally and Bank’s evidence in support is construed narrowly.

UMF 1 contends that during his deposition, Mr. Mohamed testified that he has “a very
solid belief” Bank’s prior statement about the builder’s agreement being eradicated by
the foreclosure is “true” and that STGC “should defend it” but the opposition correctly
points out Mr. Mohamed also testified that the ultimate question regarding the truth
and accuracy of Bank’s statement remains undetermined inasmuch as the present
lawsuit is still unresolved.  In light of the latter testimony which must be liberally
construed, the Court finds UMF 1 poses triable issue of material fact which precludes
summary adjudication.

As discussed above, UMF 2 asserts there is no evidence showing that Bank had any
intent to defraud plaintiffs but the totality of the evidence offered by the opposition,
including plaintiffs’ own AMF, could potentially be enough for a factfinder to conclude
that Bank did have such an intent.  This conclusion is further reinforced by the rule
requiring the evidence in opposition be construed liberally.  The triable issue of
material fact which exists relative to UMF 2 independently mandates denial of
summary adjudication of both misrepresentation COA.

UMF 9 states that Bank sold the lots to plaintiffs at a discounted price specifically
because of the “risk and uncertainty created by the Builder’s Agreement” but the
evidence in opposition tends to show that in light of plaintiffs’ concerns over the
potential obligations relating to the fee credits, Bank made less ambiguous
representations regarding the fee credits on which plaintiffs claim to have relied.
Coupled with the requirement that plaintiffs’ evidence be construed liberally, UMF 9
also presents a triable issue of material fact which precludes summary adjudication of
the misrepresentation COA.

Bank’s UMF 34 insists that plaintiffs have never purchased any fee credits from
Sunridge and “have never incurred any monetary damages as a result of any conduct
they have alleged against [Bank].”  However, based on the evidence cited in response,
plaintiffs have as a result of the alleged misrepresentations by Bank regarding the
obligation to purchase fee credits been unable to develop and sell the subject lots and
have therefore incurred monetary damages including but not limited to ongoing
payment of homeowner association dues.  Especially because plaintiffs’ evidence must
be construed liberally, the Court finds a triable issue of material fact exists with respect
to UMF 34 as well and summary adjudication cannot be had as to either of the
misrepresentation COA asserted against Bank.

Financial Elder Abuse.  Bank seeks summary adjudication of this COA on the ground
that plaintiffs have no evidence Bank deprived them of any property with the intent to
defraud or for a wrongful use.  As support for its contention, Bank cites UMF Nos. 103-
129 but with the exception of UMF 128, these UMF are identical to UMF Nos. 1-24 and
33-34.  Consequently, summary adjudication must be denied as to the financial elder
abuse claim because, as explained above, Bank failed to satisfy its initial burden of
production under Code of Civil Procedure §437c(p)(2) with respect to UMF Nos. 2 and
13 (identical to UMF Nos. 104 and 115).  Even if Bank had satisfied its initial burden in
connection with all UMF offered in support of summary adjudication of the financial
elder abuse COA, the motion must still be denied as this COA because plaintiffs have
produced evidence sufficient to show a triable issue of material fact relative to UMF
Nos. 103-104, 111 and 129 which are identical to UMF Nos. 1-2, 9 and 34 discussed
above in connection with the two misrepresentation claims.  That these UMF pose a
triable issue of material fact which mandates denial of summary adjudication is
reinforced by the well established rule that the evidence in opposition to the motion is
construed liberally while the evidence in support is construed narrowly.

This minute order is effective immediately.  Pursuant to CRC Rule 3.1312, counsel for
plaintiffs to prepare an order which conforms to Code of Civil Procedure §437c(g).

Item  4    2011-00108297-CU-BC

Joseph Mohamed vs. Stewart Title Guaranty Company

Nature of Proceeding:  Motion for Summary Judgment/Adjudication (Stewart Title)

Filed By: Didak, Anna

***  If oral argument is requested, the parties are directed to notify the clerk and
opposing counsel at the time of the request which of the 53 Undisputed Material
Facts offered by moving defendant and/or the 72 Additional Material Facts
offered by plaintiffs will be addressed at the hearing and the parties should be
prepared to point to specific evidence which is claimed to show the existence or
non-existence of a triable issue of material fact.  ***

Defendant Stewart Title Guaranty Company’s (“STGC”) motion for summary judgment
or alternatively, for summary adjudication of issues is DROPPED in part as moot,
GRANTED in part as unopposed, and DENIED in part.

Moving counsel is admonished for failing to comply with CRC Rule 3.1350(b) and (h),
requiring all issues presented for summary adjudication to be stated in the notice of
motion and repeated verbatim in the separate statement, and with CRC Rule 3.1116
(c), requiring that all cited portions of deposition testimony be highlighted or otherwise
marked.

Plaintiffs’ counsel is admonished because several of the papers filed in opposition fail
to comply with CRC Rule 3.1110(b)(1), (2) and (4).

Both moving and opposing counsel are admonished for failing to comply with CRC
Rule 3.1350(g) which requires all evidence (including declarations) which exceeds 25
pages to be included in a single volume of evidence with a table of contents.

STGC’s request for judicial notice is unopposed and is granted except as to Exhibit 8 (
other than the 2/25/2013 minute order) because STGC’s request fails to comply with
CRC Rule 3.1306(c). Plaintiffs’ request for judicial notice is granted but only as to the existence of the cited
documents, not the truth of their contents. (See e.g., Professional Engineers v. Dept.
of Transp. (1997) 15 Cal.4th 543, 590; Steed v. Department of Consumer Affairs
(2012) 204 Cal.App.4th 112, 120-121; see also, Bach v. McNelis (1989) 207
Cal.App.3d 852, 865 [“There exists a mistaken notion that this means taking judicial
notice of the existence of facts asserted in every document of a court file, including
pleadings and affidavits. … A court may take judicial notice of the existence of each
document in a court file, but can only take judicial notice of the truth of facts asserted
in documents such as orders, findings of fact and conclusions of law, and judgments.”
(Emphasis added).])

STGC’s objections to plaintiffs’ evidence in opposition are sustained except for
objection Nos. 1, 11-12, 17-19 and 24-32, each of which is overruled.

Plaintiffs’ separate objections to STGC’s evidence are overruled because they fail to
comply with the express requirements of CRC Rule 3.1354(b)(1)-(3) and because
many of the objections actually appear to be directed at STGC’s undisputed material
facts (“UMF”), rather than at the evidence cited as support for STGC’s UMF.
Additionally, to the extent plaintiffs have included in their separate statement in
response to STGC’s UMF purported objections to evidence (see, Resp. to UMF Nos.
13, 16-17, 19-20, 37, 40, 46, 48-49, 52), these are overruled because they too fail to
comply with the express requirements of CRC Rule 3.1354(b)(1)-(3).  Finally, plaintiffs’
separate statement in response also includes “objections” to STGC’s UMF themselves
; these purported objections are overruled because objections are properly directed
only at evidence, not the UMF. (See, CRC Rules 3.1352, 3.1354.)

This litigation arises out of plaintiffs’ 2009 purchase of unimproved residential lots in
the Anatolia subdivision in the City of Rancho Cordova.  These lots were originally
developed by Sunridge-Anatolia LLC (“Sunridge”), which made substantial
improvements benefitting the lots and pursuant to an agreement with the City,
Sunridge obtained credits which could be applied against the fees ultimately paid to
the City to obtain building permits for the lots.  According to STGC, the permit fee
credits generated by Sunridge for its initial improvements are valued at “millions of
dollars.”  In 2007 CH (Anatolia) LP (“CHA”) became obligated by virtue of a purchase
agreement and a builder’s agreement, which was recorded, to purchase from Sunridge
these permit fee credits in three installments commencing once CHA sought the first
building permits for the lots.  Although CHA did seek a handful of permits in 2007, it
never actually purchased any of the permit fee credits from Sunridge and CHA then
lost the lots to Exchange Bank (“Bank”) by virtue of the latter’s foreclosure of its
second deed of trust in June 2008.

The first deed of trust on the lots was also foreclosed upon by Bank in January 2009
and Bank, consistent with the terms of the builder’s agreement, took title free of any
obligation to purchase Sunridge’s fee credits but there remained some question
whether the properties remained subject to the obligation to purchase the fee credits
pursuant to the builder’s agreement recorded after Bank’s now-foreclosed first deed of
trust.  Aware of the builder’s agreement as well as CHA’s own failure to pay Sunridge
for the fee credits, plaintiffs purchased in April 2009 the lots from Bank and a title
insurance policy was issued by STGC which provides in pertinent part:

“The company [STGC] hereby insures the insured [plaintiffs] against loss or
damage the insured shall sustain by reason of the enforcement or attempted
enforcement of a claim that the insured must pay unpaid amounts under the
Builder’s Agreement referred to in Item 21 of Schedule B which accrued prior to
the date of the Trustee’s Deed recorded on January 20, 2009…”

In August 2009 plaintiffs received a letter from Sunridge which notified them of the
“obligation” to  purchase the latter’s substantial fee credits pursuant to the builder’s
agreement but when this letter was submitted by plaintiffs to STGC along with a
subsequent formal claim against the title policy, plaintiffs insist STGC ‘took no
meaningful action to resolve the fee credit issue.’  In April 2010, the City sent to
plaintiffs a letter stating that without a fee credit transfer signed by Sunridge, the fee
credits would have to be paid in full to the City.  In March 2011 plaintiffs received
another demand from Sunridge to pay for the fee credits previously generated by prior
improvements benefitting the Anatolia lots.

Plaintiffs’ Third Amended Complaint (“3AC”) alleges inter alia that STGC not only
breached its title insurance policy but also the implied covenant of good faith and
further seeks a declaration of STGC’s obligations under that policy, while asserting
additional causes of action (“COA”) against other defendants including Bank.

STGC now moves for summary adjudication of each of the COA alleged in the 3AC
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excepting only the 6   COA for breach of fiduciary duty (alleged against defendant
Placer Title only) on the grounds that there is no triable issue of material fact and
STGC is entitled to judgment on each COA as a matter of law.

th
In light of plaintiffs’ voluntary dismissal with prejudice of the 9   COA against STGC for
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declaratory relief, STGC’s motion for summary adjudication of that 9   COA is now
rd  th       th  th
DROPPED as moot.  Additionally, STGC’s motion relative to the 3                      -5   and 7    -8   COA
is unopposed by plaintiffs and therefore, summary adjudication of these five (5) COA is
hereby GRANTED.  Accordingly, the remainder of this ruling will be focused solely on
the first two and the only COA against STGC for breach of insurance contract and bad
faith.

STGC seeks summary adjudication of the two remaining COA because it contends it
did not breach the title insurance policy inasmuch as the policy does not actually afford
coverage for plaintiffs’ claims and as a consequence, STGC’s refusal to cover plaintiffs’
claim could not constitute bad faith.  As support for summary adjudication of these two
COA, STGC offers the same 53 UMF and thus, if STGC’s moving papers fail to satisfy
its initial burden of production under Code of Civil Procedure §437c(p)(2) with respect
to any one of these 53 UMF or if there is a triable issue of material fact with respect to
any UMF, summary adjudication must be denied as to both COA, mandating denial of
summary judgment as well. (See, Nazir v. United Airlines, Inc. (2009) 178 Cal.App.4th
243, 252 (citing Weil & Brown, Civil Procedure Before Trial, Ch.10:95.1) [moving
party’s inclusion of facts in its separate statement effectively concedes each fact’s
“materiality,” whether intended or not, and if there is a triable dispute relating to any
one, the motion must be denied].)

Plaintiffs oppose summary adjudication of the two remaining COA arguing that the
obligation to purchase the permit fee credits on the 106 lots is an obligation which
arose prior to their purchase of the property in April 2009.  Specifically, plaintiffs assert
that their obligation to purchase the fee credits arose pursuant to an agreement
between Sunridge and CHA once CHA sought building permits in 2007 but then failed
to make the requisite payments to Sunridge.  The opposition adds that plaintiffs are parties to neither the CHA/Sunridge purchase agreement nor the builder’s agreement
recorded in connection therewith and thus, plaintiffs maintain they have no contractual
obligation to purchase now the fee credits.  Nevertheless, according to the opposition,
both the City and Sunridge continue their attempts to hold plaintiffs legally responsible
to fulfill CHA’s outstanding contractual obligation which arose in 2007.  Plaintiffs insist
the present situation is exactly why they sought and obtained the special endorsement
for the title insurance but STGC has incorrectly argued that plaintiffs’ obligation to
purchase the fee credits arose in 2009, after they obtained the property.  The
opposition contends there are triable issues of fact as to whether STGC breached its
obligation under the title policy and also acted in bad faith, thereby requiring denial of
summary adjudication of the first two COA as well as summary judgment.  As support
for the opposition, plaintiffs claim that several of STGC’s UMF are not supported by the
evidence cited in the moving papers and that a number of the UMF are in dispute.
Plaintiffs also offer 72 of their own additional material facts (AMF) which are also
asserted to establish triable issue of material fact but the Court notes that many of
these AMF essentially reiterate the substance of plaintiffs’ responses to STGC’s UMF.

According to STGC’s reply, plaintiffs’ opposition presents no admissible evidence and
creates no triable issue of material fact since plaintiffs ignore the “Mortgage Protection”
clause of the builder’s agreement which provides that purchasers of the lots at
foreclosure are not liable for a prior owner’s failure to purchase fee credits but that a
new owner will become independently obligated buy the fee credits from Sunridge if
and when the new owner applies for building permits.  Although plaintiffs contend that
in August 2008 Sunridge demanded payment for the pre-foreclosure fee credits, this
demand was withdrawn in October 2008 in light of the aforementioned language of the
builder’s agreement.  Thereafter, consistent with the builder’s agreement, there were
no demands to purchase the credits as a result of CHA’s seeking building permits in
2007 and prior to the January 20, 2009 trustee’s sale but when plaintiffs applied for
their own building permits after acquiring ownership of the lots in April 2009, plaintiffs
became independently obligated to purchase the permit fee credits from Sunridge.
Plaintiffs now refuse to pay and this action is an attempt to shift this obligation to pay
the defendants even though the fee credits in dispute are simply not covered under the
title insurance policy.   For these reasons, STGC maintains that summary adjudication
st       nd
of the remaining two COA (i.e., 1   and 2          ) is warranted.

The motion for summary adjudication must be denied as to the breach of insurance
contract and bad faith COA because STGC’s moving papers failed to satisfy its initial
burden of production under Code of Civil Procedure §437c(p)(2) and even if STGC
were deemed to have met this initial burden, the Court finds that there are triable
issues of material fact which preclude judgment in favor of STGC as a matter of law on
both remaining COA.  This conclusion is reinforced by the well established rule that the
evidence offered in opposition must be construed liberally while the evidence in
support is construed narrowly. (See, e.g., DiLoreto v. Bd. of Education (1999) 74
Cal.App.4th 267; Alvarez v. State of California (1999) 75 Cal.App.4th 903.)  As noted
above, STGC bases its motion for summary adjudication of these two COA on the
same 53 UMF and consequently, the outcome of each COA will be the same here
even though the prima facie elements of each COA are not.

STGC’s UMF Nos. 24 and 77 both assert in pertinent part, “Plaintiffs were represented
in their purchase of the Property by an agent Randall M. Schaber from The Schaber
Company, LTD.”  However, the evidence cited by STGC as support for UMF Nos. 24
and 77 (STGC’s Req. for Jud. Not., Ex. 7) fails to demonstrate that this assertion is
true and is, in fact, entirely silent as to Mr. Schaber’s alleged representation of
plaintiffs.

UMF Nos. 27 and 80 both state “Prior to close of escrow for their purchase of the
Property, plaintiffs did not pursue further with Sacramento County or the City of
Rancho Cordova the question of whether plaintiffs can use Fee Credits arising under
the Builder’s Agreement, toward their building permit fees” (emphasis added) but the
evidence actually cited by STGC does not support this proposition.  Instead, the
deposition testimony cited merely indicates that Mr. Mohamed could not recall if he
pursued further the fee credit issue.

UMF Nos. 31 and 84 claim in pertinent part that plaintiffs “read and approved the
Preliminary [title] reports prior to the close of escrow” (emphasis added) but none of
the cited actually indicated plaintiffs actually “approved” any preliminary [title] reports at
any time, much less prior to close of escrow.

Because UMF Nos. 24, 27, 31, 77, 80 and 84 are not supported by the evidence cited
by STGC’s moving papers and because STGC’s inclusion of these UMF in their
separate statement effectively concedes their “materiality,” whether intended or not,
the motion for summary judgment/adjudication must be denied with respect to both
COA regardless of any evidence offered in opposition. (See, Nazir, at 252 (citing Weil
& Brown, Civil Procedure Before Trial, Ch.10:95.1.)

However, even if STGC were deemed to have met its initial burden of production
under Code of Civil Procedure §437c(p)(2) with respect to the six (6) UMF noted
above, the Court finds that STGC has failed to satisfy its initial burden of production by
demonstrating that plaintiffs are entitled to no coverage as a matter of law under the
subject title insurance policy and regardless, there are several triable issues of
material fact relating to whether plaintiffs are entitled to coverage under the policy for
the demands made for payment of fee credits.  As noted above, the special
endorsement to the title insurance issued by STGC provides in pertinent part:

“The company [STGC] hereby insures the insured [plaintiffs] against loss or
damage the insured shall sustain by reason of the enforcement or attempted
enforcement of a claim that the insured must pay unpaid amounts under the
Builder’s Agreement referred to in Item 21 of Schedule B which accrued prior to
the date of the Trustee’s Deed recorded on January 20, 2009…” (Emphasis
added.)

However, STGC’s own UMF fail to provide any definition for or otherwise address the
terms “loss or damage” or “accrued” which are used in connection with the description
of what is actually covered under the STGC policy.  Although the STGC policy also
contains exclusionary language, STGC’s failure to address or explain how these key
terms of the policy are defined, it is impossible for the Court to conclude as a matter of
law that plaintiffs are not entitled to any coverage for their claims relating to the fee
credits at issue as STGC’s contends.  Therefore, summary judgment/adjudication must
be denied regardless of the evidence offered in opposition.

Moreover, given it is effectively undisputed that Sunridge has “attempted” to enforce a
claim of right to payment for fee credits after plaintiffs’ acquisition of the subject lots in
April 2009 and there is admissible evidence showing plaintiffs have sustained at least
some “loss or damage” (see, PL AMF 72) as these terms are ordinarily understood,            there is a triable issue of material fact since a factfinder could reasonably conclude on
the present record that Sunridge’s claim to payment for fee credits “accrued” prior to
January 20, 2009.

Conversely, while the STGC policy also includes exclusionary language, the Court
cannot conclude that such language precludes as a matter of law the coverage
claimed by plaintiffs.  The STGC policy includes the following exclusionary language:

“This endorsement does not insure the insured against loss or damage caused
by the enforcement or attempted enforcement of a claim that the insured must
pay the amount of the builder’s payment obligations under the Builder’s
Agreement that relates to expenses incurred subsequent to the date of the
Exchange Bank’s trustee’s deed recorded January 20, 2009.”

However, STGC’s separate statement fails to define much less address the terms
“loss or damage” or “incurred” and thus, based on the present record, a reasonable
factfinder could find that plaintiffs’ alleged “loss or damage” resulting from Sunridge’s
claim to payment for fee credits does not “relate[ ] to expenses incurred subsequent
to…January 20, 2009.”  In other words, the factfinder could conclude that the
exclusionary language is inapplicable and this presents another triable issue of
material fact which mandates denial of summary adjudication.

Because summary adjudication is not granted as to all COA asserted in the 3AC,
summary judgment must be denied.

This minute order is effective immediately.  Pursuant to CRC Rule 3.1312, counsel for
STGC to prepare an order which conforms to Code of Civil Procedure §437c(g).