Case Number: KC069393 Hearing Date: March 01, 2019 Dept: J

RE: Jones v. Casita Financial, Inc., et al. (KC069393)

______________________________________________________________________________

Defendants Maven Asset Management, Inc.’s, Sandcastle Trustee Services’, Kyla D.

Sullivan’s, individually and as designated officer of Casita Financial, Maven Asset

Management, Inc. and Sandcastle Trustee Services, Paul A. Torok’s and FCI Lender

Services, Inc.’s MOTION FOR SUMMARY JUDGMENT OR ALTERNATIVELY

SUMMARY ADJUDICATION

Responding Party: None (unopposed, as of 2/15/19, 1:35 p.m.)

Tentative Ruling

Defendants Maven Asset Management, Inc.’s, Sandcastle Trustee Services’, Kyla D.

Sullivan’s, individually and as designated officer of Casita Financial, Maven Asset

Management, Inc. and Sandcastle Trustee Services, Paul A. Torok’s and FCI Lender

Services, Inc.’s unopposed Motion for Summary Judgment is GRANTED.

Background

Plaintiff Kathy Jones (“Plaintiff”) asserts that her residential property located at 1903 S. Shadydale Avenue in West Covina was wrongfully foreclosed upon. On June 19, 2017, Plaintiff filed a complaint, asserting causes of action against Defendants Casita Financial, Inc. (“CFI”), Maven Asset Management, Inc. (“Maven”), Sandcastle Trustee Services (“Sandcastle”), Kyla D. Sullivan, individually and as designated officer of Casita Financial, Maven Asset Management, Inc. and Sandcastle (“Sullivan”), Paul A. Torok (“Torok”), DLI Properties, LLC (“DLI”) and Does 1-10 for:

Cancellation of Trustee Sale (Civil Code § 3412)

Cancellation of Deed

Fraud

Wrongful Foreclosure

Conspiracy to Commit Fraud

Intentional Infliction of Emotional Distress

Violation of CA Business and Professions Code

On July 11, 2017, the court denied Plaintiff’s ex parte application for order to show cause and temporary restraining order. On July 31, 2017, DLI’s demurrer to the fifth and sixth causes of action was sustained; said causes of action were dismissed with prejudice at the time of the hearing. On August 31, 2017, DLI filed a cross-complaint, asserting causes of action against Plaintiff, Cross-Defendants Torok, Sandcastle and Roes 1-40 for:

Restitution Based on Unjust Enrichment

Equitable Indemnity and Attorneys’ Fees

Equitable Contribution

Declaratory Relief

Attorneys’ Fees and Damages Based on the Tort of Another

Wrongful Foreclosure

Negligence and Negligence Per Se

Negligent Misrepresentation

Rescission and Restitution Based on Mistake

Equitable Subrogation

On September 18, 2017, Plaintiff filed an “Amendment to Complaint,” wherein FCI Lender Services, Inc. was named in lieu of Doe 1. On September 21, 2017, Plaintiff filed an “Amended Notice of Pending Action.” On October 23, 2017, the court denied Plaintiff’s motion for preliminary injunction. On October 24, 2017, CFI’s default was entered.

On February 22, 2018, the court granted Maven’s, Sandcastle’s, Sullivan’s, Torok’s and DLI’s motion for judgment on the pleadings as to the third and seventh causes of action.

Trial is set for April 2, 2019.

Legal Standard

The purpose of a motion for summary judgment or summary adjudication “is to provide courts with a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) “Code of Civil Procedure section 437c, subdivision (c), requires the trial judge to grant summary judgment if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119 [emphasis theirs].)

“On a motion for summary judgment, the initial burden is always on the moving party to make a prima facie showing that there are no triable issues of material fact.” (Scalf v. D.B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519.) A defendant moving for summary judgment or summary adjudication “has met his or her burden of showing that a cause of action has no merit if the party has shown that one or more elements of the cause of action . . . cannot be established, or that there is a complete defense to the cause of action.” (CCP § 437c(p(2).) “Once the defendant . . . has met that burden, the burden shifts to the plaintiff . . . to show that a triable issue of one or more material facts exists as to the cause of action of a defense thereto.” (CCP § 437(p)(2).) “If the plaintiff cannot do so, summary judgment should be granted.” (Avivi v. Centro Medico Urgente Medical Center (2008) 159 Cal.App.4th 463, 467.)

“When deciding whether to grant summary judgment, the court must consider all of the evidence set forth in the papers (except evidence to which the court has sustained an objection), as well as all reasonable inferences that may be drawn from that evidence, in the light most favorable to the party opposing summary judgment.” (Id. at 467; CCP § 437c(c).)

Discussion

Defendants Maven, Sandcastle, Sullivan, Torok and FCI (hereinafter, “Defendants”) request that the court enter summary judgment in their favor and against Plaintiff pursuant to CCP § 437c on the ground that there is no triable issue of material fact and Plaintiff is therefore entitled to judgment as a matter of law. In the alternative, Defendants seek summary adjudication as follows:

First Cause of Action for Cancellation of Trustee Sale (Civil Code § 3412)

1. The first cause of action is barred by laches.

2. The evidence shows that Plaintiff’s first cause of action is contrary to all evidence on required elements and is supported by no evidence.

Second Cause of Action for Cancellation of Deed

1. The second cause of action is barred by laches.

2. The evidence shows that Plaintiff’s second cause of action is contrary to all evidence on required elements and is supported by no evidence.

Third Cause of Action for Wrongful Foreclosure[1]

1. The third cause of action is barred by laches.

2. The evidence shows that Plaintiff’s third cause of action is contrary to all evidence on required elements and is supported by no evidence.

Fourth Cause of Action for Fraud[2]

1. The fourth cause of action is barred by the statute of limitations.

2. The evidence shows that Plaintiff’s fourth cause of action is contrary to all evidence on required elements and is supported by no evidence.

Fifth Cause of Action for Conspiracy to Commit Fraud

1. The fifth cause of action is barred by the statute of limitations.

2. The evidence shows that Plaintiff’s fifth cause of action is contrary to all evidence on required elements and is supported by no evidence.

Sixth Cause of Action for Intentional Infliction of Emotional Distress

1. The sixth cause of action is barred by the statute of limitations.

2. The evidence shows that Plaintiff’s sixth cause of action is contrary to all evidence on required elements and is supported by no evidence.

Seventh Cause of Action for Violation of CA Business and Professions Code

The seventh cause of action is not pled against any of the moving parties.

Request for Judicial Notice

Defendants’ Request for Judicial Notice (“RJN”) is GRANTED.

At the outset, the court notes that the motion is unopposed. CCP § 437c(b) gives the trial court discretion to grant a motion for summary judgment when an opposing party fails to comply with the requirement of a separate statement. (See also Blackman v. Burrows (1987) 193 Cal.App.3d 889, 893; Kaplan v. LaBarbera (1997) 58 Cal.App.4th 175, 179).

The court further notes that on February 22, 2018, the court granted Maven’s, Sandcastle’s, Sullivan’s and Torok’s motion for judgment on the pleadings as to the third and seventh cause of action. The third and seventh causes of action, moreover, were not pled against FCI. The following analysis, then, does not address these causes of action.

The first, second, fifth and sixth causes of action are alleged against “All Defendants.” The fourth cause of action is asserted only against Maven, Sandcastle and Sullivan and is not asserted against Torok and FCI.

Plaintiff has alleged that sometime in June 2007, Plaintiff agreed to take out a Home Equity Credit Line with Casita Financial, Inc. (“Casita”). (Complaint, ¶12). Plaintiff has alleged that Casita gave her a cash loan advance of $7,885.00 on or about July 25, 2007 and that “she at no time received more than the check for $7,885 from Casita,” but that when she later received her Lender Disclosure Agreement she found that a sum of $20,080.00 had been credited to her account out of which Casita paid itself the sum of $10,420.00 for assorted services. (Id., ¶15). Plaintiff has alleged that after receiving the $7,885.00 check, she paid out $9,389.98 to Casita from July 2007 until about April 2009. (Id., ¶17). Plaintiff has alleged that two notices of default were subsequently recorded on her property, the second of which reflected that Plaintiff purportedly owed $65,422.00 on the loan. (Id., ¶25). Plaintiff has alleged that on or about March 31, 2018, a notice of trustee’s sale was recorded on the property and that, on or about April 20, 2017, Plaintiff’s property “was purportedly sold for the sum of $89,000 over a claimed debt of $65,422.00.” (Id., ¶¶28-29).

Defendants have submitted evidence that on or about June 7, 2007, Plaintiff executed a Home Equity Lune of Credit (“HELOC”) in favor of Casita Financial. (Ross Decl., ¶2, Exh. 5.) The HELOC had an annual percentage rate of 15.99% and an 8 year term. (Ibid.) The initial draw limit was $38,500.00, of which Plaintiff’s first Cash Loan was stated to be $30,500.00. (Ibid.) The HELOC contained the following provisions:

“5. Minimum Payment. You agree to pay either the entire outstanding balance (‘New Balance’) indicated on your monthly statement or at least the minimum monthly payment. During the period you are permitted to obtain new Cash Loans (‘Draw Period’), the minimum monthly payment (“Minimum Payment Due”) that you must pay will be equal to the unpaid finance charges that have accrued during the billing cycle, without any provision for reduction of the principal balance. At the end of the Draw Period and continuing until you have paid the principal balance in full, your Minimum Payment Due will be fixed at an amount equal to 60 equal monthly payments of amortized principle and interest. If you default and we must advance other sums to protect the security of our Deed of Trust, you agree to pay these amounts in full together with the next regularly scheduled Minimum Payment Due. . .

7. Draw and Repayment Periods. You may take additional cash advances for up to 36 months so long as you own your home and you are not in default (“Draw Period”). Thereafter (“Repayment Period”), you must pay at least the Minimum Payment, calculated as amortized principle and interest, until the Unpaid Balance is paid in full. . .

8. Application of Payment. Payments received will be applied first to late and other fees, then to interest, then to repay any advances made to protect the lien or collateral, then carried as a credit against future payments or charges. On written request or written designation by the borrower, excess payments can be applied against principal.” (Ibid.)

The HELOC delineated loan fees and third party payments on page 2 totaling $11,620.00. (Ibid.)

The HELOC was secured by a deed of trust recorded on June 11, 2007. (Ross Decl., ¶ 3, Exh. 4). On June 11, 2007 by check 1382, Casita disbursed $20,103.00 to Plaintiff. (Id., ¶ 7, Exh. 6). Due to the lapse of time, Ross does not have bank statements for Casita from 2007. (Id., ¶7). Ross, however, attests that he knows this check was negotiated and the funds were paid. (Ibid.) Here, Plaintiff testified that she never received the June 11, 2007 check. (Plaintiff’s Depo., 45:18-22). Plaintiff was aware that at the time she took out the HELOC, the first cash loan was supposed to be $30,500.00. (Id., 34:7-15). Plaintiff also testified that after she took out the loan and began receiving the monthly statements, the monthly statements showed a balance of $30,000.00 at the top. (Id., 37:10-15). Plaintiff, however, “just figured that’s just how it was, and [she] just kept paying it. [She] would get the bill, pay it, and that’s it. [She] never questioned it.” (Id., 37:16-20). Plaintiff received bills from FCI every month. (Id., 17:11-14). Plaintiff does not have the checks that she used to pay the loan, nor did she save any of her bank statements from that time period. (Id., 47:3-6). Bank of America was Plaintiff’s bank in 2007 and 2008. (Id., 47:10-12).

On July 25, 2007, Plaintiff executed a cash loan request to Casita for $7,885.00. (Ross Decl., ¶9, Exh. 7). On August 9, 2017, by check 1572, Casita disbursed $7,885.00 to Plaintiff. (Id., ¶10, Exh. 20). Casita hired FCI as its loan servicer. (Id., ¶4; Griffith Decl., ¶2). A Borrower Late Notice dated October 18, 2008 from FCI to Plaintiff reflects that the principal balance was then $38,098.84. (Griffith Decl., ¶6, Exh. 16). Another late notice from FCI to Plaintiff dated December 2, 2008 showed the same principal balance. (Id., ¶7, Exh. 17). Plaintiff received at least one of the late payment notices from FCI in 2008. (Plaintiff’s Depo., 29:15-21). Plaintiff ceased making payments by the end of March 2009 because she believed she had completely paid off the loan at that time. (Id., 18:1-7). Plaintiff believed that her monthly payments of about $460, added together, paid off her loan plus the interest. (Id., 41:17-4). Plaintiff did not receive any notice from any of the Defendants saying that the loan was paid off or a statement that had a zero balance on it, nor did she send a letter to Defendants or communicate with them in any way telling them that she believed the loan was fully paid off. (Id., 18:8-15). Per FCI’s Loan Master Report dated October 16, 2017, however, there was still a principal loan balance of $38,098.84. (Griffith Decl., ¶3, Exh. 9). Plaintiff’s payments never paid down any principal and were interest only payments. (Ross Decl., ¶2; Griffith Decl., ¶9 and Exh. 9).

In 2015, Casita sold the loan to Torok. (Ross Decl., ¶¶5 and 11, Exh. 13). Maven took over as loan servicer from FCI. (Sullivan Decl., ¶1). Plaintiff received a February 24, 2015 notice form Maven. (Plaintiff’s Depo., 31:1-7). Plaintiff also got a notice from the County in 2016 advising her that the property was going to be auctioned in about February. (Id., 33:23-34:2). Plaintiff never asserted to any Defendant that she claimed the loan was paid off in 2009 or that she had not received the initial draw check, at any time until after the foreclosure sale in 2017. (Id., 34:7-35:9, 37:10-20).

First, Second and Fourth Causes of Action for Cancellation of Trustee Sale (Civil Code § 3412), Cancellation of Deed and Wrongful Foreclosure, Respectively

Plaintiff claims that “[t]he sale of the properly [sic] was improperly held, and the trustee’s deed was illegally executed, delivered and recorded, in that (1) the amount quoted as owed to beneficiary/trustee is fraudulent[,] (2) there was no notice of transfer of trust deed from Casita to Maven and the notice of transfer to Torok is fraudulent, (3) there is no record of the existence of the entity Sandcastle in both California and Nevada; therefore, Sandcastle had no legal capacity as Trustee to conduct the sale of plaintiff’s property, and (4) Sullivan, acting as the designated officer of both Maven and Sandcastle, is enmeshed in serious ethical violations…which cast serious doubts on her duty as the purported trustee to protect the plaintiff’s rights in the transactions.” (Id., ¶ 48).

Defendants note that, as to the second and third claims, Plaintiff has no standing to complain because the transfers were not void, pursuant to Yvanova v. New Century Mortg. Corp. (2016) 62 Cal.4th 919. Plaintiff’s allegations regarding Sullivan’s purported “unethical conduct;” as noted by the court in its February 22, 2018 ruling on the motion for judgment on the pleadings, irrelevant for the purposes of these causes of action. Plaintiff, at any rate, testified that these causes of action “all [went] to a claim that the foreclosure sale was wrongful because [she] didn’t owe anything on the loan.” (Plaintiff’s Depo., 12:2-7).

Defendants assert, with respect to the amount owed, that Plaintiff’s disputed amount owed argument is barred by the affirmative defense of laches. “Laches is an equitable defense based on the principle that those who neglect their rights may be barred from obtaining relief in equity.” (Feduniak v. California Coastal Comm’n. (2007) 148 Cal.App.4th 1346, 1381. “The defense of laches requires unreasonable delay plus either acquiescence in the act about which plaintiff complains or prejudice to the defense resulting from the delay.” (Bakersfield Elementary Teachers Assn. v. Bakersfield City School Dist. (2006) 145 Cal.App.4th 1260, 1274 [quotations and citation omitted].) “Laches is a question of fact for the trial court, but may be decided as a matter of law where, as here, the relevant facts are undisputed.” (Ibid.)

Defendants have met their burden of showing that laches is a complete defense to Plaintiff’s causes of action. Plaintiff claims that she never received the first disbursement check, yet she testified that she never contacted anyone to let them know this. Plaintiff thereafter received statements for a principal balance of over $30,000.00, which Plaintiff acknowledges seeing. Plaintiff claims she paid off the loan in March of 2009, despite the fact that she did not receive any notice from any of the Defendants saying that the loan was paid off or a statement that had a zero balance and despite never communicating this belief to Defendants. Plaintiff received a February 24, 2015 notice from Maven and was aware of the foreclosure proceedings, yet did not communicate with Defendants either that she did not receive the initial disbursement or believed that she had paid off the loan in 2009 through her monthly interest payments. Plaintiff has not kept any of her cancelled checks reflecting payment on the loan or bank statements from that period. Additionally, Defendants’ counsel has learned that Bank of America, Plaintiff’s bank and the bank upon which the check for $20,103.00 was allegedly drawn, has a bank statement retention policy of “up to seven years.” (Mortensen Decl., ¶ 2, Exh. 22).

Plaintiff, in turn, failed to meet her burden of showing a triable issue of material fact exists as to any of the aforesaid causes of action. Plaintiff has failed to file an opposition to the motion.

Fifth Cause of Action for Conspiracy to Commit Fraud

Again, on February 22, 2018, the court granted Maven’s, Sandcastle’s, Sullivan’s and Torok’s motion for judgment on the pleadings as to the third cause of action for Fraud. The third cause of action, moreover, is not asserted against FCI. The fifth cause of action fails as against Defendants, inasmuch as it is derivative of Plaintiff’s third cause of action.

The statute of limitations for any cause of action on the ground of fraud is three years from the date of “the discovery, by the aggrieved part, of the facts constituting the fraud.” CCP § 338(d). Here, Plaintiff acknowledges receiving monthly statements from September 2007 through March 2009, each giving her notice that Defendants were asserting and collecting the balance on the statements. If the amount was wrong, Plaintiff was aware of it with the first statement.

Defendants have met their moving burden of showing that the statute of limitations is a complete defense to Plaintiff’s cause of action. Plaintiff, in turn, failed to meet her burden of showing a triable issue of material fact exists. Plaintiff has failed to file an opposition to the motion.

Sixth Cause of Action for Intentional Infliction of Emotional Distress

Plaintiff’s sixth cause of action is based on the same facts as her fraud cause of action.

Defendants have met their moving burden of showing that the statute of limitations is a complete defense to Plaintiff’s cause of action. Plaintiff, in turn, failed to meet her burden of showing a triable issue of material fact exists. Plaintiff has failed to file an opposition to the motion.

Defendants’ motion for summary judgment is GRANTED.

[1] The wrongful foreclosure cause of action is actually the fourth cause of action in the body of Plaintiff’s complaint.

[2] The fraud cause of action is actually the third cause of action in the body of Plaintiff’s complaint.