34-2011-00097976

One West Bank vs. John Chandler

Nature of Proceeding: Motion for Summary Adjudication

Filed By: McCardle, John H.

Cross-complainant Umpqua Bank seeks summary adjudication on the causes of action
for Breach of Contract (1st and 4th causes of action), Common Counts (2nd and 5th
causes of action), and the 3rd and 6th causes of action (Judicial Foreclosure) in its
First Amended Cross-complaint arising out of Chandler’s failure to pay two loans owed
to Umpqua Bank.

The motion for summary judgment/summary adjudication is denied.

Chandler’s evidentiary objections to the Declaration of Clubb are ruled on as follows: Sustained: 12, 14, 15, 23 and 24.

Overruled: Objection Nos. 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 13, 16, 17, 18, 19, 20, 21,
and 22.,

This motion was filed on August 8, 2013 and seeks adjudication of portions of the 1st
Amended Cross-complaint filed on July 12, 2013. On September 27, 2013 a 2nd
amended cross-complaint was filed. However, the subsequent cross-complaints
contains the same first six causes of action. The only change to the 2nd amended
cross-complaint was in the 7th cause of action. The Court is construing this motion as
one for summary adjudication of causes of action one through six of the 2nd amended
cross-complaint. To rule otherwise would elevate form over substance. (The Court
has since ordered Chandler to file an Answer to the 7th cause of action for Fraudulent
Conveyance.)

Umpqua’s Request for Judicial Notice of the Purchase and Assumption Agreement
between the FDIC and Umpqua Bank is denied. See Jolley v. Chase Home Finance,
LLC (2013) 213 Cal. App. 4th 872, 886-879.

Umpqua supports its motion with the Declaration of Clubb, who is an “Assistant Vice
President on the Asset Resolution Team” of Umpqua Bank. Umpqua contends that
Chandler is indebted to Umpqua on Loan 600 in the original principal amount of
$583,500. That loan was secured by a deed of trust encumbering property in Gold
River, at 2483 Sunrise Blvd. The Loan contained certain interest/late fee provisions
set forth in UMF 9 – 11, and an attorney fee provision. (UMF 12) Pursuant to the
agreement, the fees and costs became a part of the indebtedness under the Loan
(UMF 13) Chandler failed to pay the monthly payment due on May 15, 2010 and
thereafter. (UMF 14) Umpqua contends that the total amount due on Loan 600,
including interest, penalties, attorneys fees, and other fees and costs is $650,465.60.
(UMF 17) (Declaration of David Clubb)

Chandler also obtained a line of credit in the amount not to exceed $400,000, identified
as Loan 620. The original loan was dated May 3, 2005 and thereafter underwent
several modifications. (UMF 24-30) Payments were to commence making payments
on June 15, 2005, with the final payment due September 15, 2009. Chandler failed to
pay the loan in full on the maturity date, and owes a principal amount of $393,000.
Umpqua contends that the total amount owed on this loan, including interest and fees,
is $491,930.93 (UMF 43) (Declaration of David Clubb)

Umpqua is the successor in interest of Silverado by virtue of the the FDIC receivership
and subsequent transfer of Silverado’s assets to Umpqua. (UMF 20 and 21,
Declaration of Clubb, ¶ 26) David Clubb, Umpqua’s Assistant Vice President on the
Asset Resolution Team states “On or about June 18, 2010, the Federal Deposit
Insurance Corporation (“FDIC”) became the receiver of Silverado’s Loans after the
Nevada Financial Institutions Division closed Silverado. All deposits and assets of
Silverado were thereby transferred to Umqua by way of a purchase and assumption
agreement. As a consequence, Umpqua is now the lawful owner of Loan 600, the
holder of the Loan 600 Documents and the beneficiary under the Loan 600 Deed of
Trust. Umpqua is also now the lawful owner of Loan 620, the holder of the Loan 620
Documents, and the beneficiary of the Loan 620 Deed of Trust.” (Declaration of Clubb
¶ 26) A plaintiff may move for summary adjudication in any action or proceeding if it is
contended that there is no defense to the action. Such motion must be granted if all of
the papers submitted show that there is no triable issue as to any material fact and that
plaintiffs are entitled to a judgment as a matter of law. Code Civ. Proc. 437c(f)(1). The
policies underlying motions for summary adjudication of issues are the same as those
for summary judgment-i.e., to promote and
protect the administration of justice, and to expedite litigation by the elimination of
needless trials. Campanano v. California Medical Center (1995) 38 Cal App 4th 1322,
1326-1327. A plaintiff has met its burden of showing that there is no defense to a
cause of action if he or she has proved each element of the cause of action entitling
him or her to judgment on that cause of action. Once the plaintiff has met that burden,
the burden shifts to the defendant to show
that a triable issue of one or more material facts exists as to that cause of action or a
defense thereto. Code Civ. Proc. 437c(p)(I); see Aguilar v. Atlantic Richfield Co . (2001)
25 Cal. 4th 826, 850. One of the elements of the breach of contract and common
counts causes of action are damages.

In opposition, Chandler contends that the claims for breach of contract and common
counts are barred by the one action rule. CCP 726. Chandler contends Umpqua Bank
is prohibited by the mandatory provisions of Code of Civil Procedure Section 726 from
seeking or obtaining a money judgment against John Chandler for alleged breaches of
a promissory note and common counts without first completing a judicial foreclosure of
the real property security for the two loans.

One Action Rule

“Section 726, subdivision (a) provides in relevant part as follows: ‘There can be but
one form of action for the recovery of any debt or the enforcement of any right
secured by mortgage upon real property . . . in accordance with the provisions of this
chapter.’ In operation, the ‘one form of action ‘rule ‘applies to any proceedings or action
by the beneficiary for the recovery of the debt, or enforcement of any right, secured by
a mortgage or deed of trust. The only ‘action’ that is permitted is foreclosure; any other
‘action’ is a violation of the rule that invokes severe sanctions.”” (4 Miller & Starr, Cal.
Real Estate (2d ed. 1989) Deeds of Trust and Mortgages, § 9:105, p. 348, italics
added.)”

However, if Umpqua could establish damages were undisputed, it would be entitled to
an order for summary adjudication of each cause of action, subject to a later election
of remedies. Pursuant to Kirkpatrick v Westamerica Bank (3rd Dist 1998) 65
Cal.App.4th 982, summary adjudication of the claims does not result in a judgment.
The one action rule only comes into play when a case has gone to a final judgment.
In this case, if summary adjudication were granted on the claims, the plaintiff would not
be permitted to obtain a judgment on the common count/contract claims until it had
completed judicial foreclosure.

An election of remedies occurs in two ways: under the doctrine of res judicata or
under the doctrine of estoppel. An estoppel arises when the action is such that
permitting the plaintiff to seek an alternative remedy will prejudice or work a substantial
injury to the defendant. In Kirkpatrick, the bank had at first pursued only an action on
the debt, one of two inconsistent remedies. However, the court denied the debtor’s
summary adjudication of its declaratory relief claim which sought to establish that the
bank had lost its security by obtaining summary adjudication of a claim on the debt.
The court then allowed the bank to amend the complaint to allege a cause of action for
judicial foreclosure. Therefore, the trial court found that the bank had not elected the
remedy merely by prevailing on a summary adjudication of the claim for damages,
since that adjudication had not attained the finality of a judgment.

An election of remedies under the res judicata branch of election of remedies doctrine
occurs at the point the judgment attains finality when the claim is merged in the
judgment. A partial summary judgment, not entered as a judgment, is not final. CCP
437c(j). Kirkpatrick, supra, at page 990.

Therefore, the Court rejects Chandler’s argument that the causes of action for breach
of contract and common counts are barred by the one action rule.

Burden of Proof on Damages

Chandler contends that Umpqua has not met its burden of proof on this motion
because the Clubb declaration is not admissible for lack of foundation and evidentiary
support. Chandler also challenges the amounts requested for attorneys fees/costs,
conveyance fees, trustee fees, and other amounts on the ground no supporting
evidence was provided for these amounts.

The Reply only addresses the issue of the authenticity of the loan documents, which
Chandler has admitted to at his deposition and in discovery responses. The Reply
does not address Chandler’s challenge to evidence supporting the monetary damages
sought related to the attorneys fees/costs, conveyance fees, trustee fees, and other
amounts that are sought as part of the total amount due on the notes.

The Court finds that the authenticity of the loan documents is not in dispute and
Chandler has raised no issue of fact as to the content of the notes, his default on the
notes, and the amounts due in principal and interest. However the Court finds that
Umpqua has not met its burden of proof as to the amount of damages it seeks under
UMF Nos. 17, 18, and 43. The Declaration of Clubb states in a conclusory manner
and without foundation that Chandler owes attorneys fees, costs, and other fees
without any evidentiary support for the specific amounts sought. The fact that the
Notes provide for such fees does not establish that the specific amounts sought were
in fact incurred.

Because Umpqua has not met its burden of proof on the entirety of damages sought,
the burden never shifted to Chandler to present admissible evidence to raise a
material issue of fact as to damages.

Because of the drastic nature of the summary judgment procedure and the importance
of safeguarding the adverse party’s right to a trial the moving party must make a strong
showing. Silva v Lucky Stores, Inc. (1998) 65 Cal.App.4th 256, 261. The moving
party’s evidence is strictly construed and the opposing party’s evidence is liberally
construed, resolving any doubts as to the propriety of granting the motion in favor of
the opposing party. Kulesa v Castleberry (1996) 47 Cal.App.4th 103, 112.

1st and 4th causes of action Breach of Contract: Motion for Summary Adjudication
is denied. Umpqua did not meet its burden of proof on the issue of damages. (UMF
17, 18, 43) 2nd and 5th causes of action Common Counts: Motion for Summary Adjudication is
denied. Umpqua did not meet its burden of proof on the issue of damages. (UMF 17,
18, 43)

3rd and 6th causes of action Judicial Foreclosure: Motion for Summary
Adjudication is denied. Umpqua did not meet its burden of proof on the issue of
damages. (UMFs 17, 18, 43)

The prevailing party is directed to prepare a formal order complying with C.C.P. §437c
(g) and C.R.C. Rule 3.1312.