Motion for Summary Judgment in EDUARDO PANIAGUA ET AL VS. MILESTONE FINANCIAL, LLC ET AL| Trellis.Law

On November 13, 2018 a Hearing was filed involving a dispute between Asturias, Elena, Paniagua, Eduardo, Bear Bruin Ventures, Inc., Hamilton, Zoe, Milestone Financial, Llc, Stuart, Carolyn, Stuart, William, and Bear Bruin Ventures, Inc., Does 1 To 100 Inclusive, Hamilton, Zoe, Milestone Financial, Llc, Stuart, Carolyn T., Stuart, William R., Paniagua, Eduardo, for BUSINESS TORT in the District Court of San Francisco County.

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1 MEYLAN DAVITT JAIN AREVIAN & KIM LLP
VINCENT J. DAVITT, ESQ. (State Bar No. 130649)
2 ANITA JAIN, ESQ. (State Bar No. 192961) ELECTRONICALLY

3
444 South Flower Street, Suite 1850 F I L E D
Los Angeles, California 90071E Superior Court of California,
County of San Francisco
4 Telephone: (213) 225-6000 / Fax: (213) 225-6660
Email: vdavitt@mdjalaw.com/Email: ajain@mdjalaw.com 11/16/2022
Clerk of the Court
5 BY: SANDRA SCHIRO
HARRIS L. COHEN, A PROF. CORP. Deputy Clerk
6 HARRIS L. COHEN, ESQ., State Bar # 119600
5305 Andasol Avenue
7
Encino, California 91316
8 Telephone: (818) 905-5599 / Fax: (818) 905-5660
Email: hcohen00@aol.com
9
Attorneys for Defendants and Cross-Complainants
10 Milestone Financial, LLC; Bear Bruin Ventures, Inc.;
William R. Stuart; Carolyn Stuart; and Zoe Hamilton
11

12 SUPERIOR COURT OF THE STATE OF CALIFORNIA
13 FOR THE COUNTY OF SAN FRANCISCO
14 Eduardo Paniagua and Elena Asturias, CASE NO. CGC-18-571279
individuals,
15 DEFENDANTS MILESTONE, BEAR
Plaintiffs,
16 vs. BRUIN, WILLIAM STUART, AND ZOE
HAMILTON’S NOTICE OF MOTION
17 Milestone Financial, LLC, a California AND MOTION FOR SUMMARY
corporation, Bear Bruin Ventures, Inc. a JUDGMENT OR, IN THE
18 California Corporation, William R. Stuart, an ALTERNATIVE, SUMMARY
individual, Carolyn Stuart, an individual, Zoe ADJUDICATION; MEMORANDUM OF
19 Hamilton, an individual, and DOES 1-100, POINTS AND AUTHORITIES
inclusive,
20 [Filed concurrently with: Separate Statement;
Defendants. Request for Judicial Notice; Appendix of
21 Federal Authorities; and Appendix of
22 Evidence, Vols. 1-3]

23 Milestone Financial, LLC, a California Limited Date: February 1, 2023
Liability Company, Bear Bruin Ventures, Inc., Time: 9:30 a.m.
24 William Stuart, Carolyn Stuart and Zoe Hamilton, Dept.: 302
25 Cross-Complainants,
v. Action filed: November 13, 2018
26 Trial Date: January 17, 2023
Eduardo Paniagua and Roes 1-100,
27 Cross-Defendants.
28
MEYLAN DAVITT 1
JAIN AREVIAN & KIM LLP DEFTS. NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT/ADJUDICATION
1 TO ALL PARTIES HEREIN AND THEIR ATTORNEYS OF RECORD:

2 PLEASE TAKE NOTICE that, on February 1, 2023, at 9:30 a.m., or as soon thereafter as the
matter may be heard, in Department 302 of the above-entitled Court, located at 400 McAllister Street,
3
San Francisco, California 94102, Defendants and Cross-Complainants Milestone Financial, LLC
4
(“Milestone”); Bear Bruin Ventures, Inc. (“BBV”); William R. Stuart (“W. Stuart”); and Zoe
5
Hamilton (“Hamilton”) (collectively, “Defendants”) will and hereby do move the Court for Summary
6 Judgment or, in the alternative, for Summary Adjudication, as to the following causes of action in the
7 First Amended Complaint (“FAC”) of Plaintiffs Eduardo Paniagua (“Paniagua”)and Elena Asturias

8 (“Asturias”) (jointly, “Plaintiffs”): 1) First Cause Of Action for Fraud; 2) Second Cause Of Action for
Negligence; 3) Third Cause Of Action for Violation of Business and Professions (“B&P”) Code
9
§17200 et seq., B&P Code §17500 et seq., and Civil Code §1750 et seq. (“Statutory Consumer
10
Claims”); 4) Fourth Cause Of Action for Violation of California Constitution Article XV §§1 et seq.
11
(“Usury”); 5) Fifth Cause Of Action for Rescission; and 6) Sixth Cause Of Action for Declaratory
12 Relief.
13 Defendants’ Motion is made pursuant to California Code of Civil Procedure §437c, on the
14 grounds described in this Notice. There is no triable issue as to any material fact, and Defendants are

15 entitled to summary judgment and/or summary adjudication as a matter of law.
SUMMARY JUDGMENT
16
Issue 1: Defendants are entitled to summary judgment as to all of Plaintiff Asturias’ causes of
17
action -- (1) Fraud; (2) Negligent Misrepresentation; (3) Statutory Consumer Claims; (4) Usury;
18 (5) Rescission; and (6) Declaratory Relief -- because Asturias is not a real party in interest and she
19 does not have standing to bring her claims.
20 SUMMARY ADJUDICATION

21 Defendants are entitled to summary adjudication as follows:
Issue 2: Defendants are entitled to summary adjudication on Plaintiffs’ First Cause of Action
22
for Fraud, Second Cause of Action for Negligent Misrepresentation, Third Cause of Action for
23
Statutory Consumer Claims, Fifth Cause of Action for Rescission, and Sixth Cause of Action for
24 Declaratory Relief because the subject loan (“Loan” or “Milestone Loan”) was not a consumer
25 residential mortgage loan; thus, Milestone did not need a real estate license and mortgage loan
26 originator’s endorsement (hereinafter “License/MLO Endorsement”) under Business and Professions

28
MEYLAN DAVITT 2
JAIN AREVIAN & KIM LLP DEFTS. NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT/ADJUDICATION
1 Code §10661.02(b) to make the Loan. 1

2 Issue 3: Defendants are entitled to summary adjudication on Plaintiffs’ First Cause of Action
for Fraud, Second Cause of Action for Negligent Misrepresentation, Third Cause of Action for
3
Statutory Consumer Claims, Fifth Cause of Action for Rescission, and Sixth Cause of Action for
4
Declaratory Relief because: i) Defendants did not represent to either Plaintiff that Milestone had a
5
License/MLO Endorsement; and ii) Plaintiffs could not have relied on any representation by any
6 Defendants that Milestone had a License/MLO Endorsement.
7 Issue 4: Defendants are entitled to summary adjudication on Plaintiffs’ First Cause of Action

8 for Fraud, Second Cause of Action for Negligent Misrepresentation, Third Cause of Action for
Statutory Consumer Claims, Fifth Cause of Action for Rescission, and Sixth Cause of Action for
9
Declaratory Relief because Paniagua knowingly and voluntarily released his claims, twice, against all
10
Defendants.
11
Issue 5: Defendants are entitled to summary adjudication on Paniagua’s First Cause of Action
12 for Fraud, Second Cause of Action for Negligent Misrepresentation, Third Cause of Action for
13 Statutory Consumer Claims, Fifth Cause of Action for Rescission, and Sixth Cause of Action for
14 Declaratory Relief because the Statute of Limitations bars these causes of action.
Issue 6: Defendants are entitled to summary adjudication on Plaintiffs’ Fifth Cause of Action
15
for Rescission because rescission is a remedy, not an independent cause of action, and the Loan
16
contract was fully performed.
17
Issue 7: Defendants are entitled to summary adjudication on Plaintiffs’ Sixth Cause of Action
18 for Declaratory Relief because there is no outstanding contract or ongoing contractual relationship
19 between any Plaintiff and any Defendant.
20 Issue 8: Defendants BBV, W. Stuart, and Hamilton are entitled to summary adjudication on

21 Plaintiffs’ Fourth Cause of Action for Usury because neither Plaintiff entered into any loan or other
transaction with, or paid any interest to, any of these Defendants.
22
This Motion is based on this Notice of Motion and Motion; the Separate Statement of
23
Undisputed Facts filed concurrently herewith; the Appendix of Evidence filed concurrently herewith;
24 the Request for Judicial Notice filed concurrently herewith; the Appendix of Federal Authorities filed
25
1
Plaintiffs’ FAC is based on the false allegation that the Milestone-Paniagua Loan was a consumer
26 residential mortgage loan and, thus, Milestone needed a B&P §10661.02(b) license and endorsement
applicable to those loans. Under §10661.02(b), a lender who makes consumer residential mortgage
27 loans (i.e., proceeds being used for “personal, family, or household purposes”) needs a real estate
license and endorsement “identifying that individual as a licensed mortgage loan originator,” which
28 license and endorsement are referred to herein as a “License/MLO Endorsement.”
MEYLAN DAVITT 3
JAIN AREVIAN & KIM LLP DEFTS. NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT/ADJUDICATION
1 concurrently herewith; the pleadings, records and papers on file herein; and such further evidence, oral

2 or written, as may be adduced at the hearing on this Motion.

3
DATED: November 15, 2022 MEYLAN DAVITT JAIN AREVIAN & KIM LLP
4

6 By:
Vincent J. Davitt
7 Attorneys for Defendants and Cross-Complainants
Milestone Financial, LLC; Bear Bruin Ventures, Inc.;
8 William R. Stuart; Carolyn Stuart; and Zoe Hamilton
9

28
MEYLAN DAVITT 4
JAIN AREVIAN & KIM LLP DEFTS. NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT/ADJUDICATION
1 TABLE OF CONTENTS

3 I. INTRODUCTION ............................................................................................................... 11

4 II. STATEMENT OF FACTS .................................................................................................. 12

5 A. Plaintiffs, Their Randall Family Home, Their GC Business, and Prior Fix and
Flips. ........................................................................................................................ 12
6
B. Milestone: A Wholesale, Commercial Lender Who Does Not Make
7 Consumer Loans. ..................................................................................................... 13

8 C. 2009-14: Funston is Given to Paniagua, the PSA, and the Fix-and-Flip
Project. ..................................................................................................................... 13
9
D. 2013-14: Initially, Paniagua, with Ruffrage’s Help, Obtained Three
10 Commercial Loans, Including the Milestone Loan, for the Fix-and-Flip
Project. ..................................................................................................................... 14
11
E. March 2014: The Milestone Commercial Loan. ..................................................... 15
12
F. Paniagua Used the Milestone Loan Proceeds to Pay Ruffrage/MJF, and for
13 the Project. ............................................................................................................... 17

14 G. 2014-21: Paniagua Defaulted on the Loan, Takes Out Six More Commercial
Loans, Finished the Project, Tried but Could Not Sell Funston, and (Illegally)
15 Rented It Again........................................................................................................ 17

16 H. 2016-2018: The Parties’ Two Settlement Agreements and Paniagua’s Payoff. ..... 19

17 I. 2018: Plaintiffs’ Pleadings and Representations at the Pleading Stage. ................. 20

18 J. Asturias Has Now Admitted the Milestone Loan was Not a Consumer
Residential Mortgage Loan on Owner-Occupied Property. .................................... 21
19
K. Plaintiffs Could Have Easily Discovered Milestone’s Licensing Status Years
20 Ago. ......................................................................................................................... 21

21 III. LEGAL ARGUMENT ........................................................................................................ 22

22 A. Asturias’ Claims Fail Because She is Not a Proper Party. ...................................... 22

23 B. Paniagua’s Claims Fail Because, as a Matter of Law, the Loan was a
Commercial Loan and He is Estopped to Claim Otherwise. ................................... 22
24
1. The Controlling, Statutory Loan Definitions Defeat Paniagua. .................. 22
25
2. Analogous Case Law Defeats Plaintiffs’ Attempt to Misclassify the
26 Loan. ............................................................................................................ 23

27 3. Plaintiffs’ “Family Home” Argument and Alleged Plan to Use Their
PSA Profits For Personal Uses Are Legally Irrelevant and
28 Demonstrably False. .................................................................................... 24

MEYLAN DAVITT 5
JAIN AREVIAN & KIM LLP DEFTS. NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT/ADJUDICATION
1 4. Milestone Did Not Need A License/MLO Endorsement to Make the
Loan. ............................................................................................................ 25
2
C. Paniagua’s Fraud, Negligent Misrepresentation, and Statutory Consumer
3 Claims Fail Because Defendants Never Misrepresented Anything to Either
Plaintiff. ................................................................................................................... 25
4
D. Paniagua Knowingly and Voluntarily Released his Claims, Twice. ....................... 26
5
E. The Statute of Limitations Bars Plaintiffs’ Claims. ................................................ 27
6
1. The Delayed Discovery Rule Does Not Save Plaintiffs. ............................. 27
7
F. Plaintiffs’ Rescission Claim Fails Because Rescission is a Remedy and the
8 Loan Agreement was Fully Performed.................................................................... 28

9 G. Without an Ongoing Contractual Relationship, Plaintiffs’ Declaratory Relief
Claim Fails............................................................................................................... 28
10
H. Defendants Other than Milestone Cannot be Liable for Usury. .............................. 29
11
I. Paniagua Cannot Avoid His Agreements By Arguing Did Not Know What
12 He Signed. ............................................................................................................... 29

13 IV. LEGAL STANDARD FOR SUMMARY JUDGMENT/ADJUDICATION...................... 30

28
MEYLAN DAVITT 6
JAIN AREVIAN & KIM LLP DEFTS. NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT/ADJUDICATION
1 TABLE OF AUTHORITIES

2 Cases
3 Aguilar v. Atlantic Richfield Co.
(2001) 25 Cal.4th 826 .............................................................................................................. 29
4
Alexander v. Exxon Mobil
5
(2013) 219 Cal.App.4th 1236 .................................................................................................. 27
6
Alfaro v. Community Housing Improvement System & Planning Assn, Inc.
7 (2009) 171 Cal. App. 4th 1356 ................................................................................................ 28

8 Baker v. Italian Maple Holdings, LLC
(2017) 13 Cal.App.5th 1152 .................................................................................................... 29
9
Bank of New York Mellon v. Citibank, N.A.
10
(2017) 8 Cal.App.5th 935 ........................................................................................................ 27
11
Berclain America Latina v. Baan Co.
12 (1999) 74 Cal.App.4th 401 ...................................................................................................... 22

13 Bisno v. Kahn
(2014) 225 Cal. App. 4th 1087 ................................................................................................ 29
14
Britton v. Girardi
15 (2015) 235 Cal.App.4th 721 .................................................................................................... 27
16
Caballero v. Premier Care Simi Valley LLC
17 (2021) 69 Cal. App. 5th 512 .................................................................................................... 29

18 City of Oakland v. Oakland Police & Fire Retirement System
(2014) 224 Cal.App.4th 210 .................................................................................................... 23
19
Clean Air Constituency v. Cal. State Air Resources Board
20 (1974) 11 Cal.3d 801 ............................................................................................................... 25
21 Czajkowski v. Haskell & White, LLP
22 (2012) 208 Cal.App.4th 166 .................................................................................................... 27

23 Daniels v. SCME Mortgage Bankers, Inc.
(2010) 680 F.Supp.2d 1126 ..................................................................................................... 23
24
Eisenberg v. Alameda Newspapers, Inc.
25 (1999) 74 Cal.App.4th 1359 .................................................................................................... 30
26 Field v. U.S. Bank Nat. Assoc.
27 (2022) 79 Cal.App.5th 703 ...................................................................................................... 30

28
MEYLAN DAVITT 7
JAIN AREVIAN & KIM LLP DEFTS. NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT/ADJUDICATION
1 Fox v. Ethicon Endo-Surgery, Inc.
(2005) 35 Cal.4th 797 .............................................................................................................. 27
2
Foxborough v. Van Atta
3 (1994) 26 Cal.App.4th 217 ...................................................................................................... 28
4 Gilliam v. Levine
5 (C.D. Cal. 2018) 2018 WL 3830773 ....................................................................................... 23

6 Graham v. Bank of America, N.A.
(2014) 226, Cal. App. 4th 594, 606 ......................................................................................... 25
7
Haddock v. Countrywide Bank, NA
8 (C.D. Cal. 2015) 2015 WL 9257316 ....................................................................................... 24
9 Hensel Phelps Construction Co. v. Superior Court
10 (2020) 44 Cal. App. 5th 595 .................................................................................................... 27

11 Hydro-Mill Co, Inc. v. Hayward, Tilton & Rolapp Ins. Assoc., Inc.
(2004) 115 Cal. App. 5th 1145 ................................................................................................ 25
12
Johnson v. Wells Fargo Home Mortgage, Inc.
13 (9th Cir. 2011) 635 F.3d 401 ................................................................................................... 23
14 Jolly v. Eli Lilly & Co.
(1988) 44 Cal.3d 1103 ............................................................................................................. 27
15

16 Killian v. Millard
(1991) 228 Cal.App.3d 1601 ................................................................................................... 22
17
Kirby v. Immoos Fire Protection, Inc. (2012)
18 53 Cal.4th 1244 ....................................................................................................................... 23
19 Linden Partners v. Wilshire Linden Assoc.
(1998) 62 Cal.App.4th 508 ...................................................................................................... 30
20
Mauro v. Countrywide Home Loans, Inc.
21
(E.D.N.Y. 2010) 727 F.Supp. 145 ........................................................................................... 24
22
Miller v. Bechtel Corp.
23 (1983) 33 Cal.3d 868 ............................................................................................................... 27

24 MRI Healthcare Center of Glendale, Inc. v. State Farm General Ins. Co.,
187 Cal.App.4th 766 (2010) .................................................................................................... 30
25
Nakash v. Superior Court
26
(1987) 196 Cal. App. 3d 59 ..................................................................................................... 28
27
Nativi v. Deutsche Bank Nat. Trust Co.
28 (2014) 223 Cal.App.4th 261 .................................................................................................... 30

MEYLAN DAVITT 8
JAIN AREVIAN & KIM LLP DEFTS. NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT/ADJUDICATION
1 Norgart v. Upjoin Co.
(1999) 21 Cal.4th 383 .............................................................................................................. 27
2
Osseous Technologies of America, Inc. v. DiscoveryOrtho Partners, LLC
3 (2010) 191 Cal. App. 4th 357 .................................................................................................. 28
4 Plaza Freeway Ltd. Partnership v. First Mountain Bank
5 (2000) 8 Cal.App.4th 616 .................................................................................................. 12, 23

6 Pulliam v. HNL Automotive Inc.
(2021) 60 Cal.App.5th 396 ...................................................................................................... 24
7
Skrbina v. Fleming Companies, Inc., et al.
8 (1996) 45 Cal.App.4th 1353 .................................................................................................... 26
9 Spears v. First American Eappraiseit
10 (N.D. Cal. 2014) 2014 WL 4647679 ....................................................................................... 24

11 Viterbi v. Wasserman
(2011) 191 Cal. App. 4th 927 .................................................................................................. 28
12
Wiz Technology, Inc. v. Coopers & Lybrand,
13 106 Cal.App.4th 1 (2003) ........................................................................................................ 30
14 Statutes
15 12 U.S.C. §2601 et seq. ................................................................................................................. 23
16
15 U.S.C. §1601 et seq. ................................................................................................................. 23
17
15 U.S.C. §§1602(d)(5) ................................................................................................................. 22
18
Business & Professions Code §10166.01(d) ..................................................................... 22, 24, 25
19
Business & Professions Code §10166.02 ...................................................................................... 25
20
Business & Professions Code §10166.02(b) ................................................................................. 25
21
Business & Professions Code §17200 ..................................................................................... 26, 27
22
Business & Professions Code §17500 ..................................................................................... 26, 27
23

24 Civil Code §§1750 et seq. ....................................................................................................... 26, 27

25 Civil Code §1761(d) ...................................................................................................................... 26

26 Civil Code §1770........................................................................................................................... 26

27 Civil Code §1783........................................................................................................................... 27
28 Civil Code § 2923.6, et seq. .......................................................................................................... 18
MEYLAN DAVITT 9
JAIN AREVIAN & KIM LLP DEFTS. NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT/ADJUDICATION
1 Civil Code § 2924.15..................................................................................................................... 18

2 Code Civ. Proc. §337(c) ................................................................................................................ 27
3 Code Civ. Proc. §338(d) ................................................................................................................ 27
4 Code Civ. Proc. §367..................................................................................................................... 22
5 Code Civ. Proc. §339.1.................................................................................................................. 27
6
Code Civ. Proc. §437c(c) .............................................................................................................. 29
7
Code Civ. Proc. §437c(f)(1) .......................................................................................................... 30
8
Evid. Code §622 ............................................................................................................................ 23
9
Financial Code §22012 ............................................................................................................ 22, 24
10
Financial Code §22203 .................................................................................................................. 22
11
Financial Code §50002(c)(6) ......................................................................................................... 25
12

13 Financial Code §22502 ............................................................................................................ 22, 24

14 S.F. Admin. Code §109A.1 ........................................................................................................... 18

28
MEYLAN DAVITT 10
JAIN AREVIAN & KIM LLP DEFTS. NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT/ADJUDICATION
1 Defendants Milestone Financial, LLC (“Milestone”), Bear Bruin Ventures, Inc. (“BBV”),

2 William R. Stuart (“W. Stuart”), and Zoe Hamilton (“Hamilton”) (collectively, “Defendants”)
submit the following Memorandum of Points and Authorities in support of their Motion for Summary
3
Judgment or, alternatively, Summary Adjudication as to the First Amended Complaint (“FAC”) of
4
Plaintiffs Eduardo Paniagua (“Paniagua”) and Elena Asturias (“Asturias”) (jointly, Plaintiffs”). 1
5
I. INTRODUCTION
6 Plaintiffs, a 30-year California lawyer and her husband, who are sophisticated in business
7 matters and are prolific borrowers of commercial loans (nine (9) of them on the subject “Funston”
Property since 2013), have engaged in a fraud on the Courts and Defendants. Plaintiffs have steadfastly
8
represented that the subject Paniagua-Milestone “Loan” was a consumer “residential mortgage loan”
9
which, under the law, means borrower Paniagua is using the loan proceeds for “personal, family, or
10
household” purposes. They claimed Milestone represented to Plaintiffs that it makes consumer
11 residential mortgage loans and held the applicable “License/MLO Endorsement.” They repeatedly
12 represented Funston, which secured the Loan, was their “family home” and “not an investment
13 property.” They sought more sympathy by claiming the Loan proceeds were being used to renovate

14 and sell the “family home” to fund the cancer treatment and retirement of Asturias’ relatives.
Investigation and discovery have shown that the exact opposite is true. Plaintiffs have admitted
15
that: 1) Asturias did not have any Loan with any Defendant and did not own Funston; she is an
16
improper plaintiff; 2) Borrower Paniagua and his family (he, Asturias, their children) never lived or
17 intended to live at Funston; 3) Funston was a rental property before and after the Loan; 4) Since 2013,
18 Paniagua obtained eight (8) commercial loans, including the Milestone Loan, and Asturias obtained
19 another commercial loan, all secured by Funston. They used the proceeds to finance and refinance

20 Paniagua’s for-profit, “fix-and-flip” renovation project (“Fix-and-Flip Project” or “Project”) under a
joint venture, profit sharing agreement (“PSA”) where Plaintiffs would keep all profits over $900,000
21
from Funston’s sale; 4) Defendants never represented to either Plaintiff that Milestone made consumer
22
residential mortgage loans or held a License/MLO Endorsement; 5) After Paniagua finished the Fix-
23
and-Flip Project, Plaintiffs tried but could not sell Funston because they did not have a Certificate of
24

25 1
Defendant Carolyn Stuart was not involved in the subject Loan and has filed a separate MSJ/MSA.
26 Plaintiffs’ FAC is based on the (false) allegation that the Loan was a consumer residential mortgage
loan (i.e., proceeds being used for “personal, family, or household purposes”) and, thus, Milestone
27 needed a license/endorsement under Business and Professions (“B&P”) Code §10661.02(b). Under
§10661.02(b), a lender who makes consumer residential mortgage loans (not Milestone) needs a real
28 estate license and endorsement “identifying that individual as a licensed mortgage loan originator,”
which are referred to herein as a “License/MLO Endorsement.” [See § III (B), infra.]
MEYLAN DAVITT 11
JAIN AREVIAN & KIM LLP DEFTS. NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT/ADJUDICATION
1 Occupancy (“CO”), so they (illegally) started renting Funston again; 6) They sued the entity they

2 blamed for the CO fiasco and obtained a $225,000 settlement; and 7) Plaintiffs did not use a penny of
the Milestone Loan proceeds, or the Funston rental income, or the $225,000 settlement, to pay for the
3
cancer treatment or retirement of Asturias’ relatives.
4
Given these facts, Plaintiffs’ fraud, negligent misrepresentation, statutory consumer, rescission,
5
and declaratory relief claims collapse. Paniagua is also estopped to disavow his representations in
6 signed Loan documents that Milestone relied on, including the multiple times he represented it was a
7 business purpose loan. Moreover, these five claims fail for two more reasons. First, in 2016 and 2017,

8 Paniagua knowingly and voluntarily released his claims, twice. Second, these claims are barred by the
statute of limitations. Plaintiffs allege injury from the first day Paniagua entered into the March 2014
9
Loan. Based on Paniagua’s own signed Loan documents and publicly available information, Plaintiffs
10
were certainly on notice by March 2014 of the nature of Paniagua’s Loan and that Milestone did not
11
have a License/MLO Endorsement. Yet, Plaintiffs waited over four (4) years to file this action.
12 Finally, Plaintiffs’ Rescission claim also fails because rescission is a remedy, not a cause of
13 action, and there is also no contract left to rescind. Their declaratory relief claim also fails because the
14 Loan was repaid in 2018, so there is no outstanding contract for which declaratory relief would be
proper. Asturias’ usury claim fails as to all Defendants because she never borrowed anything, or paid
15
any interest, to any Defendant. Paniagua’s usury claim fails against the non-Milestone Defendants
16
because they did not loan any money to, or collect any interest from, Paniagua.
17
II. STATEMENT OF FACTS
18 A. Plaintiffs, Their Randall Family Home, Their GC Business, and Prior Fix and Flips.
19 Paniagua, the only Loan borrower, has lived in the U.S. since 1985. He obtained his general
contractor’s (“GC”) license in 1996. He took the GC exam in English, and has entered into many
20
loans, real estate contracts, and construction contracts in English. Asturias, his wife, did not have a
21
loan from any Defendant. She has been a California lawyer since 1989, has an LLM from Georgetown,
22
and worked 16 years as a California Dept. of Insurance lawyer. To the extent Paniagua now claims
23 difficulty understanding Loan documents in English, he had access to and relied on his attorney wife,
24 Asturias, and his friend and agent, Jose Ruffrage (“Ruffrage”), to help and advise him. [UF 1-2, 6-8.] 2
25 Since the 1990s, Plaintiffs have owned and operated Paniagua Construction, a San Francisco
general contracting business they incorporated in 2005 (“PCI”). Paniagua is PCI’s President; Asturias
26

27
2
28 Plaintiffs have pushed another legally irrelevant and factually false theory – English is Paniagua’s
second language, and he allegedly may have not fully understood what he signed. [See § III(I).]
MEYLAN DAVITT 12
JAIN AREVIAN & KIM LLP DEFTS. NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT/ADJUDICATION
1 is CFO and Secretary. PCI focuses on home renovations, has done roughly 100 “projects” since 2005,

2 and had between 3-20 employees the past decade. In the mid-2000s, Plaintiffs used commercial loans
to buy two residential investment properties (“Caselli” and “22nd St.”), intending to “fix-and-flip”
3
them for a profit. They renovated and sold Caselli for a profit; they sold 22nd St. for a profit before
4
renovation; as part of the purchase contract the buyer hired PCI for the renovation. [UF 10-12.]
5
The subject Loan was secured by Paniagua’s property at 1228 Funston Ave., San Francisco
6 (“Funston”). Plaintiffs and their children (“Plaintiffs’ Family”) never resided or intended to reside at
7 Funston. Since 2009, they have lived at 176 Randall St., San Francisco (“Randall”). [UF 9.]

8 B. Milestone: A Wholesale, Commercial Lender Who Does Not Make Consumer Loans.
Milestone, an LLC owned by William Stuart (“W. Stuart”) and his wife Carolyn, has 2-5
9
workers. Milestone’s Zoe Hamilton (“Hamilton”) handled the Loan paperwork. W. Stuart made the
10
higher level decisions. Milestone only makes commercial loans. It does not make consumer residential
11 mortgage loans. Thus, it has never needed a License/MLO Endorsement applicable to lenders of
12 consumer residential mortgage loans. Milestone only makes a loan if a borrower first represents, in a
13 notarized loan purpose affidavit, that the proceeds are being used for commercial, investment, or

14 business purposes. In Milestone’s industry, a loan secured by a non-owner occupied, residential rental
property, where the borrower represents the proceeds are being used to renovate and sell the property,
15
is a commercial loan. Milestone and other commercial lenders rely on a borrower’s loan purpose
16
affidavit, as lenders generally do not track a borrower’s post-lending spending activity. [UF 13-16.]
17 Milestone, as a “wholesale” lender, generally does not deal directly with borrowers before loan
18 closing. It deals with a borrower’s representative(s), one of which must be a licensed broker. The
19 borrower selects and pays for the licensed broker. The borrower represents to Milestone, in multiple

20 documents: the broker’s identity; the broker is licensed (which Milestone also verifies); and the broker
is arranging the loan for the borrower. If Milestone is contacted directly by a borrower or unlicensed
21
representative for a loan, it sometimes sends the person a Notice to Borrower which: states Milestone
22
does not represent borrowers; lists several licensed area brokers as non-exclusive options; and urges
23
the borrower to interview several licensees. Milestone has never required or demanded that a borrower
24 use a particular broker; it is the borrower’s sole decision. [UF 17-20.]
25 Milestone does not directly solicit borrowers. It only mails flyers to licensed brokers which

26 have never stated that Milestone makes consumer residential mortgage loans or has a License/MLO
Endorsement. Its website has always stated it only makes commercial loans arranged by a borrower’s
27
licensed broker, and has never stated Milestone has a License/MLO Endorsement. [UF 21-22.]
28
C. 2009-14: Funston is Given to Paniagua, the PSA, and the Fix-and-Flip Project.
MEYLAN DAVITT 13
JAIN AREVIAN & KIM LLP DEFTS. NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT/ADJUDICATION
1 In 2009, Plaintiffs obtained a 50% interest in Funston from Asturias’ relatives. In 2011, to

2 facilitate borrowing for the Fix-and-Flip Project, the then-owners transferred 100% of Funston to
Paniagua. He did not pay for Funston. It was given to him under a written, profit sharing agreement
3
(“PSA”) whereby: 1) Paniagua would remove the paying tenant from Funston; 2) using loans, he
4
would renovate and sell (“fix and flip”) Funston for a profit (“Fix-and-Flip Project” or “Project”);
5
and 3) Plaintiffs would divide the proceeds pursuant to the PSA – i.e., the first $900,000 to the prior
6 Funston owners and all remaining profits to Plaintiffs. The purpose of the PSA and Project was to fix-
7 and-flip Funston for a profit and allocate the proceeds per the PSA. [UF 23-26.] 3

8 Paniagua’s Family never resided or intended to reside at Funston. For decades, a tenant, Larry
Brown, lived at Funston, paid monthly rent, and had protected status due to his age and AIDS
9
diagnosis. Around late 2013, Paniagua paid Brown $30,000 to vacate Funston so Paniagua could
10
proceed with the Fix-and-Flip Project. Funston was vacant by March 2014. [UF 24, 27-29.]
11
D. 2013-14: Initially, Paniagua, with Ruffrage’s Help, Obtained Three Commercial Loans,

Case Info

Judge

Curtis E.A. Karnow Track Judge’s New Case

Case No.

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Document Filed Date

November 16, 2022

Case Filing Date

November 13, 2018

County

Parties

ADELAARS, SARAH Attorney
ADELAARS, SARAH Attorney for the Appellant
ADELAARS, SARAH Attorney for the Plaintiff
ASTURIAS, ELENA Appellant
ASTURIAS, ELENA Plaintiff
BEAR BRUIN VENTURES, INC. Cross Complainant
BEAR BRUIN VENTURES, INC. Defendant
BURNS, ELKANAH J. Attorneys for Plaintiffs
BURNS, ELKANAH J. Attorney for the Defendant
BURNS, ELKANAH J. Attorney for the Plaintiff
COHEN, HARRIS L Attorneys for Defendants
COHEN, HARRIS L Attorney for the Appellant
COHEN, HARRIS L Attorney for the Defendant
DAVITT, VINCENT J. Attorneys for Defendants
DAVITT, VINCENT J. Attorney for the Appellant
DAVITT, VINCENT J. Attorney for the Defendant
DOES 1 TO 100 INCLUSIVE Defendant
HAMILTON, ZOE Cross Complainant
HAMILTON, ZOE Defendant
LAU, JOYCE K. Attorney
LAU, JOYCE K. Attorney for the Appellant
LAU, JOYCE K. Attorney for the Defendant
MARQUEZ, VICTOR MANUEL Attorneys for Plaintiffs
MARQUEZ, VICTOR MANUEL Attorney for the Appellant
MARQUEZ, VICTOR MANUEL Attorney for the Plaintiff
MILESTONE FINANCIAL, LLC Appellant
MILESTONE FINANCIAL, LLC Cross Complainant
MILESTONE FINANCIAL, LLC Defendant
PANIAGUA, EDUARDO Appellant
PANIAGUA, EDUARDO Cross Defendant
PANIAGUA, EDUARDO Plaintiff
PANIAGUA, EDUARDO Respondent
ROES 1-100 Cross Defendant
SHAPERO, SARAH Attorneys for Plaintiffs
SHAPERO, SARAH Attorney for the Plaintiff
STUART, CAROLYN Cross Complainant
STUART, CAROLYN T. Defendant
STUART, WILLIAM Cross Complainant
STUART, WILLIAM R. Defendant
Jessica Adair Attorneys for Plaintiffs
Stephanie Warden Attorneys for Plaintiffs
Anita Jain Attorneys for Defendants
Neil Chan Attorneys for Plaintiffs
Joyce Liou Attorneys for Defendants
Stephanie Silvers Attorneys for Defendants
Stefani Silverman Attorneys for Plaintiffs
Edward Jamison Attorney
Nathaniel Fisher Attorney
Stephanie Wald Attorney
Marie Fournier Attorney
Bernard Kornberg Attorneys for Defendants
John McDonnell Attorney

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Hearing: EDUARDO PANIAGUA ET AL VS. MILESTONE FINANCIAL, LLC ET AL

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