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Search Terms: Plaintiff verdict, mortgage fraud, unclean hands, abuse of
judicial process, fraud, wrongful foreclosure, unlawful eviction
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Page 2
Page 3
2011 U.S. Dist. LEXIS 89049, *
3 of 100 DOCUMENTS
KOKOPELLI COMMUNITY WORKSHOP CORPORATION, et al., Plaintiffs, vs.
SELECT PORTFOLIO SERVICING, INC., et al., Defendants.
CASE NO. 10CV1605 DMS (RBB)
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
CALIFORNIA
2011 U.S. Dist. LEXIS 89049
August 9, 2011, Decided
August 10, 2011, Filed
PRIOR HISTORY: Kokopelli Cmty. Workshop Corp. v.
Select Portfolio Servicing, Inc., 2011 U.S. Dist. LEXIS
89045 (S.D. Cal., Aug. 9, 2011)
COUNSEL: [*1] Catherine Bryan, Plaintiff, Pro se,
Carlsbad, CA.
Betty Bryan, Plaintiff, Pro se, Carlsbad, CA.
For Litton Loan Service, as a company owned by
Goldman Sachs Bank, Goldman Sachs Bank as acting
trustee on behalf of the holders of the Gsamp Trust 2006HE3 Mortgage pass thru certificates, series 2006-HE3,
For MTGLQ Investors, LP, as a company owned by,
Goldman Sachs Bank, Defendants: Kalama Mark LuiKwan, LEAD ATTORNEY, Severson & Werson A
Professional Corporation, San Francisco, CA; Regina Jill
McClendon, LEAD ATTORNEY, Severson and Werson,
San Francisco, CA.
For Bill Koch, in his capacity as agent for Select
Portfolio Servicing Inc. F/K/A Fairbanks Capital Corp.,
Select Portfolio Servicing, Inc., a Utah corporation doing
business in the State of California, formerly known as
Fairbanks Capital Corp., Defendants: Gwen H. Ribar,
LEAD ATTORNEY, Wright Finley and Zak, Newport
Beach, CA; William J. Idleman, LEAD ATTORNEY,
Wright Finlay & Zak LLP, Newport Beach, CA.
For Stephen C Wichmann, in his capacity as agent for
Goldman Sachs Bank D/B/A MTGLQ Investors, LP,
Defendant: Cathy A Knecht, LEAD ATTORNEY, Barry
Gardner & Kincannon APC, Carlsbad, CA.
Page 4
2011 U.S. Dist. LEXIS 89049, *
BACKGROUND
On November 7, 2005, Plaintiffs obtained a
refinance mortgage loan from Novelle Financial Services
in the amount of $649,000.00, secured by a Deed of
Trust on the subject property, which Plaintiff [*3] Betty
Bryan purchased in 1950. (TAC 2, 46; MTGLQ/Litton
RJN Ex. 1.) 1 Plaintiffs allege they sent a notice of
rescission to certain Defendants pursuant to the Truth in
Lending Act, dated February 5, 2007. (TAC at 29, 40,
111, 137, 140.) Subsequent to the alleged notice of
rescission, Plaintiffs made an additional approximately
$80,000 in payments to Defendant Select Portfolio
Servicing, Inc. ("SPS"). (Id. at 282-83.) Nonetheless,
a Notice of Default was recorded on June 19, 2008.
(MTGLQ/Litton RJN Ex. 3.) Plaintiffs filed a Complaint
in San Diego Superior Court on November 3, 2008.
(TAC 37, 49.) An Assignment of the Deed of Trust
transferring the Deed to MTGLQ Investors, LP was
signed on October 21, 2008 and recorded on December
15, 2008. (MTGLQ/Litton RJN Ex. 2.) Plaintiff Betty
Bryan filed for Chapter 13 bankruptcy on November 4,
2008. (TAC 122.) On March 23, 2009, Plaintiffs Betty
Bryan and Catherine Bryan recorded a Grant Deed
deeding their interest in the subject property to Kokopelli
Community Workshop Corporation. (MTGLQ/Litton
RJN Ex. 5.) A Trustee's Deed Upon Sale was recorded on
October 30, 2009, granting to MTGLQ Investors, LP all
interest in the subject property [*4] under the Deed of
Trust. (MTGLQ/Litton RJN Ex. 6.) This action was
removed to this Court on August 2, 2010. (Doc. 1.)
Plaintiffs subsequently filed the TAC on October 8,
2010. (Doc. 9.)
1
In support of their motion to dismiss,
Defendants Litton and MTGLQ request the Court
take judicial notice of the following documents:
(1) Deed of Trust, (2) Corporate Assignment of
Deed of Trust, (3) Notice of Default, (4)Notice of
Trustee's Sale, (5) Grant Deed, and (6) Trustee's
Deed Upon Sale. Goldman similarly asks the
Court to take judicial notice of these documents,
as well as documents filed in this action and the
docket for this action prior to removal. A court
may take judicial notice of facts that are not
subject to reasonable dispute and are either "(1)
generally known within the territorial jurisdiction
of the trial court or (2) capable of accurate and
ready determination by resort to sources whose
accuracy cannot reasonably be questioned." Fed.
R. Evid. 201(b). As the documents submitted by
Defendants are matters of public record subject to
judicial notice under Federal Rule of Evidence
201, Defendants' requests for judicial notice are
granted.
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2011 U.S. Dist. LEXIS 89049, *
Page 6
2011 U.S. Dist. LEXIS 89049, *
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2011 U.S. Dist. LEXIS 89049, *
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2011 U.S. Dist. LEXIS 89049, *
Page 9
2011 U.S. Dist. LEXIS 89049, *
2. Goldman
It is not entirely clear whether Plaintiffs intended to
state a claim for breach of contract against Goldman, as
the TAC states the claim for breach of contract is brought
against "Defendants Select Portfolio Servicing, and
Goldman Sachs d/b/a [*25] MTGLQ Investors L.P." (Id.
at 65.). However, to the extent it is stated against
Goldman, Goldman argues it should be dismissed
because the purported contract is between Plaintiffs and
Novelle, the original lender. (See Id. at 46, 86, 234;
Goldman RJN Ex. 1.) Plaintiffs do not allege the
existence of a contract between them and Goldman.
Rather, they allege "Plaintiffs have been informed and
believe, and therefore allege, that they have never
entered into any agreement with Defendant Goldman
Sachs who d/b/a MTGLQ Investors L.P. who now claim
to ownership possession of their home [sic]." (TAC
106.) Accordingly, Goldman's motion to dismiss the
breach of contract claim is granted.
G. Breach of Implied Covenant of Good Faith and
Fair Dealing
Plaintiffs allege "[t]he documents in connection with
the Subject Loan, including without Limitation, the loan
agreement, promissory note and deed of trust, all include
an implied covenant of good faith and fair dealing."
(TAC 241.) They allege the loan itself "violated every
implied covenant of Good Faith and Fair Dealing." (Id.
at 59.) Plaintiffs further allege Defendants "breached
the implied covenant of good faith and fair dealing by,
among [*26] other things: a) Failing to put as much
consideration to Plaintiffs' interests as to Defendants'
interests. b) Initiating foreclosure proceedings on the
Subject Property despite not having the right to do so and
failing to comply with applicable California law. c)
Failing to provide proper notice before commencing a
wrongful foreclosure soon followed by eviction
proceedings." (Id. at 246.)
1. Litton and MTGLQ
Litton and MTGLQ argue this claim should be
dismissed as against them because the acts alleged by
Plaintiffs were authorized under the loan agreement
and/or California law and because the implied covenant
is limited to enforcing compliance with the express terms
of a contract. "Since the good faith covenant is an
implied term of a contract, the existence of a contractual
relationship is thus a prerequisite for any action for
breach of the covenant." Kim v. Regents of the Univ. of
Cal., 80 Cal. App. 4th 160, 164, 95 Cal. Rptr. 2d 10
(2000); see also Racine & Laramie, Ltd. v. Dep't of
Parks & Recreation, 11 Cal. App. 4th 1026, 1033, 14
Cal. Rptr. 2d 335 (1992)("If there exists a contractual
Page 10
2011 U.S. Dist. LEXIS 89049, *
Page 11
2011 U.S. Dist. LEXIS 89049, *
L. Quiet Title
Plaintiffs allege they "seek a quieting of title against
the trustee's deed upon sale which is the basis of legal
title claims by Defendant SELECT and Defendant
MTGLQ." (TAC 262.) To state a claim to quiet title,
"the complaint shall be verified" and must include all of
the following: (1) a legal description of the property and
its street address or common designation; (2) the title of
the plaintiff and the basis of the title; (3) the adverse
claims to the title of the plaintiff; (4) the date as of which
the determination is sought; and (5) a prayer for the
determination of the title of the plaintiff against the
adverse claims. Cal. Code Civ. Pro. 761.020.
1. Litton and MTGLQ
Litton and MTGLQ argue this claim should be
dismissed because it is dependent upon Plaintiffs'
challenge of the foreclosure process and deed upon sale
on the basis that Plaintiffs rescinded the loan. However,
for the reasons set forth above, Plaintiffs have stated a
plausible claim under TILA and for rescission.
Accordingly, motion to dismiss this claim is denied.
2. Goldman
There are no allegations in the TAC that Goldman
claims any right, title, or interest in [*36] Plaintiffs' loan
or that Goldman was involved in the foreclosure or
subsequent sale of the property. Moreover, Plaintiffs
allege MTGLQ is in possession of the note. Accordingly,
Goldman's motion to dismiss this claim is granted.
M. Elder Abuse
Financial abuse of an elder occurs when an entity
"[t]akes, secretes, appropriates, obtains, or retains real or
personal property of an elder or dependent adult for a
wrongful use or with intent to defraud, or both." Cal.
Welf. & Inst. Code 15610.30. In support of their claim
for elder abuse, Plaintiffs allege misrepresentations in the
loan origination and that Defendants engaged in a
wrongful foreclosure on the subject property in light of
their knowledge of Plaintiffs' alleged valid rescission.
(See TAC 65, 268-69.) Plaintiffs allege, "[s]ubsequent
to Betty Bryan's valid February 5, 2007 Notice of
Rescission, all the above Defendants herein named took,
secreted, appropriated and/or retained real or personal
property of elder Plaintiff Betty Bryan for a wrongful use
or with the intent to defraud, or both. Defendants' acts
were done in bad faith." (Id. at 269.)
1. Litton and MTGLQ
Litton Loan and MTGLQ argue Plaintiffs' alleged
rescission [*37] was not valid as to them for the reasons
set forth above and, therefore, any allegations of elder
Page 12
2011 U.S. Dist. LEXIS 89049, *
Page 14Page 14
2009 U.S. Dist. LEXIS 99355, *
4 of 100 DOCUMENTS
ANTHONY BUTERA, Plaintiff, vs. COUNTRYWIDE HOME LOANS, INC., et al,
Defendants.
CASE NO. CV F 09-1677 LJO SMS
UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF
CALIFORNIA
2009 U.S. Dist. LEXIS 99355
October 26, 2009, Decided
October 26, 2009, Filed
COUNSEL: [*1] For Anthony Butera, Plaintiff: Richard
Aguila Taguinod, LEAD ATTORNEY, Law Office
Richard A. Taguinod, Danville, CA.
For Countrywide Home Loans, Mortgage Electronic
Registration Systems, Inc., Recontrust Co., Defendants:
Michael Bryan Wall, LEAD ATTORNEY, Donald M.
Scotten, Akerman Senterfitt, LLP, Los Angeles, CA.
JUDGES: Lawrence J. O'Neill, UNITED STATES
DISTRICT JUDGE.
Page 15Page 15
2009 U.S. Dist. LEXIS 99355, *
Page 16Page 16
2009 U.S. Dist. LEXIS 99355, *
3
"We have extended the 'incorporation by
reference' doctrine to situations in which the
plaintiff's claim depends on the contents of a
document, the defendant attaches the document to
its motion to dismiss, and the parties do not
dispute the authenticity of the document, even
though the plaintiff does not explicitly allege the
contents of that document in the complaint."
Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir.
2005) (citing Parrino, 146 F.3d at 706).
Rescission
The complaint's first claim is entitled "Rescission
and/or Reformation of Contract" and alleges that
defendants "used misrepresentation and deceit, to lull
borrowers into real estate mortgage loans by steering
them into such loans that have low teaser adjustable
interests [sic] rates only and negative amortization that
quickly raise the monthly payments to an amount beyond
the
borrowers'
capacities
to
pay."
The
rescission/reformation [*10] claim "offers to restore
Defendants the subject property in return for defendants'
return to plaintiff all monies paid to defendants in
connection with the placement of the loans, service of
the loans, loan payments made, improvements made to
the property and other costs and expenses plaintiff has
incurred in the maintenance and upkeep of the subject
property."
Failure To Tender
Defendants challenge the rescission/reformation
claim's failure to allege that Mr. Butera "tendered the
amount due on the loan, which serves to bar almost all of
his claims." Defendants note that to maintain a challenge
to a foreclosure sale, "the borrower must actually pay, or
offer to pay the entire loan amount prior to the sale."
"A tender is an offer of performance made with the
intent to extinguish the obligation." Arnolds
Management Corp. v. Eischen, 158 Cal.App.3d 575, 580,
205 Cal.Rptr. 15 (1984) (citing Cal. Civ. Code, 1485;
Still v. Plaza Marina Commercial Corp., 21 Cal.App.3d
378, 385, 98 Cal.Rptr. 414 (1971). "A tender must be one
of full performance . . . and must be unconditional to be
valid." Arnolds Management, 158 Cal.App.3d at 580,
205 Cal.Rptr. 15.
A defaulted borrower is "required to allege [*11]
tender of the amount of [the lender's] secured
indebtedness in order to maintain any cause of action for
irregularity in the sale procedure." Abdallah v. United
Savings Bank, 43 Cal.App.4th 1101, 1109, 51
Cal.Rptr.2d 286 (1996), cert. denied, 519 U.S. 1081, 117
S. Ct. 746, 136 L. Ed. 2d 684 (1997). In FPCI RE-HAB
01 v. E & G Investments, Ltd., 207 Cal.App.3d 1018,
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2009 U.S. Dist. LEXIS 99355, *
Page 18Page 18
2009 U.S. Dist. LEXIS 99355, *
Page 19Page 19
2009 U.S. Dist. LEXIS 99355, *
Page 20Page 20
2009 U.S. Dist. LEXIS 99355, *
contains a power of sale clause, the lender may nonjudicially foreclose. See McDonald v. Smoke Creek Live
Stock Co., 209 Cal. 231, 236-237, 286 P. 693 (1930).
The California Court of Appeal has explained nonjudicial foreclosure under California Civil Code sections
2924-2924i:
The comprehensive statutory framework
established [*26] to govern nonjudicial
foreclosure sales is intended to be
exhaustive. . . . It includes a myriad of
rules relating to notice and right to cure. It
would be inconsistent with the
comprehensive and exhaustive statutory
scheme
regulating
nonjudicial
foreclosures to incorporate another
unrelated cure provision into statutory
nonjudicial foreclosure proceedings.
Moeller v. Lien, 25 Cal.App.4th 822, 834, 30 Cal.Rptr.2d
777 (1994).
Under California Civil Code section 2924(a)(1), a
"trustee, mortgagee or beneficiary or any of their
authorized agents" may conduct the foreclosure process.
Under California Civil Code section 2924b(b)(4), a
"person authorized to record the notice of default or the
notice of sale" includes "an agent for the mortgagee or
beneficiary, an agent of the named trustee, any person
designated in an executed substitution of trustee, or an
agent of that substituted trustee." "Upon default by the
trustor, the beneficiary may declare a default and proceed
with a nonjudicial foreclosure sale." Moeller, 25
Cal.App.4th at 830, 30 Cal.Rptr.2d 777.
A "trustee or mortgagee may be liable to the trustor
or mortgagor for damages sustained where there has
been an illegal, fraudulent or wilfully [*27] oppressive
sale of property under a power of sale contained in a
mortgage or deed of trust." Munger v. Moore, 11
Cal.App.3d 1, 7, 89 Cal.Rptr. 323 (1970).
The complaint lacks facts of foreclosure
irregularities or facts to support wrongful foreclosure to
warrant dismissal of the fourth claim.
Turning to wrongful eviction, defendants note the
absence of eviction without foreclosure.
A claim "for a threatened wrongful eviction is in
reality an action for malicious prosecution, an essential
element of which is a want of probable cause." Asell v.
Rodrigues, 32 Cal.App.3d 817, 824, n. 3, 108 Cal.Rptr.
566 (1973) (citing Gause v. McClelland, 102 Cal.App.2d
762, 764, 228 P.2d 91 (1951)). A "complaint for
malicious prosecution must allege malice, lack of
probable cause and a favorable termination of the prior
Page 21Page 21
2009 U.S. Dist. LEXIS 99355, *
IT IS SO ORDERED.
Dated: October 26, 2009
/s/ Lawrence J. O'Neill
UNITED STATES DISTRICT JUDGE
Page 23Page 23
2004 Cal. App. Unpub. LEXIS 7947, *
5 of 100 DOCUMENTS
MARGARET FRANCIS, Plaintiff and Appellant, v. ALBERT FRANCIS et al.,
Defendants and Respondents.
C044773
COURT OF APPEAL OF CALIFORNIA, THIRD APPELLATE DISTRICT
2004 Cal. App. Unpub. LEXIS 7947
August 30, 2004, Filed
NOTICE:
[*1] NOT TO BE PUBLISHED IN
OFFICIAL REPORTS. CALIFORNIA RULES OF
COURT, RULE 977(a), PROHIBIT COURTS AND
PARTIES FROM CITING OR RELYING ON
OPINIONS NOT CERTIFIED FOR PUBLICATION OR
ORDERED PUBLISHED, EXCEPT AS SPECIFIED BY
RULE 977(B). THIS OPINION HAS NOT BEEN
CERTIFIED FOR PUBLICATION OR ORDERED
PUBLISHED FOR THE PURPOSES OF RULE 977.
PRIOR HISTORY:
Superior Court of Sacramento
County, No. 01AS05579.
JUDGES: NICHOLSON, J.; SIMS, Acting P.J., DAVIS,
J. Concurred.
OPINION BY: NICHOLSON
OPINION
Plaintiff Margaret Francis sued her son, defendant
Albert Francis, for breach of contract, common counts,
fraud, judicial foreclosure and quiet title, rescission, and
wrongful eviction. Plaintiff filed a notice of lis pendens
against property in Citrus Heights and Orangevale.
However, the court expunged the lis pendens. Defendant
filed a motion for summary judgment on all six causes of
action. 1
1
Although Albert Francis's former spouse,
Rosemarie Loop, was also a defendant in the
underlying action and is named as a respondent,
we need not refer to her separately in this
opinion. "Defendant" therefore refers to Albert
Francis. We also note that Loop has made no
appearance in this court. This lack of response is
Page 24Page 24
2004 Cal. App. Unpub. LEXIS 7947, *
FACTS
These facts are derived from trial evidence
construed in a light most favorable to the verdicts. As
will be seen, plaintiff's contentions concerning the
summary judgment proceedings do not require a separate
recitation of facts provided during those proceedings.
In 1990, defendant purchased an undeveloped lot in
Citrus Heights for $ 170,000. He paid $ 30,000 as a
down payment and signed a deed of trust on the property,
securing a $ 140,000 loan. Defendant intended to
subdivide the property, build homes, and sell the homes
for profit. He also intended to provide his mother with a
home on one of four divided lots at the cost she was
paying to rent her apartment.
On December 7, 1993, defendant signed a grant
deed over to plaintiff for the property designated as 6715
Sunrise Boulevard in Citrus Heights. [*4] At that time,
6715 Sunrise Boulevard remained undeveloped.
Defendant verbally conditioned the deed on plaintiff
obtaining financing to cover the existing $ 85,000
encumbrance on the property. Defendant told plaintiff
not to record the deed until she had financing because an
acceleration clause would require a balloon payment to
become due. Plaintiff was unable to obtain financing.
Discouraged, she left town for several months, beginning
in June 1994. Plaintiff did not tell defendant where she
was going.
On June 27, 1994, defendant signed a grant deed
over to his former spouse, Rosemarie Loop, for the same
quarter lot, 6715 Sunrise Boulevard. Loop recorded the
June 27, 1994, grant deed the same day, causing the
acceleration clause on the deed of trust to be activated.
Loop began the process of obtaining financing to cover
the note against 6715 Sunrise Boulevard.
On August 8, 1994, while Loop's financing was in
escrow, plaintiff recorded the December 7, 1993 grant
deed. Plaintiff testified she recorded the deed without
financing because defendant told her she had no claim to
the property, but someone in a legal aid office told her
she had an interest in the property. This subsequently
[*5] created a cloud over Loop's title and delayed
escrow because the lender required a clean title before it
would provide financing. The creditor threatened
foreclosure if escrow did not close.
Defendant asked plaintiff to sign a grant deed over
to Loop to clean the title. After title company agents
explained the situation, plaintiff signed a grant deed
conveying 6715 Sunrise Boulevard to Loop on
December 22, 1994. Loop recorded the grant deed from
plaintiff on January 23, 1995. Thereafter, Loop sold 6715
Sunrise Boulevard. Defendant assured plaintiff he still
intended to build a house in which she could live for
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2004 Cal. App. Unpub. LEXIS 7947, *
Page 26Page 26
2004 Cal. App. Unpub. LEXIS 7947, *
Page 27Page 27
2004 Cal. App. Unpub. LEXIS 7947, *
115Q75
Send To:
TERMINAL, SIX
ALAMEDA COUNTY LAW LIBRARY
125 12TH ST
OAKLAND, CA 94607-4912
13:18:52 EST