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WILLIAM B. LOOK, JR.
Attorney at Law
PO BOX 1381
Monterey, CA 93942
831-372-1371/
email: look_mtr@yahoo.com
#66631
Attorney for Plaintiff
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF MONTEREY
Dory Ford, Christine Ford Aqua Terra CASE NO.: 23CV002765
Culinary, Inc.,
OMNIBUS RESPONSE TO
10 DEMURRER, MOTION TO
Plaintiffs, EXPUNGE AND 128.7 MOTION
11 FOR SANCTIONS AND IN
V. SUPPORT OF COUNTER MOTION
12 FOR SANCTIONS: DEFENSE BAD
SLS International Holdings , Inc., David FAITH
13 Prichard, The Colorado Project LLC, a
Colorado Corporation, et al., Does 1-100
14 DATE: 7 JUNE 2024
TIME: 08:30 AM
15 Defendants. DEPT: 14
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OMNIBUS RESPONSE TO DEMURRER, TO MOTION TO EXPUNGE
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AND TO 128.7 MOTION FOR SANCTIONS AND
IN SUPPORT OF COUNTER MOTION FOR SANCTIONS
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All of the pending motions set June 7, 2024 in this action for Quiet Title lack merit
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and are advanced in bad faith without a good faith purpose nor are any founded on good
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legal cause and lack a competent evidentiary base. All are vulnerable in one way or
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another, but Mr. Eikenberry’s motives are clearly in bad faith, given he and his clients
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knew or should have known the source of funds for the Settlements put in issue in related
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case 23CV002785 were Covid-19 grants to Aqua Terra Culinary Inc., and Mr. Ford as
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27 Omnibus Response to Demurrer, Motion Expunge and 128.7 Motion and in Support of Counter Sanctions
proprietor, and that property acquired with those funds was being liquidated to raise the
funds for the settlements. See attached Amended Complaint, 23CV002785, §¥ 5, 31-33.
It was only after present counsel disclosed that Mr. Ford had been indicted January
25, 2024, and substantial elements of the settlement payments were vulnerable to
disgorgement to the United States, did Mr. Eikenberry’s hostility and accusatory
opposition marialize. See Eikenbarry 128.7 Declaration, §{] 38,39. Indeed, that’s no
surprise since he may have exposure to his clients and certainly will be a percipient witness
in the case. Id., { 13. That ‘clouded mind-frame’ shows in the wild, unsupported claims
being made in Mr. Eikenberry’s pleadings in this case. To bring some rationality to bear
the ‘scatter’ of “Quick! Throw the rug over it.” motions filed by Eikenberry on behalfof
SLS International Holdings, Inc. (SLS), herein and in the pleadings filed herewith,
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plaintiffs and present counsel in self-defense point to seven meritorious defenses to the
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Demurrer, Motions to Expunge, and frivolous 128.7 Motion, that also support plaintiffs
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counter motions for sanctions, and illustrate why the Shakespearean adage applies (from
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Hamlet), that “The lady doth protest too much, methinks.”
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I. A LEGAL BASIS FOR QUIET TITLE FOR BREACH OF A CONTRACT DUTY
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TO RECONVEY TITLE IS ADMITTED BY DEFENDANT’S OWN PLEADINGS
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This lawsuit did not arise out of ‘whole cloth’ as Mr. Eikenberry suggests. It has its
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roots in specific performance of the term of the 2022 Settlement obliging SLS to reconvey
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title to plaintiff Fords. All payments under the latter settlement were completed by July
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2023 and the duty to reconvey arose at that time. Since the title was post a foreclosure sale
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by the beneficiary, and the underlying debt was satisfied by ‘untainted’ payments at least
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sufficient to cure the defaults and pay off the principal (and interest) and met the terms that
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obliged the beneficiary to reconvey. Plaintiffs also contend that Civ. Code §§ 2924b(a)(2)
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& 2941(a) apply and create a statutory duty in addition to and independent of the contract
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duty to rescind.
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27 Omnibus Response to Demurrer, Motion Expunge and 128.7 Motion and in Support of Counter Sanctions
The basic facts are disclosed by and admitted in SLS’s moving papers, including
Mr. Eikenberry’s Decl., Exhibit G, which contains the following judicial admission of
contract terms and states:
“2. Consideration Provided bv SLS to Ford: Upon timely and full
performance by Ford of their obligations set forth in Paragraph | above, SLS
shall;
(a) execute before a notary and, deliver to Ford a Grant Deed to the
Property conveying the Property to Ford (the manner in which title is to be
conveyed to Ford [i,e, joint tenancy, tenants in common, etc.] shall be specified
by Ford to SLS in writing upon the execution of this AGREEMENT by Ford); and
in the event that Ford desires to have SLS convey the Property to them through a
formal escrow with a policy of owner's title insurance issued to Ford, Ford shall
be responsible for the payment of all costs and fees related to the escrow and the
10 issuance of a policy of owner's title insurance;”
11 When this case was first presented to present counsel, the reconveyance was a
12 matter of concern, in part because plaintiffs have a first mortgage and were making the
13 payments thereunder as well as the settlement payments, as well as the annual property tax
14 payments, even though SLS held the ‘paper’ title since January 2023. The term for
15 reconveyance by grant deed posed issues relating to potential re-appraisal and assessment
16 of property taxes. Thus present counsel negotiated toward a reconveyance by rescission of
17 the trustee’s deeds, to restore the “status quo ante’ as the statutes require. The upshot of
18 this was as related by Mr. Eikenberry in his declaration, main body, §{ 36-37, in the
19 following judicial admissions made under oath:
20 “36. On 9-6-2023 new counsel for Plaintiffs sent to counsel for SLS an email and
an attached letter signed by Dory Ford and Christine Ford instructing SLS that
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title to the Property be restored to them through a Rescission Of Trustee's Deed
22 Upon Sale [instead of through a Grant Deed]. A true and correct copy of said
23 email and letter are attached hereto as Exhibit "H".
37. Ihave informed new counsel for Plaintiffs that SLS understands that the
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foreclosure trustee [Best Alliance Foreclosure And Lien Services Corp.] is willing
25 to issue a Rescission Of Trustee's Deed Upon Sale [upon certain conditions] and
26 that SLS is agreeable to a Rescission Of Trustee's Deed Upon Sale instead of a
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Omnibus Response to Demurrer, Motion Expunge and 128.7 Motion and in Support of Counter Sanctions
Grant Deed, provided that Plaintiffs dismiss SLS from this action and from Case
23CV002785.”
In other words, defendant attempted to use the reconveyance term as a ‘quid pro
quo’ for dismissing the lawsuits or otherwise as ‘settlement leverage’ and thus admits it
did not fulfill its duty under the contract to reconvey, despite its contentions it is entitled to
specific performance, etc., alleged in the cross-complaint. Plaintiffs thus were right to file.
Further, although Mr. Eikenberry claims over 40 years experience in litigation, he
apparently has forgotten some basics of pleading, e.g., §{] 3-35, of Mr. Eikenberry’s
Declaration consists of ‘interpretation’ of attached hearsay documents, disclosing his own
work product, but his opinions, conclusions and contentions about hearsay documents are
not evidence, nor doe they ‘define’ the construction, meaning, or effect of the terms of the
10 legal instruments in issue. The contracts and other instruments and documents attached,
11 independent of Mr. Eikenberry’s self-serving commentary, have to ‘stand on their own
12 four corners’ and ‘speak for themselves’ in this lawsuit. And that applies to the ambiguities
13 written into the contracts he negotiated (infra), that inter alia create issues of compliance
14 with the private foreclosure statutes in the manner of taking title.
15 Il. A LEGAL BASIS FOR QUIET TITLE IS STATED BASED ON CURING THE
16 DEFAULT BY SETTLEMENT UNDER CIVIL CODE §§ 2924c RENDERING THE
TRUSTEE’S SALE IN JANUARY 2023 VOID
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Mr. Eikenberry also seems to have forgotten some basics of foreclosure law and
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procedure, one of them being that if the trustor and beneficiary enter into a new agreement
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to resolve a default, on new payment terms, the agreement is a novation that cures a default
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within the meaning of Civ. Code. § 2924c. That is precisely what Settlement | in June
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2022 was, prima facie, including as it did terms not within the original promissory notes
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secured by the 2015 and 2016 trust deeds, then pending foreclosure. As pointed out
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elsewhere in plaintiffs’ responsive pleadings, there are ambiguities in the 2022 settlement
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as to the enforcement terms. But suffice here that, even assuming defendant could proceed
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with the ‘old’ foreclosure against the ‘new’ debt, the Notices of Default and of Sale that
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were first recorded in 2021 were based on the 2015 and 2016 notes, and not based on
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Omnibus Response to Demurrer, Motion Expunge and 128.7 Motion and in Support of Counter Sanctions
default of the later June 2022 agreement between beneficiary and trustors. As a result the
prior recorded Notices were contrary to law and incorrect in amount, and the January 2023
sale was irregular. See e.g., Civ. Code § 2924c(a)(1), (a)(2),(b)(1); see Alliance Mortgage
Co. v. Rothwell (1995) 10 Cal.4th 1226, 1235.
Thus, even assuming the terms for ‘resuming’ foreclosure could be enforced, at a
minimum foreclosure had to proceed only after recording new and different Notices of
Default (i.e., declaring a default of the new debt obligation and in what amount). Since
strict compliance is the ‘order of the day’ in private foreclosure proceedings (Coppola v.
Superior Court (Singer) (1989) 211 Cal.App.3d 848, 868; Bisno v. Sax (1959) 175 Cal.
App. 2d 714, 720 ), the fact that neither a Notice of Default nor Notice of Sale stating the
correct deficiency under the correct debt instrument were ever recorded, is a valid legal
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ground for setting aside a trustee’s sale.
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That is, because the trustee proceeded to sale based on the ‘obsolete’ Notices of
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Default and without re-recording a Notice of Sale, the notices of record failed to identify
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the true debt and correct amount of deficiency balances on the date of sale. E.g., see the
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variance between the recitals of the Trustee’s Deed (SLS Request Judicial Notice, Ex. A),
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stating “The Amount of The Unpaid Debt was $256,754.73 The Amount Paid By The
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Grantee Was $256,754.73” and the uncertain figures referred to in Eikenberry 128.7 Decl.,
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Ex. A, 93, p . 5, which provides:
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“b. SLS may, but is not required to, declare a default uuder any of the following
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conditions: [4] i. Failure to timely make, without cure, the First Payment; and ii.
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Failure to timely make, without cure, the Second Payment. [4] In the event of a
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default, SLS shall be entitled to the following remedies: [{] i. In the event that the
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First Payment is not timely made, or is not timely cured, then a) SLS may record
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and enforce the Prichard Collateral under applicable state law, and b) SLS shall be
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entitled to complete the pending foreclosure against the Ford's Monterey Property
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to collect in full monies owed under the Second Deed of Trust and Third
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Omnibus Response to Demurrer, Motion Expunge and 128.7 Motion and in Support of Counter Sanctions
Deed of Trust under applicable state law; and [{] ii. In the event that the First
Payment is made, but the Second Payment is not timely made in full, and after
application of any monies paid to SLS towards the Second Payment as a credit,
then SLS shall be entitled to complete the pending foreclosure against the Ford's
Monterey Property to collect in full monies owed under the Second Deed of
Trust and Third Deed of Trust under applicable state law.” (Emphasis added
relevant to ambiguity.)
Presumably these ‘numbers’ due under the First and Second Deeds of Trust should
have been determined by Settlement | if it is assumed to be binding, as SLS contends, since
said { 3 is entitled, “Default/Remedies,” and refers to default of the Settlement not the original
notes under the trust deeds, in an uncertain amount identified as “monies owed.” Thus, one
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calculation would have been that the amount secured after July 2022 , was under the terms of 4
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3(c) , $700,000.00 less $250,000 ‘downpayment’ or $550,000.00. But as shown by
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PLAINTIFFS Request for Judicial Notice exhibits 1a and 2a, the Notices of Sale recorded in
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March 2022 were not updated after the June 2023 Settlement, and reference superseded debt.
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Thus the trustee’s sale did not comply with, inter alia, the terms of the contract itself
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which required that a follow on foreclosure be completed “under applicable state law.” Given
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neither of the Notices of Default nor Notices of Sale (pending in April-May 2022) reference
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any figures derived from Settlement 1, not least because they antedated the June 25, 2022
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settlement, the sale was irregular in January 2023. See Eikenberry 128.7 Declaration, {8 & Ex.
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A, p. 2, 2d Recital, §] a,b (NODs recorded 7/13 & 7/14/2021); and see Lona v. Citibank, N.A.
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(2011) 202 Cal.App.4th 89, 103-104 (error in stating default in Notice of Default one ground
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to set aside trustee’s sale). Thus this is not the ‘cut and dried’ case Eikenberry wants it to be.
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The reality is the 2022 Settlement was a novation, and new foreclosure notices were required.
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III. THE SAME LAW FIRM AND ATTORNEY REPRESENTED BORROWER AND
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LENDER IN THE ORIGINATION OF VOID OR VOIDABLE SECURED DEBTS
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Omnibus Response to Demurrer, Motion Expunge and 128.7 Motion and in Support of Counter Sanctions
As shown by PLAINTIFFS’ Omni Exhibits 1b and 2b, the same law firm, Hudson
Martin Ferrante Street Witten & Demaria PC, and partner Witten, represented both parties to
the underlying lending transactions, an undisclosed conflict of interest that had the foreseeable
effect of ‘ripening’ of a dispute over repayment of the loans. PLAINTIFFS contend in this
action as well as related case 22CV002785, that the resulting terms include usury as well as
render the debts void or voidable, and at best can only entitle SLS to the return of its capital.
Further, there is an issue that Sutter Law PC may have negotiated a ‘confidential’ settlement
with Hudson Martin and Ms. Witten, without disclosure to PLAINTIFFS, in derogation of the
mutual duties between the parties, as well as in derogation of the implied waiver of
confidentiality between the parties as to the loans brokered by a mutual agent.
IV. SLS WENT TO SALE ON THE JUNIOR LIEN AND THE X-C TO ENFORCE
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SETTLEMENT 2 IS CONTRARY TO THE ONE ACTION RULE AND CCP 586b
11 As shown by Request for Judicial Notice Exhibits la & 1b and 2a & 2b, Defendant and
12 Cross-plaintiff SLS elected to go to sale in January 2023 based on the Notice of Sale recorded
13 under the junior 2016 trust deed and debt originally for $150,000.00. SLS later rescinded the
14 Notice of Default for the first lien for the 2015 trust deed and debt originally for $250,000.00.
15 See Omni RJN Exhibits 1a, 2a, & 3. Thus SLS was not a ‘sold out junior lienholder.’
16 Aside from issues of merger of the liens as a result of taking title, the effect of the one
17 action rule prevents SLS from obtaining a de facto deficiency in the guise of 2023 Settlement 2
18 by cross-complaint. See C.C.P. § 726(a); Birman v. Loeb (1998) 64 Cal.App.4th 502, 509-510;
19 see also Roseleaf Corp. v. Chierighino (1963) 59 Cal.2d 35, 43-44 (only “nonselling junior
20 lienor can escape scope of C.C.P. § 580d). Section 580d was amended effective January 2023.
21 Thus inter alia PLAINTIFFS contend that Settlement 2 is an unenforceable version of an
22 unconscionable contract that extracted penalty or premium consideration contrary to the policy
23 of both the One Action Rule and § 580d, and at the least it is grounds for rescission or
24 reformation of the settlement. E.g., electing to foreclose the junior lien eliminated
25 consideration based on the senior lien, leaving only the original principal balances ever due.
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Omnibus Response to Demurrer, Motion Expunge and 128.7 Motion and in Support of Counter Sanctions
V. SLS WAS PROPERLY SERVED WITH THE NOTICE OF PENDING ACTION
AND SLS LACKS STANDING TO OBJECT TO NOTICE OR LACK OF NOTICE TO
OTHER PARTIES
A Notice of Pending Action can be recorded by any party holding a real property claim
adverse to another. C.C. P. §§ 405.2, 405.20. Section 405.22, provides for mail service of the
Notice of Pending Action. But failure or defect of mail service is not a ground for
expungement under C.C.P. §§ 405.30-405.32. The mail service requirement is intended to give
actual notice to the party holding an adverse interest in real property. Here that was SLS that
credit bid and obtained ‘trustee’s title’ adverse to plaintiffs in 2023, creating actual notice.
But SLS was clearly mail served in accord with the statute. See C.C.P. § 405.22. A
defect or failure of service is not ‘jurisdictional’ but rather can be corrected by later service (or
10 more typically by service of a complaint on a named party, providing actual notice). See §
11 405.22. A Notice of Pending Action is a matter of constructive notice (see § 405.24) but notice
12 can just as well, and arguably be better done, by giving actual notice. The proofs of service of
13 record show personal service on SLS (via Sutter Law it’s agent for service), and on Prichard
14 and his corporation in Colorado. Thus the mail service issue is immaterial if not frivolous.
15 But further, the mail service on an agent or principal is service on the other. That is,
16 notice to a principal is notice to an agent, and ‘vice versa.” Civ. Code § 2332; see E-Fab, Inc.
17 v. Accountants, Inc. Services (2007) 153 Cal.App.4th 1308, 1319 (rule applies to actual or
18 constructive notice); see also Watson v. Sutro (1890) 86 Cal. 500, 523 (notice between agent
19 and principal is constructive). There is no legitimate issue of lack of notice based on an
20 alleged defect of mail service of the Notice of Pending Action, even assuming SLS has
21 standing to challenge lack of mail service on others.
22 VI. SLS ADMITS IT HOLDS THE CURRENT TITLE AND RECEIVED NOTICE OF
23 THE PENDING ACTION BY MAIL SERVICE AS WELL AS BY PERSONAL
24 SERVICE
25 As Mr. Eikenberry’s 129.7 declaration admits at {38,39 the 2023 Settlement required
26 defendants to reconvey the title to HARRISON to plaintiffs, but although willing to reconvey
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Omnibus Response to Demurrer, Motion Expunge and 128.7 Motion and in Support of Counter Sanctions
via rescission by the trustee (required anyway under Civ. Code § 2924b(a)(2), ' or if plaintiffs
prevail in proving the sale void), refused to do so and continues to refuse to do so. See also
Look 128.7 Counter Motion Declaration, and Exhibits. As pointed out above, and generally in
the responsive pleadings, that is a breach of the terms of the agreement sufficient to support a
good faith quiet title action, as well as breach of contract and rescission or reformation as
alleged in 22CV002785, to inter alia, fix and determine the ambiguities described above
regarding enforcement of the Settlement agreements, and what money SLS can keep.
But further, SLS’s request for judicial notice in support of its Motion to Expunge, also
shows SLS currently holds title and that it was duly served with the Notice of Pending Action
via its agent for service of process, Sutter Law PC. Sutter Law PC was also served with the
summons and complaint in 22CV002785. (See Proof of Service, Notice of Pending Action and
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Proofs of Service of Summons and Complaint of record.) Thus there is no viable issue that the
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Notice of Pending Action was invalid as to SLS, and the contention is a another meritless, if
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not frivolous, element of SLS’s pleading ‘package.’
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VII. THE AMENDED COMPLAINT IN 23CV002785 IS BASED ON DISGORGEMENT
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OF FUNDS SLS RECEIVED UNLAWFULLY BY SLS
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As alleged in the attached First Amended Complaint in 23CV0022785, but for about
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$300,000.00 of retirement funds (technically borrowed from retirement trustees), all of the
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money received by SLS was sourced from grants received by Dory Ford (and ATC), that were
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improperly reinvested in a real estate scheme in Belize ‘masterminded’ by defendant Prichard.
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Delays in selling off the assets in Belize caused the default of payment in 2022, but that does
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not affect the fact that Covid-19 grant money to restaurants was subject to restrictions. Suffice
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it that unwittingly or not, Mr. Ford used grant money for an unauthorized purpose. On the
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1 “(2) If the trustor, mortgagor, or other person authorized to cure the default pursuant to
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this subdivision does cure the default, the beneficiary or mortgagee or the agent for the beneficiary or
25 mortgagee shall, within 21 days following the reinstatement, execute and deliver to the trustee a
notice of rescission that rescinds the declaration of default and demand for sale and advises the trustee of
26 the date of reinstatement. The trustee shall cause the notice of rescission to be recorded within 30 days
of receipt of the notice of rescission and of all allowable fees and costs.”
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Omnibus Response to Demurrer, Motion Expunge and 128.7 Motion and in Support of Counter Sanctions
other hand, the payment of pre-existing mortgage debt is an authorized purpose. Thus the
retirement sourced money plus an amount sufficient to satisfy the liens, was a lawful use of the
Covid-19 grant money. But everything else paid under Settlement 1 or 2, was not an allowable
expense or use of the grant money and therefore is subject to disgorgement by SLS. Mr. Ford
also has a duty to recover the funds because he now knows it was an unauthorized use, as well
as he is likely to have a restitution order and duty to cooperate with the United States to
recover that portion of the funds paid to SLS that SLS cannot keep.
VIII. SLS’S OWN MOTION PAPERS DEFEAT THE 128.7 MOTION BECAUSE THEY
ADMIT THE FORGOING AND THEREBY ADMIT THIS ACTION IS NOT
FRIVOLOUS
C.C.P. § 128.7 sets a high bar for imposition of sanctions. The burden is on the moving
10 party to show the pleading— here the complaint- is frivolous, that is, lacking in any legal or
11 fact merit. But as shown above defendant’s own papers filed in support, and in particular Mr.
12 Eikenberry’s own declaration, which admits there is a dispute over reconveyance of title,
13 shows there are genuine disputed legal and fact contentions between the parties. There is no
14 ‘smoking gun’ issue that disposes of the case disclosed by Mr. Eikenberry’s showing supposed
15 to show 23CV002765 or 23CV0027835 are frivolous. The reality is that despite over payment
16 after foreclosure SLS is refusing to reconvey, and received funds in excess of the true debt
17 amount, an excess subject to refund to the United States. These are legitimate, ‘real world’
18 disputes. For that reason, plaintiffs have filed their own counter-motion for sanctions against
19 Mr. Eikenberry, who knew or should have known his motions lacked merit under § 128.7(h).
20 CONCLUSION
21 For each of the foregoing reasons defendant SLS’s pending 128.7 motion, demurrer,
22 and motion to expunge should be denied.
23 DATED: March 26, 2024 UNkbam B Lock, Oh
Attorney for Plaintiff 7
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Omnibus Response to Demurrer, Motion Expunge and 128.7 Motion and in Support of Counter Sanctions
PROOF OF SERVICE BY ELECTRONIC DELIVERY
I declare that Iam employed in the County of Monterey, California. I am over the age
of eighteen years and not a party to the action herein. My business address is P. O. Box 1381,
Monterey, California 93942.
On March 26, 2024, I caused the above pleading entitled OMNIBUS RESPONSE TO
DEMURRER, MOTION TO EXPUNGE AND 128.7 MOTION FOR SANCTIONS AND
IN SUPPORT OF COUNTER MOTION FOR SANCTIONS
by automated electronic email service via a certified digital filing service provider, to
wit, Green Legal File, to the electronic email address of:\
Kevin S. Eikenberry, Esq.
EIKENBERRY LAW FIRM
1470 Maria Lane, Suite 440
Walnut Creek, CA 94596
kevin@eikenberrylawfirm.com
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11 I declare under penalty of perjury under the laws of the State of California that the
foregoing is true and correct. Executed on March 26, 2024 at Monterey, California.
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UWhbiam 2 Lock,
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W B Look, Jr.
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Omnibus Response to Demurrer, Motion Expunge and 128.7 Motion and in Support of Counter Sanctions
OMNI EXHIIBT1
WILLIAM B. LOOK, JR. ELECTRONICALLY FILED BY
Attorney at Law Superior Court of California,
PO BOX 1381 County of Monterey
Monterey, CA 93942 On 3/18/2024 1:19 PM
831-372-1371/ By: Hicet Ramirez-P erez, Deputy
email: look_mtr@yahoo.com
#66631
Attorney for Plaintiff
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF MONTEREY
Dory Ford, Christine Ford, Aqua Terra CASE NO.: 23CV002785
Culinary, Inc.,
FIRST AMENDED:
10 Plaintiffs, VERIFIED COMPLAINT FOR
REFORMATION AND RESCISSION
11 V. OF CONTRACTS AND FOR
IMPOSITION OF CONSTRUCTIVE
12 SLS International Holdings , Inc., David TRUST IN FAVOR OF UNITED
Prichard, The Colorado Project Inc.,Does STATES
13 1-25,
CC §§ 1689, 1692; § 3399; and the
14 Defendants. Usury Law; 15 USC 9009¢; CC § 2224
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JURISDICTIONAL STATEMENT AND IDENTITY OF PARTIES
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1. Plaintiffs Dory Ford and Christine Ford (PLAINTIFFS) are residents of Monterey County,
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California. PLAINTIFFS are the legal and beneficial title holders of a parcel of real property
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commonly known as 981 Harrison St., City of Monterey, Monterey County, California,
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Monterey County Assessor’s Parcel Number (APN) 001-346-003-000 (HARRISON)..
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2. Aqua Terra Culinary, Inc. (ATC), is a corporation owned and operated by PLAINTIFFS.
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3. Defendant SLS International Holdings, Inc. (SLSI) is a business entity exact form unknown,
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but doing business in Monterey County, California, and alleging a lien interest in said property
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pursuant to two deeds of trust of record encumbering said parcel, the first recorded May 27,
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Amended Verified Complaint for Reformation and Rescission of Contracts -l-
OMNI EXHIIBT1
2015, as Document 2015027469 Official Records Monterey County (ORMC), securing a
balance of $250,000.00 ( DOT 1), and a second deed of trust recorded June 08, 2016, as
Document 2016031230 ORMC, securing a balance of $150,000.00.
4. David Prichard is an individual doing business in California, and the proprietor and an officer
or director of the business entity known as The Colorado Project, Inc. (herein collectively ‘David
Pritchard and his corporation’). David Prichard and his corporation were parties to the settlement
agreements put in issue by this complaint.
5. But for that portion of the consideration paid for settlement of disputed secured debts, as
hereinafter alleged, that was derived from plaintiff Dory Ford’s and Christine Ford’s retirement
accounts, all or substantially all such funds were derived from grants obtained pursuant to the
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American Rescue Plan Act of 2021 (ARPA), 15 USC 9009c, by Dory Ford and plaintiff ATC, as
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so-called Covid Relief Funds. On or about January 25, 2024, Dory Ford was indicted in federal
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case 5:24-cr-00050 (under seal) , based on use of said funds contrary to the authorized use of
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funds pursuant to subpart c(5) of said ARPA. Plaintiffs are informed and herein allege that only
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that portion of the funds described hereinafter derived from ARPA funds, to satisfy the mortgage
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debt secured by plaintiffs Dory Ford and Christine Ford’s residence, as more fully described in
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related case 23CV000965, in the total sum of $405,000.00 of principal amount, was lawfully
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expended, under ARPA subpart c(5)(b). Plaintiffs are further informed and believe and thereon
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allege that all other monies described herein and referenced in the attached Exhibits, are funds
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that were improperly tendered to and received by defendants herein, and are subject to
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disgorgement and refund thereof to the United States Small Business Administration and
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Internal Revenue Service, pursuant to ARPA subpart (c)(6), and thereby impressed with a
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construtive and implied at law trust in favor of the United States.
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6. The true names and capacities of the parties sued herein as DOES 1-25 are unknown to
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plaintiff. Plaintiff will amend the pleading to state the true names and capacities of said DOE
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defendants when the same are ascertained.
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Amended Verified Complaint for Reformation and Rescission of Contracts -2-
OMNI EXHIIBT1
7. In doing the things hereinafter alleged, the forgoing defendants were, each and severally,
acting as the agent and employee of the other, and in doing the things herein alleged, were acting
within the course and scope of such agency and employment.
FIRST CAUSE OF ACTION
FOR REFORMATION OF 2022 CONTRACT
AGAINST ALL DEFENDANTS
8. PLAINTIFFS incorporate herein by reference and re-alleges the allegations of paragraphs 1-6
above.
9. In 2021 and 2022, SLSI recorded notices of default and notices of sale based on DOT1 and
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DOT2, with a sale originally noticed for May 29, 2022. An written settlement agreement was
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entered into between On or about May 27, 2015, between Plaintiffs, ATC, SLSI, and additional
12
parties David Prichard and , an entity owned or controlled by said David Prichard, in June 2022,
13
that constituted a novation on new payment terms and additional consideration running to SLSI.
14
10. The scope of the novation, entitled Settlement Agreement (herein SETTLEMENT 1),
15
included the debts secured by DOT1 and DOT2, but also other business debts and debts peculiar
16
to David Prichard, outside the scope of DOT1 and DOT 2, but included in the installment
17
payment terms as well as other contingent terms therein, that provided that the foreclosures
18
pending in 2022 could proceed upon default of payment of the new debt obligation created by
19
SETTLEMENT 1| in June 2022, a date later in time than the Notices of Default and Notices of
20
Sale of record, and thereby constituting a novation and cure of the declared defaults as alleged in
21
greater detail in pending related case Monterey Superior Court Case 23CV002765. A copy of
22
said SETTLEMENT 1 is attached hereto and incorporated as Exhibit Settlement No. lof this
23
complaint.
24
11. A dispute arose over the timing of a second installment required under said SETTLEMENT
25
1 in 2022, and as a result SLSI unlawfully caused a trustee’s sale to proceed on January 17,
26
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Amended Verified Complaint for Reformation and Rescission of Contracts 3-
OMNI EXHIIBT1
2023, despite the novation of the secured debt, whereby HARRISON was sold to SLSI by credit
bid. Said sale was unlawful because the novation reached by SETTLEMENT | effected a cure of
the defaults and SLSI failed to re-record the required notices or otherwise comply with
California Civil Code §§ 2924-2924k, in order to foreclose based on a default of the new terms
created by said SETTLEMENT 1, as also alleged in greater detail in related case 23CV002765.
12. A dispute further exists because of the unfair and unconscionable terms of SETTLEMENT 1
whereby liens and encumbrances of David Prichard and his corporation were cured by an initial
payment of $250,000.00 made by PLAINTIFFS under said SETTLEMENT 1, that was not
applied as an offset or partial cure of the defaults noticed in 2022 by SLSI, resulting in a
forfeiture of said payment without benefit to PLAINTIFFS, who lost their home despite a
10
payment sufficient to cure the default of the deed of trust selected for the trustee’s sale on
11
January 17, 2023, where the home was purchased by the lender with a credit bid less than
12
$250,000.00 on date of sale, as also alleged in greater detail in related case 23CV002765
13
13, PLAINTIFFS and ATC seek reformation of SETTLEMENT | as to the amount of
14
consideration running from them to SLSI to cure the debts declared to be in default under DOT1
15
and DOT2 to conform to the actual net balance due on the date SETTLEMENT 1 was effective
16
in June 2022, with credit for the cash part payment they made against that balance, and to strike
17
the unlawful terms purporting to permit a private foreclosure without compliance with Civil
18
Code §§ 2924-2924k, based on a default of SETTLEMENT 1.
19
14. PLAINTIFFS and ATC further seek reformation by severance of the unfair and inequitable
20
terms of SETTLEMENT | that provide consideration running to David Prichard at their expense
21
and without any offsetting consideration to them from releasing his or his corporation’s liability
22
and liens based on cash consideration paid by PLAINTIFFS and ATC, and reforming
23
SETTLEMENT | to provide that said David Prichard and his corporation pay whatever
24
consideration the court deems just and due to SLSI under the reformed contract.
25
26
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Amended Verified Complaint for Reformation and Rescission of Contracts -4-
OMNI EXHIIBT1
15. Reformation is sought on the grounds of mutual mistake, and unilateral mistake of
PLAINTIFFS and ATC, over the enforceability and lawfulness of the terms of SETTLEMENT 1
purporting to permit SLSI to continue a private foreclosure after entering a novation that de facto
cured the defaults recorded in 2022, mistake as to the effect and allocation of the $250,000.00
installment paid in 2022, and mistake as to the effect and allocation of said payment, t hat would
result in satisfaction of debts owed by David Prichard and his corporation, but leave
PLAINTIFFS and ATC exposed to foreclosure of PLAINTIFFS home despite the relief from
liability running to Prichard without offsetting duty or obligation on his part to contribute to or
pay further installments required under SETTLEMENT 1.
16. Reformation is also sought on the grounds that the agreement is unlawful and contrary to
10
public policy by purporting to permit SLSI to proceed with a private foreclosure sale contrary to
11
the private foreclosure law of California in Civil Code §§ 2024-2924k, and seeks to eliminate
12
said terms and reform SETTLEMENT 1 as a bona fide novation and settlement of the debt
13
referenced in DOT 1 and DOT 2, with credit for the $250,000.00 cash payment made by
14
PLAINTIFFS, and eliminate any benefit therefrom to David Pritchard and his corporation.
15
17. PLAINTIFFS and ATS seek reformation in order to strike the void provisions and conform
16
SETTLEMENT | to the terms of the new agreement for repayment of the debts of PLAINTIFFS
17
represented by DOT 1 AND DOT 2 which was agreed but failed to be expressed at all or in
18
lawful terms by the document executed by the parties. PLAINTIFFS and ATC further seek to
19
reform those provisions of the release contained in said settlement as they pertain to the
20
provisions reformed hereby.
21
22
SECOND CAUSE OF ACTION
23
FOR PARTIAL RESCISSION OF 2022 SETTLEMENT
24
AGAINST ALL DEFENDANTS
25
26
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Amended Verified Complaint for Reformation and Rescission of Contracts -5-
OMNI EXHIIBT1
18. PLAINTIFFS and ATC incorporate here and re-allege paragraphs 1-17 above.
19. Pursuant to Civil Code § 1691, et seq., PLAINTIFFS and ATC hereby rescind in part
SETTLEMENT 1, as to those provisions which they entered into by mistake or understanding
that they would benefit David Pritchard or his corporation at their expense and without offsetting
consideration, and as to those provisions which are contrary to law and policy, which purport to
permit SLSI to conduct a private foreclosure without complying with California Civil Code §§
2924-2924k. PLAINTIFFS and ATC further seek to rescind those provisions of the release
contained in said settlement as the pertain to the provisions rescinded hereby.
20. The provisions of said SETTLEMENT | PLAINTIFFS and ATC rescind are as designated
by redacting and interlineation shown in attached EXHIBIT Settlement No. 1A, with the
10
objective of purging said agreement of the references to David Pritchard, his debt or his
11
corporation, for which no consideration ran to them, even after paying the first installment
12
referenced therein, and occurred as a direct and proximate result of the negotiation of said
13
contract by David Pritchard and his counsel, without the informed consent or understanding of
14
its meaning and effect on the part of PLAINTIFFS, nor understanding of the unlawful terms
15
purporting to authorize completion of the then pending foreclosure of the liens against
16
HARRISON, which PLAINTIFFS did not realize was contrary to law nor that such terms placed
17
all or substantially all of the risk of loss on them, and not on David Pritchard, if there was a
18
default after the first installment and release of his liens, despite his ostensible co-liability under
19
SETTLEMENT 1.
20
21. PLAINTIFFS and ATC allege they never received any consideration for the part payment
21
they made as hereinabove alleged, and are entitled to an offset against the total of consideration
22
required under the terms of said settlement, but otherwise tender the balance due as determined
23
by the court, after due credit for the consideration running to defendant David Prichard and his
24
corporation, that was of no benefit as consideration to PLAINTIFFS and ATC, but is due in
25
whole or part from said David Pritchard and his corporation to SLSI.
26
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Amended Verified Complaint for Reformation and Rescission of Contracts -6-
OMNI EXHIIBT1
THIRD CAUSE OF ACTION
FOR PARTIAL RESCISSION OF 2023 SETTLEMENT
AGAINST SLSI
22. PLAINTIFFS and ATC incorporate here and re-allege paragraphs 1-21 above.
23. On or about , 2023, PLAINTIFFS and SLSI entered into an agreement entitled Settlement
Agreement and Mutual Release, following on and premised by the trustee’s sale unlawfully
conducted by SLSI on January 17, 2023. (SETTLEMENT 2.) The essential terms of the latter
settlement called for another cash payment by PLAINTIFFS, restoration of title, and dismissal of
a pending unlawful detainer action, Monterey Superior Court case 23CV000760 , an action filed
after and premised upon the foreclosure sale and putative title acquired by SLSI by its credit bid
10
at said sale. A true copy of said agreement is attached hereto as EXHIBIT Settlement No. 2.
11
24. As more fully alleged in the related quiet title action, Monterey Superior Court case
12
23CV002765, the sale conducted by SLSI on January 17, 2023 was unlawful, and the novation
13
entered into in June 2022 between the parties alleged above as SETTLEMENT 1, constituted a
14
cure of the defaults then pending. As a consequence the title SETTLEMENT 2 presupposed
15
existed as a condition of settlement, did not in fact lawfully occur, and the trustee’s deeds
16
attached to said SETTLEMENT 2, and to which it refers, were void.
17
25. As a consequence, the supposed consideration running to PLAINTIFFS under said
18
agreement, of a return of title and possession (actual or threatened by case 23CV000760), did
19
not exist in reality on the part of SLSI to grant, convey or return to PLAINTIFFS because SLSI
20
never held any form of lawful title under either trustee’s deed attached to SETTLEMENT 2.
21
26. PLAINTIFFS therefor seek to rescind all of said SETTLEMENT 2, except those provisions
22
calling for dismissal of case 23CV000760 (as shown by the redacted and interlined version
23
attached hereto as EXHIBIT Settlement 2A, which constitutes an obligation SLSI owes to
24
PLAINTIFFS in any case, since said action is a form of wrongful eviction and attempted
25
26
27
Amended Verified Complaint for Reformation and Rescission of Contracts -7-
OMNI EXHIIBT1
trespass, based on false fact allegations of title, whereas SLSI has never had lawful title to
HARRISON, the trustee’s deeds attached to SETTLEMENT 2 not withstanding.
FOURTH CAUSE OF ACTION
VIOLATION OF THE USURY LAW
OMNIBUS ALLEGATION OF MONEY DAMAGES
27. PLAINTIFFS and ATC incorporate here and re-allege paragraphs 1-26 above.
28. PLAINTIFFS are informed and believe and thereon allege that the firm and individual who
arranged or brokered the loans secured by DOT1 and DOT2 was not licensed by the California
Department of Real Estate to broker loans as required by the Real Estate Law of California, and
held a conflict of interest by representing both sides of the transaction. The stated interest rate of
10
said loans if 12% per annum exceeds the lawful rate that can be charged in California and was
11
not within any exemption from the Usury Law. Plaintiffs therefore are entitled to an offset or
12
credit against all balances alleged to be due under SETTLEMENT 1 derived from said notes for
13
all interest, commissions, fees or other finance charges stated therein, and reserve as a remedy
14
herein, the right to rescind the loan transactions, based on a breach of fiduciary duty by the loan
15
arranger owed to both borrower and lender.
16
29. As a result of the mutual and unilateral mistakes and false premises and promises alleged
17
above, that caused PLAINTIFFS and ATC to enter into the agreements alleged above, and
18
caused their change of position and attempts to comply with the terms thereof, as a direct, legal
19
and proximate result of the wrongs alleged above, PLAINTIFFS and ATC sustained general and
20
special damages as compensation or restitution in an amount not yet ascertained, but in total an
21
amount equal to or greater than $260,000,00. To the extent a portion of the amount credit bid at
22
said trustee’s sale January 17, 2023 included usury, PLAINTIFFS are entitled to credit for treble
23
the amount.
24
FIFTH CAUSE OF ACTION
25
FOR PARTIAL RESCISSION AND DISGORGEMENT OF FUNDS.
26 ALL DEFENDANTS
27
Amended Verified Complaint for Reformation and Rescission of Contracts -8-
OMNI EXHIIBT1
30. PLAINTIFFS and ATC incorporate here and re-allege paragraphs 1-29 above.
31. At all relevant times hereinabove alleged, plaintiffs allege on information and belief that
defendants and each of them knew or should have known that plaintiff Dory Ford, but for that
portion of the funds derived from retirement funds of PLAINTIFFS, derived all or substantially
all funds described herein and in the Exhibits attached, from grants obtained from the Small
Business Administration via the Internal Revenue Service, under ARPA as Covid relief funds,
and that said funds in accounts or which had been invested in real property or other assets, which
Dory Ford was obliged to resell or otherwise transfer in order to raise funds, were sourced from
and traceable to said Covid relief funds, received as grants by Dory Ford and ACT from the
Small Business Administration under ARPA, and under the terms thereof, were subject to refund
10
and reimbursement.
11
32. At all relevant times hereinabove alleged, plaintiffs allege on information and belief that
12
defendants and each of them knew or should have known that all late payments by plaintiff Dory
13
Ford, were a direct or indirect consequence of the delays created by title disputes arising from
14
the disposition of assets acquired with or traceable to Covid relief funds, and delay in disposition
15
of assets, incurred in liquidating said assets in order to pay the sums described in the Exhibits
16
attached hereto.
17
33. At all relevant times hereinabove alleged, plaintiffs allege on
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WILLIAM B. LOOK, JR. Attorney at Law PO BOX 1381 Monterey, CA 93942 831-372-1371/ email: look_mtr@yahoo.com #66631 Attorney for Plaintiff SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF MONTEREY Dory Ford, Christine Ford Aqua Terra CASE NO.: 23CV002765 Culinary, Inc., OMNIBUS RESPONSE TO 10 DEMURRER, MOTION TO Plaintiffs, EXPUNGE AND 128.7 MOTION 11 FOR SANCTIONS AND IN V. SUPPORT OF COUNTER MOTION 12 FOR SANCTIONS: DEFENSE BAD SLS International Holdings , Inc., David FAITH 13 Prichard, The Colorado Project LLC, a Colorado Corporation, et al., Does 1-100 14 DATE: 7 JUNE 2024 TIME: 08:30 AM 15 Defendants. DEPT: 14 16 17 OMNIBUS RESPONSE TO DEMURRER, TO MOTION TO EXPUNGE 18 AND TO 128.7 MOTION FOR SANCTIONS AND IN SUPPORT OF COUNTER MOTION FOR SANCTIONS 19 All of the pending motions set June 7, 2024 in this action for Quiet Title lack merit 20 and are advanced in bad faith without a good faith purpose nor are any founded on good 21 legal cause and lack a competent evidentiary base. All are vulnerable in one way or 22 another, but Mr. Eikenberry’s motives are clearly in bad faith, given he and his clients 23 knew or should have known the source of funds for the Settlements put in issue in related 24 case 23CV002785 were Covid-19 grants to Aqua Terra Culinary Inc., and Mr. Ford as 25 26 27 Omnibus Response to Demurrer, Motion Expunge and 128.7 Motion and in Support of Counter Sanctions proprietor, and that property acquired with those funds was being liquidated to raise the funds for the settlements. See attached Amended Complaint, 23CV002785, §¥ 5, 31-33. It was only after present counsel disclosed that Mr. Ford had been indicted January 25, 2024, and substantial elements of the settlement payments were vulnerable to disgorgement to the United States, did Mr. Eikenberry’s hostility and accusatory opposition marialize. See Eikenbarry 128.7 Declaration, §{] 38,39. Indeed, that’s no surprise since he may have exposure to his clients and certainly will be a percipient witness in the case. Id., { 13. That ‘clouded mind-frame’ shows in the wild, unsupported claims being made in Mr. Eikenberry’s pleadings in this case. To bring some rationality to bear the ‘scatter’ of “Quick! Throw the rug over it.” motions filed by Eikenberry on behalfof SLS International Holdings, Inc. (SLS), herein and in the pleadings filed herewith, 10 plaintiffs and present counsel in self-defense point to seven meritorious defenses to the 11 Demurrer, Motions to Expunge, and frivolous 128.7 Motion, that also support plaintiffs 12 counter motions for sanctions, and illustrate why the Shakespearean adage applies (from 13 Hamlet), that “The lady doth protest too much, methinks.” 14 I. A LEGAL BASIS FOR QUIET TITLE FOR BREACH OF A CONTRACT DUTY 15 TO RECONVEY TITLE IS ADMITTED BY DEFENDANT’S OWN PLEADINGS 16 This lawsuit did not arise out of ‘whole cloth’ as Mr. Eikenberry suggests. It has its 17 roots in specific performance of the term of the 2022 Settlement obliging SLS to reconvey 18 title to plaintiff Fords. All payments under the latter settlement were completed by July 19 2023 and the duty to reconvey arose at that time. Since the title was post a foreclosure sale 20 by the beneficiary, and the underlying debt was satisfied by ‘untainted’ payments at least 21 sufficient to cure the defaults and pay off the principal (and interest) and met the terms that 22 obliged the beneficiary to reconvey. Plaintiffs also contend that Civ. Code §§ 2924b(a)(2) 23 & 2941(a) apply and create a statutory duty in addition to and independent of the contract 24 duty to rescind. 25 26 27 Omnibus Response to Demurrer, Motion Expunge and 128.7 Motion and in Support of Counter Sanctions The basic facts are disclosed by and admitted in SLS’s moving papers, including Mr. Eikenberry’s Decl., Exhibit G, which contains the following judicial admission of contract terms and states: “2. Consideration Provided bv SLS to Ford: Upon timely and full performance by Ford of their obligations set forth in Paragraph | above, SLS shall; (a) execute before a notary and, deliver to Ford a Grant Deed to the Property conveying the Property to Ford (the manner in which title is to be conveyed to Ford [i,e, joint tenancy, tenants in common, etc.] shall be specified by Ford to SLS in writing upon the execution of this AGREEMENT by Ford); and in the event that Ford desires to have SLS convey the Property to them through a formal escrow with a policy of owner's title insurance issued to Ford, Ford shall be responsible for the payment of all costs and fees related to the escrow and the 10 issuance of a policy of owner's title insurance;” 11 When this case was first presented to present counsel, the reconveyance was a 12 matter of concern, in part because plaintiffs have a first mortgage and were making the 13 payments thereunder as well as the settlement payments, as well as the annual property tax 14 payments, even though SLS held the ‘paper’ title since January 2023. The term for 15 reconveyance by grant deed posed issues relating to potential re-appraisal and assessment 16 of property taxes. Thus present counsel negotiated toward a reconveyance by rescission of 17 the trustee’s deeds, to restore the “status quo ante’ as the statutes require. The upshot of 18 this was as related by Mr. Eikenberry in his declaration, main body, §{ 36-37, in the 19 following judicial admissions made under oath: 20 “36. On 9-6-2023 new counsel for Plaintiffs sent to counsel for SLS an email and an attached letter signed by Dory Ford and Christine Ford instructing SLS that 21 title to the Property be restored to them through a Rescission Of Trustee's Deed 22 Upon Sale [instead of through a Grant Deed]. A true and correct copy of said 23 email and letter are attached hereto as Exhibit "H". 37. Ihave informed new counsel for Plaintiffs that SLS understands that the 24 foreclosure trustee [Best Alliance Foreclosure And Lien Services Corp.] is willing 25 to issue a Rescission Of Trustee's Deed Upon Sale [upon certain conditions] and 26 that SLS is agreeable to a Rescission Of Trustee's Deed Upon Sale instead of a 27 Omnibus Response to Demurrer, Motion Expunge and 128.7 Motion and in Support of Counter Sanctions Grant Deed, provided that Plaintiffs dismiss SLS from this action and from Case 23CV002785.” In other words, defendant attempted to use the reconveyance term as a ‘quid pro quo’ for dismissing the lawsuits or otherwise as ‘settlement leverage’ and thus admits it did not fulfill its duty under the contract to reconvey, despite its contentions it is entitled to specific performance, etc., alleged in the cross-complaint. Plaintiffs thus were right to file. Further, although Mr. Eikenberry claims over 40 years experience in litigation, he apparently has forgotten some basics of pleading, e.g., §{] 3-35, of Mr. Eikenberry’s Declaration consists of ‘interpretation’ of attached hearsay documents, disclosing his own work product, but his opinions, conclusions and contentions about hearsay documents are not evidence, nor doe they ‘define’ the construction, meaning, or effect of the terms of the 10 legal instruments in issue. The contracts and other instruments and documents attached, 11 independent of Mr. Eikenberry’s self-serving commentary, have to ‘stand on their own 12 four corners’ and ‘speak for themselves’ in this lawsuit. And that applies to the ambiguities 13 written into the contracts he negotiated (infra), that inter alia create issues of compliance 14 with the private foreclosure statutes in the manner of taking title. 15 Il. A LEGAL BASIS FOR QUIET TITLE IS STATED BASED ON CURING THE 16 DEFAULT BY SETTLEMENT UNDER CIVIL CODE §§ 2924c RENDERING THE TRUSTEE’S SALE IN JANUARY 2023 VOID 17 Mr. Eikenberry also seems to have forgotten some basics of foreclosure law and 18 procedure, one of them being that if the trustor and beneficiary enter into a new agreement 19 to resolve a default, on new payment terms, the agreement is a novation that cures a default 20 within the meaning of Civ. Code. § 2924c. That is precisely what Settlement | in June 21 2022 was, prima facie, including as it did terms not within the original promissory notes 22 secured by the 2015 and 2016 trust deeds, then pending foreclosure. As pointed out 23 elsewhere in plaintiffs’ responsive pleadings, there are ambiguities in the 2022 settlement 24 as to the enforcement terms. But suffice here that, even assuming defendant could proceed 25 with the ‘old’ foreclosure against the ‘new’ debt, the Notices of Default and of Sale that 26 were first recorded in 2021 were based on the 2015 and 2016 notes, and not based on 27 Omnibus Response to Demurrer, Motion Expunge and 128.7 Motion and in Support of Counter Sanctions default of the later June 2022 agreement between beneficiary and trustors. As a result the prior recorded Notices were contrary to law and incorrect in amount, and the January 2023 sale was irregular. See e.g., Civ. Code § 2924c(a)(1), (a)(2),(b)(1); see Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1235. Thus, even assuming the terms for ‘resuming’ foreclosure could be enforced, at a minimum foreclosure had to proceed only after recording new and different Notices of Default (i.e., declaring a default of the new debt obligation and in what amount). Since strict compliance is the ‘order of the day’ in private foreclosure proceedings (Coppola v. Superior Court (Singer) (1989) 211 Cal.App.3d 848, 868; Bisno v. Sax (1959) 175 Cal. App. 2d 714, 720 ), the fact that neither a Notice of Default nor Notice of Sale stating the correct deficiency under the correct debt instrument were ever recorded, is a valid legal 10 ground for setting aside a trustee’s sale. 11 That is, because the trustee proceeded to sale based on the ‘obsolete’ Notices of 12 Default and without re-recording a Notice of Sale, the notices of record failed to identify 13 the true debt and correct amount of deficiency balances on the date of sale. E.g., see the 14 variance between the recitals of the Trustee’s Deed (SLS Request Judicial Notice, Ex. A), 15 stating “The Amount of The Unpaid Debt was $256,754.73 The Amount Paid By The 16 Grantee Was $256,754.73” and the uncertain figures referred to in Eikenberry 128.7 Decl., 17 Ex. A, 93, p . 5, which provides: 18 “b. SLS may, but is not required to, declare a default uuder any of the following 19 conditions: [4] i. Failure to timely make, without cure, the First Payment; and ii. 20 Failure to timely make, without cure, the Second Payment. [4] In the event of a 21 default, SLS shall be entitled to the following remedies: [{] i. In the event that the 22 First Payment is not timely made, or is not timely cured, then a) SLS may record 23 and enforce the Prichard Collateral under applicable state law, and b) SLS shall be 24 entitled to complete the pending foreclosure against the Ford's Monterey Property 25 to collect in full monies owed under the Second Deed of Trust and Third 26 27 Omnibus Response to Demurrer, Motion Expunge and 128.7 Motion and in Support of Counter Sanctions Deed of Trust under applicable state law; and [{] ii. In the event that the First Payment is made, but the Second Payment is not timely made in full, and after application of any monies paid to SLS towards the Second Payment as a credit, then SLS shall be entitled to complete the pending foreclosure against the Ford's Monterey Property to collect in full monies owed under the Second Deed of Trust and Third Deed of Trust under applicable state law.” (Emphasis added relevant to ambiguity.) Presumably these ‘numbers’ due under the First and Second Deeds of Trust should have been determined by Settlement | if it is assumed to be binding, as SLS contends, since said { 3 is entitled, “Default/Remedies,” and refers to default of the Settlement not the original notes under the trust deeds, in an uncertain amount identified as “monies owed.” Thus, one 10 calculation would have been that the amount secured after July 2022 , was under the terms of 4 11 3(c) , $700,000.00 less $250,000 ‘downpayment’ or $550,000.00. But as shown by 12 PLAINTIFFS Request for Judicial Notice exhibits 1a and 2a, the Notices of Sale recorded in 13 March 2022 were not updated after the June 2023 Settlement, and reference superseded debt. 14 Thus the trustee’s sale did not comply with, inter alia, the terms of the contract itself 15 which required that a follow on foreclosure be completed “under applicable state law.” Given 16 neither of the Notices of Default nor Notices of Sale (pending in April-May 2022) reference 17 any figures derived from Settlement 1, not least because they antedated the June 25, 2022 18 settlement, the sale was irregular in January 2023. See Eikenberry 128.7 Declaration, {8 & Ex. 19 A, p. 2, 2d Recital, §] a,b (NODs recorded 7/13 & 7/14/2021); and see Lona v. Citibank, N.A. 20 (2011) 202 Cal.App.4th 89, 103-104 (error in stating default in Notice of Default one ground 21 to set aside trustee’s sale). Thus this is not the ‘cut and dried’ case Eikenberry wants it to be. 22 The reality is the 2022 Settlement was a novation, and new foreclosure notices were required. 23 III. THE SAME LAW FIRM AND ATTORNEY REPRESENTED BORROWER AND 24 LENDER IN THE ORIGINATION OF VOID OR VOIDABLE SECURED DEBTS 25 26 27 Omnibus Response to Demurrer, Motion Expunge and 128.7 Motion and in Support of Counter Sanctions As shown by PLAINTIFFS’ Omni Exhibits 1b and 2b, the same law firm, Hudson Martin Ferrante Street Witten & Demaria PC, and partner Witten, represented both parties to the underlying lending transactions, an undisclosed conflict of interest that had the foreseeable effect of ‘ripening’ of a dispute over repayment of the loans. PLAINTIFFS contend in this action as well as related case 22CV002785, that the resulting terms include usury as well as render the debts void or voidable, and at best can only entitle SLS to the return of its capital. Further, there is an issue that Sutter Law PC may have negotiated a ‘confidential’ settlement with Hudson Martin and Ms. Witten, without disclosure to PLAINTIFFS, in derogation of the mutual duties between the parties, as well as in derogation of the implied waiver of confidentiality between the parties as to the loans brokered by a mutual agent. IV. SLS WENT TO SALE ON THE JUNIOR LIEN AND THE X-C TO ENFORCE 10 SETTLEMENT 2 IS CONTRARY TO THE ONE ACTION RULE AND CCP 586b 11 As shown by Request for Judicial Notice Exhibits la & 1b and 2a & 2b, Defendant and 12 Cross-plaintiff SLS elected to go to sale in January 2023 based on the Notice of Sale recorded 13 under the junior 2016 trust deed and debt originally for $150,000.00. SLS later rescinded the 14 Notice of Default for the first lien for the 2015 trust deed and debt originally for $250,000.00. 15 See Omni RJN Exhibits 1a, 2a, & 3. Thus SLS was not a ‘sold out junior lienholder.’ 16 Aside from issues of merger of the liens as a result of taking title, the effect of the one 17 action rule prevents SLS from obtaining a de facto deficiency in the guise of 2023 Settlement 2 18 by cross-complaint. See C.C.P. § 726(a); Birman v. Loeb (1998) 64 Cal.App.4th 502, 509-510; 19 see also Roseleaf Corp. v. Chierighino (1963) 59 Cal.2d 35, 43-44 (only “nonselling junior 20 lienor can escape scope of C.C.P. § 580d). Section 580d was amended effective January 2023. 21 Thus inter alia PLAINTIFFS contend that Settlement 2 is an unenforceable version of an 22 unconscionable contract that extracted penalty or premium consideration contrary to the policy 23 of both the One Action Rule and § 580d, and at the least it is grounds for rescission or 24 reformation of the settlement. E.g., electing to foreclose the junior lien eliminated 25 consideration based on the senior lien, leaving only the original principal balances ever due. 26 27 Omnibus Response to Demurrer, Motion Expunge and 128.7 Motion and in Support of Counter Sanctions V. SLS WAS PROPERLY SERVED WITH THE NOTICE OF PENDING ACTION AND SLS LACKS STANDING TO OBJECT TO NOTICE OR LACK OF NOTICE TO OTHER PARTIES A Notice of Pending Action can be recorded by any party holding a real property claim adverse to another. C.C. P. §§ 405.2, 405.20. Section 405.22, provides for mail service of the Notice of Pending Action. But failure or defect of mail service is not a ground for expungement under C.C.P. §§ 405.30-405.32. The mail service requirement is intended to give actual notice to the party holding an adverse interest in real property. Here that was SLS that credit bid and obtained ‘trustee’s title’ adverse to plaintiffs in 2023, creating actual notice. But SLS was clearly mail served in accord with the statute. See C.C.P. § 405.22. A defect or failure of service is not ‘jurisdictional’ but rather can be corrected by later service (or 10 more typically by service of a complaint on a named party, providing actual notice). See § 11 405.22. A Notice of Pending Action is a matter of constructive notice (see § 405.24) but notice 12 can just as well, and arguably be better done, by giving actual notice. The proofs of service of 13 record show personal service on SLS (via Sutter Law it’s agent for service), and on Prichard 14 and his corporation in Colorado. Thus the mail service issue is immaterial if not frivolous. 15 But further, the mail service on an agent or principal is service on the other. That is, 16 notice to a principal is notice to an agent, and ‘vice versa.” Civ. Code § 2332; see E-Fab, Inc. 17 v. Accountants, Inc. Services (2007) 153 Cal.App.4th 1308, 1319 (rule applies to actual or 18 constructive notice); see also Watson v. Sutro (1890) 86 Cal. 500, 523 (notice between agent 19 and principal is constructive). There is no legitimate issue of lack of notice based on an 20 alleged defect of mail service of the Notice of Pending Action, even assuming SLS has 21 standing to challenge lack of mail service on others. 22 VI. SLS ADMITS IT HOLDS THE CURRENT TITLE AND RECEIVED NOTICE OF 23 THE PENDING ACTION BY MAIL SERVICE AS WELL AS BY PERSONAL 24 SERVICE 25 As Mr. Eikenberry’s 129.7 declaration admits at {38,39 the 2023 Settlement required 26 defendants to reconvey the title to HARRISON to plaintiffs, but although willing to reconvey 27 Omnibus Response to Demurrer, Motion Expunge and 128.7 Motion and in Support of Counter Sanctions via rescission by the trustee (required anyway under Civ. Code § 2924b(a)(2), ' or if plaintiffs prevail in proving the sale void), refused to do so and continues to refuse to do so. See also Look 128.7 Counter Motion Declaration, and Exhibits. As pointed out above, and generally in the responsive pleadings, that is a breach of the terms of the agreement sufficient to support a good faith quiet title action, as well as breach of contract and rescission or reformation as alleged in 22CV002785, to inter alia, fix and determine the ambiguities described above regarding enforcement of the Settlement agreements, and what money SLS can keep. But further, SLS’s request for judicial notice in support of its Motion to Expunge, also shows SLS currently holds title and that it was duly served with the Notice of Pending Action via its agent for service of process, Sutter Law PC. Sutter Law PC was also served with the summons and complaint in 22CV002785. (See Proof of Service, Notice of Pending Action and 10 Proofs of Service of Summons and Complaint of record.) Thus there is no viable issue that the 11 Notice of Pending Action was invalid as to SLS, and the contention is a another meritless, if 12 not frivolous, element of SLS’s pleading ‘package.’ 13 VII. THE AMENDED COMPLAINT IN 23CV002785 IS BASED ON DISGORGEMENT 14 OF FUNDS SLS RECEIVED UNLAWFULLY BY SLS 15 As alleged in the attached First Amended Complaint in 23CV0022785, but for about 16 $300,000.00 of retirement funds (technically borrowed from retirement trustees), all of the 17 money received by SLS was sourced from grants received by Dory Ford (and ATC), that were 18 improperly reinvested in a real estate scheme in Belize ‘masterminded’ by defendant Prichard. 19 Delays in selling off the assets in Belize caused the default of payment in 2022, but that does 20 not affect the fact that Covid-19 grant money to restaurants was subject to restrictions. Suffice 21 it that unwittingly or not, Mr. Ford used grant money for an unauthorized purpose. On the 22 23 1 “(2) If the trustor, mortgagor, or other person authorized to cure the default pursuant to 24 this subdivision does cure the default, the beneficiary or mortgagee or the agent for the beneficiary or 25 mortgagee shall, within 21 days following the reinstatement, execute and deliver to the trustee a notice of rescission that rescinds the declaration of default and demand for sale and advises the trustee of 26 the date of reinstatement. The trustee shall cause the notice of rescission to be recorded within 30 days of receipt of the notice of rescission and of all allowable fees and costs.” 27 Omnibus Response to Demurrer, Motion Expunge and 128.7 Motion and in Support of Counter Sanctions other hand, the payment of pre-existing mortgage debt is an authorized purpose. Thus the retirement sourced money plus an amount sufficient to satisfy the liens, was a lawful use of the Covid-19 grant money. But everything else paid under Settlement 1 or 2, was not an allowable expense or use of the grant money and therefore is subject to disgorgement by SLS. Mr. Ford also has a duty to recover the funds because he now knows it was an unauthorized use, as well as he is likely to have a restitution order and duty to cooperate with the United States to recover that portion of the funds paid to SLS that SLS cannot keep. VIII. SLS’S OWN MOTION PAPERS DEFEAT THE 128.7 MOTION BECAUSE THEY ADMIT THE FORGOING AND THEREBY ADMIT THIS ACTION IS NOT FRIVOLOUS C.C.P. § 128.7 sets a high bar for imposition of sanctions. The burden is on the moving 10 party to show the pleading— here the complaint- is frivolous, that is, lacking in any legal or 11 fact merit. But as shown above defendant’s own papers filed in support, and in particular Mr. 12 Eikenberry’s own declaration, which admits there is a dispute over reconveyance of title, 13 shows there are genuine disputed legal and fact contentions between the parties. There is no 14 ‘smoking gun’ issue that disposes of the case disclosed by Mr. Eikenberry’s showing supposed 15 to show 23CV002765 or 23CV0027835 are frivolous. The reality is that despite over payment 16 after foreclosure SLS is refusing to reconvey, and received funds in excess of the true debt 17 amount, an excess subject to refund to the United States. These are legitimate, ‘real world’ 18 disputes. For that reason, plaintiffs have filed their own counter-motion for sanctions against 19 Mr. Eikenberry, who knew or should have known his motions lacked merit under § 128.7(h). 20 CONCLUSION 21 For each of the foregoing reasons defendant SLS’s pending 128.7 motion, demurrer, 22 and motion to expunge should be denied. 23 DATED: March 26, 2024 UNkbam B Lock, Oh Attorney for Plaintiff 7 24 25 26 27 Omnibus Response to Demurrer, Motion Expunge and 128.7 Motion and in Support of Counter Sanctions PROOF OF SERVICE BY ELECTRONIC DELIVERY I declare that Iam employed in the County of Monterey, California. I am over the age of eighteen years and not a party to the action herein. My business address is P. O. Box 1381, Monterey, California 93942. On March 26, 2024, I caused the above pleading entitled OMNIBUS RESPONSE TO DEMURRER, MOTION TO EXPUNGE AND 128.7 MOTION FOR SANCTIONS AND IN SUPPORT OF COUNTER MOTION FOR SANCTIONS by automated electronic email service via a certified digital filing service provider, to wit, Green Legal File, to the electronic email address of:\ Kevin S. Eikenberry, Esq. EIKENBERRY LAW FIRM 1470 Maria Lane, Suite 440 Walnut Creek, CA 94596 kevin@eikenberrylawfirm.com 10 11 I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed on March 26, 2024 at Monterey, California. 12 13 UWhbiam 2 Lock, 14 W B Look, Jr. 15 16 17 18 19 20 21 22 23 24 25 26 27 Omnibus Response to Demurrer, Motion Expunge and 128.7 Motion and in Support of Counter Sanctions OMNI EXHIIBT1 WILLIAM B. LOOK, JR. ELECTRONICALLY FILED BY Attorney at Law Superior Court of California, PO BOX 1381 County of Monterey Monterey, CA 93942 On 3/18/2024 1:19 PM 831-372-1371/ By: Hicet Ramirez-P erez, Deputy email: look_mtr@yahoo.com #66631 Attorney for Plaintiff SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF MONTEREY Dory Ford, Christine Ford, Aqua Terra CASE NO.: 23CV002785 Culinary, Inc., FIRST AMENDED: 10 Plaintiffs, VERIFIED COMPLAINT FOR REFORMATION AND RESCISSION 11 V. OF CONTRACTS AND FOR IMPOSITION OF CONSTRUCTIVE 12 SLS International Holdings , Inc., David TRUST IN FAVOR OF UNITED Prichard, The Colorado Project Inc.,Does STATES 13 1-25, CC §§ 1689, 1692; § 3399; and the 14 Defendants. Usury Law; 15 USC 9009¢; CC § 2224 15 16 17 JURISDICTIONAL STATEMENT AND IDENTITY OF PARTIES 18 1. Plaintiffs Dory Ford and Christine Ford (PLAINTIFFS) are residents of Monterey County, 19 California. PLAINTIFFS are the legal and beneficial title holders of a parcel of real property 20 commonly known as 981 Harrison St., City of Monterey, Monterey County, California, 21 Monterey County Assessor’s Parcel Number (APN) 001-346-003-000 (HARRISON).. 22 2. Aqua Terra Culinary, Inc. (ATC), is a corporation owned and operated by PLAINTIFFS. 23 3. Defendant SLS International Holdings, Inc. (SLSI) is a business entity exact form unknown, 24 but doing business in Monterey County, California, and alleging a lien interest in said property 25 pursuant to two deeds of trust of record encumbering said parcel, the first recorded May 27, 26 27 Amended Verified Complaint for Reformation and Rescission of Contracts -l- OMNI EXHIIBT1 2015, as Document 2015027469 Official Records Monterey County (ORMC), securing a balance of $250,000.00 ( DOT 1), and a second deed of trust recorded June 08, 2016, as Document 2016031230 ORMC, securing a balance of $150,000.00. 4. David Prichard is an individual doing business in California, and the proprietor and an officer or director of the business entity known as The Colorado Project, Inc. (herein collectively ‘David Pritchard and his corporation’). David Prichard and his corporation were parties to the settlement agreements put in issue by this complaint. 5. But for that portion of the consideration paid for settlement of disputed secured debts, as hereinafter alleged, that was derived from plaintiff Dory Ford’s and Christine Ford’s retirement accounts, all or substantially all such funds were derived from grants obtained pursuant to the 10 American Rescue Plan Act of 2021 (ARPA), 15 USC 9009c, by Dory Ford and plaintiff ATC, as 11 so-called Covid Relief Funds. On or about January 25, 2024, Dory Ford was indicted in federal 12 case 5:24-cr-00050 (under seal) , based on use of said funds contrary to the authorized use of 13 funds pursuant to subpart c(5) of said ARPA. Plaintiffs are informed and herein allege that only 14 that portion of the funds described hereinafter derived from ARPA funds, to satisfy the mortgage 15 debt secured by plaintiffs Dory Ford and Christine Ford’s residence, as more fully described in 16 related case 23CV000965, in the total sum of $405,000.00 of principal amount, was lawfully 17 expended, under ARPA subpart c(5)(b). Plaintiffs are further informed and believe and thereon 18 allege that all other monies described herein and referenced in the attached Exhibits, are funds 19 that were improperly tendered to and received by defendants herein, and are subject to 20 disgorgement and refund thereof to the United States Small Business Administration and 21 Internal Revenue Service, pursuant to ARPA subpart (c)(6), and thereby impressed with a 22 construtive and implied at law trust in favor of the United States. 23 6. The true names and capacities of the parties sued herein as DOES 1-25 are unknown to 24 plaintiff. Plaintiff will amend the pleading to state the true names and capacities of said DOE 25 defendants when the same are ascertained. 26 27 Amended Verified Complaint for Reformation and Rescission of Contracts -2- OMNI EXHIIBT1 7. In doing the things hereinafter alleged, the forgoing defendants were, each and severally, acting as the agent and employee of the other, and in doing the things herein alleged, were acting within the course and scope of such agency and employment. FIRST CAUSE OF ACTION FOR REFORMATION OF 2022 CONTRACT AGAINST ALL DEFENDANTS 8. PLAINTIFFS incorporate herein by reference and re-alleges the allegations of paragraphs 1-6 above. 9. In 2021 and 2022, SLSI recorded notices of default and notices of sale based on DOT1 and 10 DOT2, with a sale originally noticed for May 29, 2022. An written settlement agreement was 11 entered into between On or about May 27, 2015, between Plaintiffs, ATC, SLSI, and additional 12 parties David Prichard and , an entity owned or controlled by said David Prichard, in June 2022, 13 that constituted a novation on new payment terms and additional consideration running to SLSI. 14 10. The scope of the novation, entitled Settlement Agreement (herein SETTLEMENT 1), 15 included the debts secured by DOT1 and DOT2, but also other business debts and debts peculiar 16 to David Prichard, outside the scope of DOT1 and DOT 2, but included in the installment 17 payment terms as well as other contingent terms therein, that provided that the foreclosures 18 pending in 2022 could proceed upon default of payment of the new debt obligation created by 19 SETTLEMENT 1| in June 2022, a date later in time than the Notices of Default and Notices of 20 Sale of record, and thereby constituting a novation and cure of the declared defaults as alleged in 21 greater detail in pending related case Monterey Superior Court Case 23CV002765. A copy of 22 said SETTLEMENT 1 is attached hereto and incorporated as Exhibit Settlement No. lof this 23 complaint. 24 11. A dispute arose over the timing of a second installment required under said SETTLEMENT 25 1 in 2022, and as a result SLSI unlawfully caused a trustee’s sale to proceed on January 17, 26 27 Amended Verified Complaint for Reformation and Rescission of Contracts 3- OMNI EXHIIBT1 2023, despite the novation of the secured debt, whereby HARRISON was sold to SLSI by credit bid. Said sale was unlawful because the novation reached by SETTLEMENT | effected a cure of the defaults and SLSI failed to re-record the required notices or otherwise comply with California Civil Code §§ 2924-2924k, in order to foreclose based on a default of the new terms created by said SETTLEMENT 1, as also alleged in greater detail in related case 23CV002765. 12. A dispute further exists because of the unfair and unconscionable terms of SETTLEMENT 1 whereby liens and encumbrances of David Prichard and his corporation were cured by an initial payment of $250,000.00 made by PLAINTIFFS under said SETTLEMENT 1, that was not applied as an offset or partial cure of the defaults noticed in 2022 by SLSI, resulting in a forfeiture of said payment without benefit to PLAINTIFFS, who lost their home despite a 10 payment sufficient to cure the default of the deed of trust selected for the trustee’s sale on 11 January 17, 2023, where the home was purchased by the lender with a credit bid less than 12 $250,000.00 on date of sale, as also alleged in greater detail in related case 23CV002765 13 13, PLAINTIFFS and ATC seek reformation of SETTLEMENT | as to the amount of 14 consideration running from them to SLSI to cure the debts declared to be in default under DOT1 15 and DOT2 to conform to the actual net balance due on the date SETTLEMENT 1 was effective 16 in June 2022, with credit for the cash part payment they made against that balance, and to strike 17 the unlawful terms purporting to permit a private foreclosure without compliance with Civil 18 Code §§ 2924-2924k, based on a default of SETTLEMENT 1. 19 14. PLAINTIFFS and ATC further seek reformation by severance of the unfair and inequitable 20 terms of SETTLEMENT | that provide consideration running to David Prichard at their expense 21 and without any offsetting consideration to them from releasing his or his corporation’s liability 22 and liens based on cash consideration paid by PLAINTIFFS and ATC, and reforming 23 SETTLEMENT | to provide that said David Prichard and his corporation pay whatever 24 consideration the court deems just and due to SLSI under the reformed contract. 25 26 27 Amended Verified Complaint for Reformation and Rescission of Contracts -4- OMNI EXHIIBT1 15. Reformation is sought on the grounds of mutual mistake, and unilateral mistake of PLAINTIFFS and ATC, over the enforceability and lawfulness of the terms of SETTLEMENT 1 purporting to permit SLSI to continue a private foreclosure after entering a novation that de facto cured the defaults recorded in 2022, mistake as to the effect and allocation of the $250,000.00 installment paid in 2022, and mistake as to the effect and allocation of said payment, t hat would result in satisfaction of debts owed by David Prichard and his corporation, but leave PLAINTIFFS and ATC exposed to foreclosure of PLAINTIFFS home despite the relief from liability running to Prichard without offsetting duty or obligation on his part to contribute to or pay further installments required under SETTLEMENT 1. 16. Reformation is also sought on the grounds that the agreement is unlawful and contrary to 10 public policy by purporting to permit SLSI to proceed with a private foreclosure sale contrary to 11 the private foreclosure law of California in Civil Code §§ 2024-2924k, and seeks to eliminate 12 said terms and reform SETTLEMENT 1 as a bona fide novation and settlement of the debt 13 referenced in DOT 1 and DOT 2, with credit for the $250,000.00 cash payment made by 14 PLAINTIFFS, and eliminate any benefit therefrom to David Pritchard and his corporation. 15 17. PLAINTIFFS and ATS seek reformation in order to strike the void provisions and conform 16 SETTLEMENT | to the terms of the new agreement for repayment of the debts of PLAINTIFFS 17 represented by DOT 1 AND DOT 2 which was agreed but failed to be expressed at all or in 18 lawful terms by the document executed by the parties. PLAINTIFFS and ATC further seek to 19 reform those provisions of the release contained in said settlement as they pertain to the 20 provisions reformed hereby. 21 22 SECOND CAUSE OF ACTION 23 FOR PARTIAL RESCISSION OF 2022 SETTLEMENT 24 AGAINST ALL DEFENDANTS 25 26 27 Amended Verified Complaint for Reformation and Rescission of Contracts -5- OMNI EXHIIBT1 18. PLAINTIFFS and ATC incorporate here and re-allege paragraphs 1-17 above. 19. Pursuant to Civil Code § 1691, et seq., PLAINTIFFS and ATC hereby rescind in part SETTLEMENT 1, as to those provisions which they entered into by mistake or understanding that they would benefit David Pritchard or his corporation at their expense and without offsetting consideration, and as to those provisions which are contrary to law and policy, which purport to permit SLSI to conduct a private foreclosure without complying with California Civil Code §§ 2924-2924k. PLAINTIFFS and ATC further seek to rescind those provisions of the release contained in said settlement as the pertain to the provisions rescinded hereby. 20. The provisions of said SETTLEMENT | PLAINTIFFS and ATC rescind are as designated by redacting and interlineation shown in attached EXHIBIT Settlement No. 1A, with the 10 objective of purging said agreement of the references to David Pritchard, his debt or his 11 corporation, for which no consideration ran to them, even after paying the first installment 12 referenced therein, and occurred as a direct and proximate result of the negotiation of said 13 contract by David Pritchard and his counsel, without the informed consent or understanding of 14 its meaning and effect on the part of PLAINTIFFS, nor understanding of the unlawful terms 15 purporting to authorize completion of the then pending foreclosure of the liens against 16 HARRISON, which PLAINTIFFS did not realize was contrary to law nor that such terms placed 17 all or substantially all of the risk of loss on them, and not on David Pritchard, if there was a 18 default after the first installment and release of his liens, despite his ostensible co-liability under 19 SETTLEMENT 1. 20 21. PLAINTIFFS and ATC allege they never received any consideration for the part payment 21 they made as hereinabove alleged, and are entitled to an offset against the total of consideration 22 required under the terms of said settlement, but otherwise tender the balance due as determined 23 by the court, after due credit for the consideration running to defendant David Prichard and his 24 corporation, that was of no benefit as consideration to PLAINTIFFS and ATC, but is due in 25 whole or part from said David Pritchard and his corporation to SLSI. 26 27 Amended Verified Complaint for Reformation and Rescission of Contracts -6- OMNI EXHIIBT1 THIRD CAUSE OF ACTION FOR PARTIAL RESCISSION OF 2023 SETTLEMENT AGAINST SLSI 22. PLAINTIFFS and ATC incorporate here and re-allege paragraphs 1-21 above. 23. On or about , 2023, PLAINTIFFS and SLSI entered into an agreement entitled Settlement Agreement and Mutual Release, following on and premised by the trustee’s sale unlawfully conducted by SLSI on January 17, 2023. (SETTLEMENT 2.) The essential terms of the latter settlement called for another cash payment by PLAINTIFFS, restoration of title, and dismissal of a pending unlawful detainer action, Monterey Superior Court case 23CV000760 , an action filed after and premised upon the foreclosure sale and putative title acquired by SLSI by its credit bid 10 at said sale. A true copy of said agreement is attached hereto as EXHIBIT Settlement No. 2. 11 24. As more fully alleged in the related quiet title action, Monterey Superior Court case 12 23CV002765, the sale conducted by SLSI on January 17, 2023 was unlawful, and the novation 13 entered into in June 2022 between the parties alleged above as SETTLEMENT 1, constituted a 14 cure of the defaults then pending. As a consequence the title SETTLEMENT 2 presupposed 15 existed as a condition of settlement, did not in fact lawfully occur, and the trustee’s deeds 16 attached to said SETTLEMENT 2, and to which it refers, were void. 17 25. As a consequence, the supposed consideration running to PLAINTIFFS under said 18 agreement, of a return of title and possession (actual or threatened by case 23CV000760), did 19 not exist in reality on the part of SLSI to grant, convey or return to PLAINTIFFS because SLSI 20 never held any form of lawful title under either trustee’s deed attached to SETTLEMENT 2. 21 26. PLAINTIFFS therefor seek to rescind all of said SETTLEMENT 2, except those provisions 22 calling for dismissal of case 23CV000760 (as shown by the redacted and interlined version 23 attached hereto as EXHIBIT Settlement 2A, which constitutes an obligation SLSI owes to 24 PLAINTIFFS in any case, since said action is a form of wrongful eviction and attempted 25 26 27 Amended Verified Complaint for Reformation and Rescission of Contracts -7- OMNI EXHIIBT1 trespass, based on false fact allegations of title, whereas SLSI has never had lawful title to HARRISON, the trustee’s deeds attached to SETTLEMENT 2 not withstanding. FOURTH CAUSE OF ACTION VIOLATION OF THE USURY LAW OMNIBUS ALLEGATION OF MONEY DAMAGES 27. PLAINTIFFS and ATC incorporate here and re-allege paragraphs 1-26 above. 28. PLAINTIFFS are informed and believe and thereon allege that the firm and individual who arranged or brokered the loans secured by DOT1 and DOT2 was not licensed by the California Department of Real Estate to broker loans as required by the Real Estate Law of California, and held a conflict of interest by representing both sides of the transaction. The stated interest rate of 10 said loans if 12% per annum exceeds the lawful rate that can be charged in California and was 11 not within any exemption from the Usury Law. Plaintiffs therefore are entitled to an offset or 12 credit against all balances alleged to be due under SETTLEMENT 1 derived from said notes for 13 all interest, commissions, fees or other finance charges stated therein, and reserve as a remedy 14 herein, the right to rescind the loan transactions, based on a breach of fiduciary duty by the loan 15 arranger owed to both borrower and lender. 16 29. As a result of the mutual and unilateral mistakes and false premises and promises alleged 17 above, that caused PLAINTIFFS and ATC to enter into the agreements alleged above, and 18 caused their change of position and attempts to comply with the terms thereof, as a direct, legal 19 and proximate result of the wrongs alleged above, PLAINTIFFS and ATC sustained general and 20 special damages as compensation or restitution in an amount not yet ascertained, but in total an 21 amount equal to or greater than $260,000,00. To the extent a portion of the amount credit bid at 22 said trustee’s sale January 17, 2023 included usury, PLAINTIFFS are entitled to credit for treble 23 the amount. 24 FIFTH CAUSE OF ACTION 25 FOR PARTIAL RESCISSION AND DISGORGEMENT OF FUNDS. 26 ALL DEFENDANTS 27 Amended Verified Complaint for Reformation and Rescission of Contracts -8- OMNI EXHIIBT1 30. PLAINTIFFS and ATC incorporate here and re-allege paragraphs 1-29 above. 31. At all relevant times hereinabove alleged, plaintiffs allege on information and belief that defendants and each of them knew or should have known that plaintiff Dory Ford, but for that portion of the funds derived from retirement funds of PLAINTIFFS, derived all or substantially all funds described herein and in the Exhibits attached, from grants obtained from the Small Business Administration via the Internal Revenue Service, under ARPA as Covid relief funds, and that said funds in accounts or which had been invested in real property or other assets, which Dory Ford was obliged to resell or otherwise transfer in order to raise funds, were sourced from and traceable to said Covid relief funds, received as grants by Dory Ford and ACT from the Small Business Administration under ARPA, and under the terms thereof, were subject to refund 10 and reimbursement. 11 32. At all relevant times hereinabove alleged, plaintiffs allege on information and belief that 12 defendants and each of them knew or should have known that all late payments by plaintiff Dory 13 Ford, were a direct or indirect consequence of the delays created by title disputes arising from 14 the disposition of assets acquired with or traceable to Covid relief funds, and delay in disposition 15 of assets, incurred in liquidating said assets in order to pay the sums described in the Exhibits 16 attached hereto. 17 33. At all relevant times hereinabove alleged, plaintiffs allege on