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  • FED HOME LOAN MTG CORP. v. BECHOLD, JERRYcivil document preview
  • FED HOME LOAN MTG CORP. v. BECHOLD, JERRYcivil document preview
  • FED HOME LOAN MTG CORP. v. BECHOLD, JERRYcivil document preview
  • FED HOME LOAN MTG CORP. v. BECHOLD, JERRYcivil document preview
  • FED HOME LOAN MTG CORP. v. BECHOLD, JERRYcivil document preview
  • FED HOME LOAN MTG CORP. v. BECHOLD, JERRYcivil document preview
  • FED HOME LOAN MTG CORP. v. BECHOLD, JERRYcivil document preview
  • FED HOME LOAN MTG CORP. v. BECHOLD, JERRYcivil document preview
						
                                

Preview

ELECTRONICALLY FILED Superior Court of California, Charles I. Karlin, Esq., SBN 149839 County of Placer Patrick Reider, Esq., SBN 232820 FIRST AMERICAN LAW GROUP 06/04/2020 5 First American Way jy: Marina Olivarez Fuentes, Deputy Clert Santa Ana, California 92707 T: (714) 250-3500 F: (714) 689-4049 ckarlin@firstam.com Attorneys for Plainti ff, FEDERAL HOME L' OAN MORTGAGE CORPORATION SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF PLACER 10 FEDERAL HOME LOAN MORTGAGE Case No: SCV0038660 11 CORPORATION, 12 Plaintiff, FEDERAL HOME LOAN MORTGAGE CORPORATION’S REPLY BRIEF IN 13 VS. SUPPORT OF ITS MOTION FOR JUDGMENT ON THE PLEADINGS 14 JERRY R, BECHOLD AKA JERRY R. BECHHOLD, an individual; PAMELA J. Hearing Date 15 HILL, an individual; ALL OTHER PERSONS UNKNOWN, DATE: June 11, 2020 16 CLAIMING ANY RIGHT, TITLE, ESTATE, TIME: 8:30 a.m. LIEN, OR INTEREST IN THE REAL DEPT: 42 17 PROPERTY DESCRIBED IN THE COMPLAINT ADVERSE TO PLAINTIFF’S Trial Date: August 3, 2020 18 INTEREST OR ANY CLOUD ON PLAINTIFF’S RIGHT THERETO; and DOES 19 1 through 50, inclusive, 20 Defendants. 21 22 Plaintiff FEDERAL HOME LOAN MORTGAGE CORPORATION (‘Plaintiff’), hereby 23 submits the following reply brief in support of its motion for an order granting judgment on the entirety 24 of its Complaint (the “Motion’) filed on November 4, 2016 against JERRY R. BECHOLD AKA 25 JERRY R. BECHHOLD (‘Bechold” or “Defendant”). 26 > 27 28 REPLY BRIEF IN SUPPORT OF MOTION FOR JUDGMENT ON THE PLEADINGS MEMORANDUM OF POINTS AND AUTHORITIES In granting Plaintiffs prior Motion for Judgment on the Pleadings, this Court adjudicated that Plaintiff had pleaded sufficient facts to support each cause of action and further adjudicated that Defendant’s answer was devoid of factual allegations subjecting the answer to a successful challenge. [RJN Exhibit I] This Court should now grant Plaintiff's current Motion because Defendant’s AVA and Opposition fail to assert any substantive defense to the fact that in admitting paragraphs 9, 11, 13, 17 and 21 of Plaintiff's Verified Complaint, judgment on the pleadings in favor of Plaintiff is warranted. Knowing he has no defense on the merits of the case, Defendant instead focuses on a technical 10 and meritless argument that that he is entitled to breach the Subject Loan with impunity because 11 Plaintiff no longer has standing to continue its causes of action for reformation, quiet title and 12 declaratory relief. In addition, Defendant hopes, once again, to avoid judgment on the pleadings by, 13 once again, moving for leave of court to amend his verified amended answer — the very answer that he 14 filed after being granted leave to amend following this Court’s granting of Plaintiff's prior Motion for 15 Judgment on the Pleadings. 16 Defendant’s tactic of ignoring the merits of the case is not surprising as Defendant has 17 admitted under oath, by virtue of admitting paragraphs 11, 13 and 21 of the Verified Complaint, the 18 following: 1) Defendant’s loan application identified the underlying property his primary residence 19 and thus the Improved Property; 2) the lender reasonably relied on Defendant’s representations in 20 making the Subject Loan and Subject DOT; 3) the lender believed that the Subject DOT would 21 encumber the Improved Property and 4) the lender made the Subject loan on the condition that the 22 Subject DOT encumber the Improved Property. [Verified Complaint at paragraphs 11, 13 and 21 — 23 RJN Exhibit K; Amended Verified Answer p. 2/18 and 25 and p. 3/13 — RJN Exhibit J]. Thus, there 24 can be no doubt that both parties to the Subject Loan and Subject DOT intended for the Subject Loan 25 to be secured by the Improved Property via the Subject DOT. 26 27 28 REPLY BRIEF IN SUPPPORT OF MOTION FOR JUDGMENT ON THE PLEADINGS Indeed, even if this Court were to again grant leave to amend, doing so would be of no help to Defendant as his proposed amendment does not seek to change his admissions to paragraphs 9, 11, 13 and 21 — the key admissions establishing Plaintiff's right to judgment on the pleadings.! With no defense on the merits, Defendant argues that approximately 19 months after filing the subject Verified Complaint, Plaintiff somehow lost standing to continue to prosecute its causes of action for reformation, quiet title and declaratory relief by virtue of the recording a Notice of Rescission of a Trustee’s Deed upon Sale (“Rescission”)[Defendant’s RJN Exhibit 5] , recording a subsequent Notice of Default (“NOD”) [Defendant’s RJN Exhibit 6] and the alleged lack of an assignment of the Subject DOT. 10 Defendant, however, fails to mention that the recording of the Rescission on or about July 6, 11 2018, and the recording of the NOD, both took place during the time period shortly after Plaintiff had 12 obtained a judgment in its favor on its entire Complaint (the “Judgment’’) and well before the Judgment 13 was vacated on or about January 31, 2019. 14 Because the Complaint included a cause of action for rescission, the Judgment effectuated the 15 Rescission and the recorded document provided notice of the Rescission. Note also that by virtue of 16 the Judgment, the rescission took place in conjunction with the reformation of the Subject DOT to 17 describe the correct property — the Improved Property. That is why the NOD, to which Defendant 18 cites, refers to the Improved Property (APN 064-110-017) consistent with the Judgment. In his 19 opposition, Defendant mistakenly states that the NOD referenced the “Subject Property”, which he 20 defined as the Vacant Lot. [Opposition p. 1/6-14; p. 3/1-3]. Accordingly, the documents cited by 21 Defendant merely reflect Judgment entered in favor of Plaintiff at that time and cannot, therefore, act 22 to deprive Plaintiff of standing. 23 Moreover, there is no dispute that Plaintiff had standing when it initially brought this action 24 and in accordance with well-established California Law, if during the course ofa lawsuit, a plaintiff's 25 interest is transferred to another, the court may allow the transferee to be substituted as a party to the 26 action, or the action may be continued in the name of the original party. [California Code of Civil 27 ' In Defendant’s Motion for Leave to File Amendment to First Amended Answer, the only admission 28 he seeks to amend is his admission of paragraph 17. See (Proposed) Amendment to First Amended Answer, attached as Exhibit 1 to Defendant’s Supporting Declaration. REPLY BRIEF IN SUPPPORT OF MOTION FOR JUDGMENT ON THE PLEADINGS Procedure (“CCP”) §368.5; Casey v. Overhead Door Corp. (1999) 74 Cal.App.4th 112, 121 (disapproved on other grounds in Jimenez v. Sup.Ct. (T.M. Cobb Co.) (2002) 29 Cal.4th 473, 484)]. In any event, the issue is moot as the party to whom Plaintiff’s interest allegedly transferred by way of the rescission, has recorded its assignment of its interest in the Subject DOT to Plaintiff thereby erasing any doubt as to Plaintiff's standing. [Supp. RJN Exhibit L]. Simply put, this Court has already adjudicated the sufficiency of Plaintiffs Verified Complaint and insufficiency of Defendant’s original verified answer. Neither Defendant’s AVA nor any judicially noticed documents provide factual allegations sufficient to defeat Plaintiff's motion. IL. ARGUMENT 10 A Plaintiff Has Standing To Seek Reformation, Quiet Title and Declaratory Relief. 11 The Verified Complaint at issue states at paragraph 17 that, “Plaintiff acquired all beneficial 12 interest in the Subject Loan and became the assignee and beneficiary of the Subject DOT.” Defendant 13 admitted the truth of paragraph 17 in both his FAVA and his original verified answer and has not 14 pleaded lack of standing as an affirmative defense. Even if this Court were to grant Defendant’s 15 motion to amend, doing so would not change the fact that, as set forth below, Plaintiff has standing. 16 The law in California is clear that once a claim has been assigned, the assignee is the owner 17 and has the right to sue on it. Searles Valley Minerals Operations Inc. v. Ralph M. Parsons Service 18 Co. (App. 4 Dist. 2011) 191 Cal.App.4th 1394, 1402. Furthermore, as set forth in CCP §368.5, “[a]n 19 action or proceeding does not abate by the transfer of an interest in the action or proceeding or by any 20 other transfer of an interest.” 21 Accordingly, if during the course of a lawsuit, a plaintiffs interest is transferred therein to 22 another, the court may allow the transferee to be substituted as a party to the action, or the action may 23 be continued in the name of the original party. [CCP § 368.5; see Casey v. Overhead Door Corp. 24 (1999) 74 Cal.App.4th 112, 121 (disapproved on other grounds in Jimenez v. Sup.Ct. (T.M. Cobb Co.) 25 (2002) 29 Cal.4th 473, 484)]. Finally, the law abhors the forfeiture of the right to a determination of 26 a cause of action on the merits. (Nasir v. Sacramento County Off: of the Dist. Atty. (1992) 11 27 Cal.App.4th 976, 986, fin. 5.) 28 REPLY BRIEF IN SUPPPORT OF MOTION FOR JUDGMENT ON THE PLEADINGS In applying the above authorities to the facts here, Plaintiff easily establishes that it has not lost its standing to prosecute its remaining causes of action. First, it is undisputed that on or about August 30, 2007, Defendant obtained the Subject Loan from Bank of America and that the Subject Loan was secured by the Subject DOT. Second, it is further undisputed that Bank of America assigned its rights to the Subject DOT to Nationstar. Third, it is undisputed that Plaintiff acquired title through its TDUS and, therefore, standing to bring this action. Indeed, Defendant concedes as much stating, “[w]hile Plaintiff may have arguably had standing as a successor in interest at the time they took title, the Rescission states that the instrument by which they took title no longer had force and effect, thus Plaintiff no longer has title.” [Opposition: p. 4/1-3]. As made clear by CCP § 368.5 and Casey, supra, 10 Plaintiff is entitled to continue the action and Nationstar need not substitute into the action. 11 If this Court were inclined to find that Plaintiff lacks standing, Plaintiff would request leave to 12 amend as the California Supreme Court has held that if the facts of the cause of action against the 13 defendant would not be “wholly different” after amendment, a complaint filed by a party without 14 standing may be amended to substitute in the real party in interest. [K/opstock v. Superior Court (1941) 15 17 Cal.2d 13, 19-22]. Here, the facts establish that Plaintiff is the real party in interest. However, 16 were this Court to determine otherwise, as established in K/opstock, an amendment to substitute the 17 real party in interest as plaintiff would be entitled to "relation-back" effect so long as the cause of 18 action against the defendant is not factually changed. [/d.; Cloud v. Northrop Grumman Corp. (1998) 19 67 Cal. App. 4th 995, 1005-06. Here, of course, the facts would not change, and Defendant would 20 suffer no prejudice. 21 Note also that, as detailed above, Defendant fails to mention that the July 6, 2018 rescission 22 took place only after and as a result of this Court entering Judgment in favor of Plaintiff on its entire 23 Complaint, which included a cause of action to rescind the errant foreclosure. Therefore, the rescission 24 simply occurred as a result of the Court’s judgment for rescission of the TDUS in conjunction with 25 the balance of the judgment, which also included reformation of the Subject DOT to correct the legal 26 description from the Vacant Lot to the Improved Property, quieting title to the Improved Property 27 consistent with the reformed Subject DOT and a judicial declaration that Subject the DOT is a lien 28 against the Improved Property. Because the Judgment reformed the Subject DOT to correct the legal REPLY BRIEF IN SUPPPORT OFMOTION FOR JUDGMENT ON THE PLEADINGS description, the post-Judgment NOD properly identified the property subject to foreclosure as the Improved Property. It was not until months later that Defendant moved for, and this Court granted, Defendant’s Motion to Vacate. Regardless of the setting aside of the Judgment, the Notice of Rescission, by its express terms, confirms that the Subject DOT is restored to full force and effect, stating, “THE DEED OF TRUST DATED 8/30/07, RECORDED 9/7/2007 AS INSTRUMENT NUMBER 2007-0087785 IS IN FULL FORCE AND EFFECT.” [Defendant’s RJN at Exhibit 5.] As such, Plaintiff, as the beneficiary/lender under the Subject DOT via assignment from Nationstar has standing by virtue of the assignment from Nationstar, CCP § 368.5, Casey, supra, 74 Cal.App.4th 112, 121 and Nasir, supra, at 11 Cal.App.4th 10 976, 986, fn. 5. 11 Defendant’s reliance on Wilson v. Wilson (2011) 191 Cal.App.4th 1559 is misplaced. Wilson 12 dealt with mootness, not standing. As set forth in Wilson, “[t]he pivotal question in determining if a 13 case is moot is whether the court can grant effectual relief. [/d. at 1574 (citations omitted).] Here, the 14 court can grant effectual relief by reforming the Subject Deed of Trust and otherwise quieting title to 15 the Improved Property as prayed for in Plaintiff's Complaint and as this Court did previously in 16 initially granting Judgment in Plaintiffs favor. 17 Reformation 18 In addition to its lack of standing argument, Defendant argues that Plaintiff may not seek 19 reformation of the Subject DOT because it is neither a party to the Subject DOT, nor a third-party 20 beneficiary. This argument is also based on the rescission of the TDUS and fails for the same reasons 21 the lack of standing argument fails. First, this Court has already determined that Plaintiff has pleaded 22 sufficient facts to support its cause of action for Reformation. Second, as established above, Bank of 23 America, the original lender party to the Subject DOT, assigned its rights to Nationstar, which, in turn, 24 assigned its rights to Plaintiff. Therefore, Plaintiff is not seeking reformation as a third-party 25 beneficiary. Instead, via assignment, it is the lender party to the Subject DOT. Third, as set forth 26 above, even without the assignment, at the time Plaintiff filed its Complaint it was the successor-in- 27 interest to Nationstar by virtue of its TDUS and is entitled to continue the action under CCP § 368.5 28 and Casey. REPLY BRIEF IN SUPPPORT OF MOTION FOR JUDGMENT ON THE PLEADINGS Quiet Title and Declaratory Relief Defendant next argues that Plaintiff cannot maintain an action for quiet title or declaratory relief because, as a result of the rescission, Plaintiff no longer has legal title to the “Subject Property.” Defendant, however, defines the “Subject Property” as the Vacant Lot (APN 064-110-016) [Opposition p. 1/8-13; p. 11/1-3]. Such an argument is a non-sequitur, as Plaintiff is not seeking to quiet title to the Vacant Lot. Instead, as clearly stated in its Complaint, it is seeking to quiet title to the Improved Property and has standing to do so by virtue of its interest in the Subject DOT, which by mutual mistake or Defendant’s misrepresentations, contains the legal description of the Vacant Lot rather than the Improved Property. 10 Defendant’s reliance on Stafford v. Ballinger (1962) 199 Cal.App.2d. 289 and Lewis v. 11 Superior Court (1994) 30 Cal.App.4" 1850 is misplaced as those cases stand for the proposition that 12 the owner of a mere equitable interest cannot maintain an action to quiet title against the owner of the 13 legal title. Similarly, in Becker v. Highboy (1931) 112 Cal.App. 219, the facts involved disputed shares 14 in a common law trust where the court determined that there was “no attempt not to remove a cloud 15 upon or quiet their title thereto, but to contest the legal title upon a mere claim of equitable title which 16 is disputed, and thereby to acquire possession.” /d. at 223. Here, as set forth above, Plaintiff is not 17 seeking a mere equitable interest. Plaintiff alleges, and Defendant disputes, that Plaintiff has a 18 security interest in the Improved Property and, therefore, is seeking to quiet title to its security interest 19 in the Improved Property pursuant to the Subject DOT. 20 Cc Defendant’s Affirmative Defenses All Fail and are Defective 21 1 Mistake of Fact 22 Defendant’s First Affirmative Defense alleges in conclusory terms that the Complaint is barred 23 because of “Defendant’s mistake of fact that the loan would encumber the parcel 064-110-017 (sic) 24 rather tan (sic) 064-110-017.” To the extent such a “defense” is even intelligible, it fails because, if 25 anything, it supports Plaintiff's claim because it admits that Defendant was mistaken as to which 26 property would be encumbered by the Subject Loan and Subject DOT. By so admitting, Defendant 27 establishes mutual mistake and thus a basis for reformation. Lemoge v. San Mateo County (1956) 46 28 Cal.2d 659, 663; Holmes v. Anderson (1928) 90 Cal.App. 276, 288. REPLY BRIEF IN SUPPPORT OFMOTION FOR JUDGMENT ON THE PLEADINGS In addition, as set forth in the Motion and above, Defendant, in his verified answer admits to the facts in paragraphs 11, 13 and 21 of the Verified Complaint that 1) Defendant’s loan application identified the underlying property his primary residence and thus the Improved Property; 2) the lender reasonably relied on Defendant’s representations in making the Subject Loan and Subject DOT; 3) the lender believed that the Subject DOT would encumber the Improved Property and 4) the lender made the Subject loan on the condition that the Subject DOT encumber the Improved Property. [Verified Complaint at paragraphs 11, 13 and 21 — RJN Exhibit K; Amended Verified Answer p. 2/18 and 25 and p. 3/13 — RJN Exhibit J]. Those established facts, when combined with Defendant’s admitted mistake of fact, establish mutual mistake. Defendant’s argument that the mistake was all on the part 10 of the lender is, therefore, inconsistent with his under oath admissions. 11 2. Laches 12 As set forth in the Motion, Defendant has pleaded no facts showing any “neglect” of any kind 13 on Plaintiff's part, nor did he allege any facts establishing that he was disadvantaged or prejudiced by 14 any conduct by Plaintiff or that the Complaint was not filed within the applicable statutes of limitation. 15 As a result, the Defendant has failed to plead the requisite elements of laches. 16 Nor has Defendant cited to any document via judicial notice that established laches. Here 17 Plaintiff is entitled to the discovery rule and there is certainly no evidence cited by Defendant that 18 Plaintiff knew or reasonably should have known of the mistake prior to the June 22, 2015 trustee sale. 19 Federal Deposit Ins. Corp. v. Dintino (2008) 84 Cal.App.4" 333, 350-352. In Dintino, a lender 20 mistakenly reconveyed a deed of trust. Despite having done so and despite the fact that the 21 reconveyance was in the public records, the discovery rule applied and the lender was not under a duty 22 to investigate such records. Here, Plaintiff filed this matter in 2016, less than two years after the 23 trustee sale and well before any applicable statute of limitations. 24 3 Waiver 25 Defendant’s Third Affirmative Defense alleges, without citing any facts, that Plaintiff has 26 waived its rights to seek the remedies demanded in the Complaint. Without pleading any facts, this 27 affirmative defense must fail, just as it did in Plaintiff's prior successful Motion for Judgment on the 28 Pleadings. The argument that the Rescission constitutes waiver fails for the reasons set forth above. REPLY BRIEF IN SUPPPORT OF MOTION FOR JUDGMENT ON THE PLEADINGS il. CONCLUSION. Plaintiff's verified complaint is well pleaded and satisfies each element as to each cause of action. Not only does Defendant’s AVA admit to the elements necessary to satisfy each cause of action in the complaint, Defendant also fails to allege any viable affirmative defenses with factual support. Based on the foregoing, Plaintiff respectfully requests that the Court grant the Motion and set this matter over for a further default prove-up as an evidentiary hearing is required for a quiet title action. DATED: June 4, 2020 FIRST AMERICAN LAW GROUP - 10 By 11 HAR LES I. KARLIN, ESQ. Attorneys for Plaintiff 12 FEDERAL HOME LOAN MORTGAGE CORPORATION 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY BRIEF IN SUPPPORT OF MOTION FOR JUDGMENT ON THE PLEADINGS PROOF OF SERVICE Iam employed in the County of Orange, State of California. I am over the age of eighteen years and not a party to the within entitled action; my business address is: 5 First American Way, 4" Floor, Santa Ana, CA 92707-5913. On June 4, 2020, I served the foregoing document(s) described: FEDERAL HOME LOAN MORTGAGE CORPORATION’S REPLY BRIEF IN SUPPORT OF ITS MOTION FOR JUDGMENT ON THE PLEADINGS on the interested parties in said action as follows: [xX] By placing [ ] the original [X] a true copy thereof enclosed in a sealed envelope addressed as follows: John S. Sargetis, Esq. Counsel for Defendant United Law Center A Professional Corporation jsargetis@unitedlawcenter.com 10 11 [x] BY ELECTRONIC MAIL I e-mailed such document from Norwalk, California to the e- mail address(es) shown above. 12 I declare under the penalty of perjury under the laws of the State of California, that the foregoing is true and correct. 13 Executed on June 4, 2020, at Norwalk, California. 14 15 16 Eunics Z 17 18 19 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE