2012-00130688-CU-OR

LNV Corporation vs. Steven E San Filippo

Nature of Proceeding:   Motion for Summary Judgment and/or Adjudication

Filed By:  Suntag, Dana A.

Plaintiff LNV Corporation’s motion for summary adjudication of its first cause of action
is ruled upon as follows.

Plaintiff moves for summary adjudication of its first cause of action for judicial
foreclosure on the grounds that it can prove each element of this cause of action and
that Defendants’ affirmative defenses have no merit.   Defendants’ affirmative
defenses are: (1) failure to state a cause of action, (2) deficiency barred, (3) non-
recourse obligation, (4) mistake of fact, (5) estoppel, (6) waiver, and (7) improper
forum.

The Court notes that Plaintiff has not separated its moving separate statement into two
sets of material facts in order to address these two arguments separately, as required
by CRC 3.1350. Rather, Plaintiff has enumerated in its moving separate statement one
set of 113 material facts common to all of its arguments. Because Plaintiff has not
supported each issue with distinct sets of material facts, the presence of a single
disputed fact requires the entire motion to be denied.

The Court considered Defendants “corrected” opposition papers which were filed on
November 26, 2013.

On approximately September 20, 2007, Defendants Steven E. San Filippo and Jerry J.
Krause entered into a $1.32 million loan agreement with Plaintiff’s predecessor in
interest, IndyMac Bank. The loan was secured by a Deed of Trust and an Assignment
of Rents for the commercial property located at 3350 Watt Avenue, Sacramento,
California. Defendants subsequently failed to make timely loan payments, and are
currently in default of the loan.

Plaintiff’s separate statement includes the following.  In early 2007, Defendants sold
their interests in various commercial properties (Plaintiff’s undisputed material facts
(“UMF”) 5.)  Defendants wanted to shield the profits from tax and decided to purchase
replacement real property in a Section 1031 exchange.  (Id.)  Defendants hired
mortgage broker Marc Blakeney (“Blakeney”) to find a loan for the purchase of the
property.  (Id. 9.)  On July 16, 2007, IndyMac issued a Letter of Interest and
Conditional Approval Letter to Defendants (“IndyMac LOI”).  (Id. 11.)  Doug Lutz, a
loan officer and Blakeney’s primary contact at IndyMac signed the IndyMac LOI.  (Id.
12.)  The LOI expressly stated that the loan would be recourse.  (Id. 15.)  Blakeney
thereafter sent Defendants copies of the letters of interests he had received from the
five lenders.  (Id. 16.)  He also sent a spreadsheet to Defendants analyzing letters of
interest from the five lenders, including IndyMac.  (Id. 17.)  The spreadsheet stated
that the IndyMac loan would be nonrecourse.  (Id. 18.)  Due to a change in interest
rates, Lutz sent a revised LOI and Conditional Approval Letter (“Revised IndyMac
LOI”), which stated that the loan would be recourse.  (Id. 20-21.)  Blakeney created a
revised spreadsheet, which again indicated that the IndyMac loan was nonrecourse.   (Id. 24, 26.)  Defendants selected IndyMac and signed the revised IndyMac LOI.  (Id.
28.)

In opposition to the motion, Defendants do not dispute that LNV has the right to
foreclose on the property.  However, they dispute Plaintiff’s claim for a deficiency on
the grounds that IndyMac and Defendants always intended and agreed that the loan
would be nonrecourse. Defendants further argue that where through mistake,
negligent misrepresentation or fraud, the loan documents have failed to accurately
reflect the understanding of the parties, parole evidence is admissible.

Defendants dispute that the IndyMac LOI that was sent to them states that the loan
was recourse.  (See Defendants’ opposing separate statement, UMF 15.)  Specifically,
Defendants argue that the letter of intent identified by Plaintiff as “Exhibit 8” is not the
letter of intent that Blakeney received from Lutz.  Blakeney states in his declaration
that he testified during his deposition that Exhibit 8 was a copy of the LOI that he
received from Lutz on July 16, 2007. (Declaration of Marc Blakeney, ¶ 4.)  He further
states that subsequent to his deposition, he had an opportunity to further review
Exhibit 8 and to compare it to the LOI that he received from Lutz on July 16, 2007.  (Id.
¶ 5.)  After that review, he is now “absolutely certain” that Exhibit 8 is not a copy of the
LOI that he received from Lutz and that his deposition testimony was mistaken.  (Id.)
The LOI that he received from Lutz is attached as Exhibit B to Defendants’ opposition.
Blakeney believes that Exhibit 8 is an altered version of the LOI that he received from
Lutz on July 16, 2007.  Exhibit B makes no mention of whether the loan is nonrecourse
or recourse.  Defendants Krause and San Filippo’s declarations are consistent with the
above.  (See Declarations of Steven San Filippo and Jerry Krause, ¶¶ 4-6.)  Krause
and Filippo further state that they relied upon Exhibit B and the fact that it did not
mention recourse in making their selection of IndyMac as the lender. (Krause Decl.,
¶6, Filippo Decl., ¶ 6.)   They also relied upon IndyMac’s promises to expedite the loan
process and to close the loan within 45 days.  (Id.)

In reply, Plaintiff requests that the Court “disregard” Exhibit 8 attached to its motion
and “accept Defendants’ version of it.”  (Reply, 2:15-18.)  Given this dispute as to the
authenticity of the document, the Court finds that Plaintiff has failed to satisfy its initial
burden to demonstrate that no triable issue of material fact exists.  Even if the Plaintiff
satisfied its burden, Defendants have demonstrated a triable issue of material fact as
to whether the IndyMac LOI sent to Blakeney on July 17, 2007 stated that the loan was
recourse.  Indeed, as noted above, Exhibit B makes no mention of whether the loan is
nonrecourse or recourse.

As a result, the motion for summary adjudication on Plaintiff’s first cause of action and
Defendants’ affirmative defenses is DENIED.

Plaintiff’s objections to evidence are ruled upon as follows.

Sustained:  1, 2, 6, 7, 8, 14, 25,

Overruled: 3, 4, 5, 9, 10, 11, 12, 15, 16, 13, 15-24, 26, 27, 28

The minute order is effective immediately.  No formal order pursuant to CRC Rule
3.1312 or further notice is required.