Demurrer in Wayne A Cook, Trustee of the Wayne A Cook 1998 Family Trust Dated 12/29/98 vs Edward f Niderost, Individually and as Trustee of the Edward F Niderost Revocable Living Trust Dated November 8, 1998| Trellis.Law

On April 22, 2020 a Motion-Secondary was filed involving a dispute between Edward F Niderost, Individually And As Trustee Of The Edward F Niderost Revocable Living Trust Dated November 8, 1998, Patterson, Lawrence, Wayne A Cook, Trustee Of The Wayne A Cook 1998 Family Trust Dated 12 29 98, Wayne A Cook, Trustee Of The Wayne A. Cook 1998 Family Trust Dated 12 29 98, and Edward F Niderost, Individually And As Trustee Of The Edward F Niderost Revocable Living Trust Dated November 8, 1998, for (26) Unlimited Other Real Property in the District Court of Butte County.

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Elm Gdu'tdClﬂm'nll
Sara M. Knowles (SBN 216139)
County or Bum
LELAND, MORRISSEY & KNOWLES m I I
1660 Humboldt Road,
CA 95928
Suite 6 L 4/5/2021 L
Chico,
E E
Telephone: (530) 342—4500 D - D
Facsimile: (530) 345-6836 By newly
Attorney for John Denton, as Conservator for Edward F.
Niderost and as Successor Trustee of the Edward F. Niderost
Revocable Living Trust Dated November 8, 1998

SUPERIOR COURT 0F CALIFORNIA,
COUNTY 0F BUTTE

10
WAYNE A. COOK; TRUSTEE OF THE ) CASE NO. 20CV00905
11 WAYNE A. COOK 1998 FAMILY TRUST )
DATED 12/29/98 ) OPPOSITION TO DEMURRER TO
12 ) SECOND AMENDED CROSS-
Plaintiff, COMPLAINT
13 g
V- )
14 ) Date: April 5, 2020
EDWARD F. NIDEROST, INDIVIDUALLY ) Time: 8:30 am.
15 AND AS TRUSTEE OF THE EDWARD F. )
NIDEROST REVOCABLE LIVING TRUST )
16 DATED NOVEMBER 8, 1998, DOES 1
)
THROUGH 10, )
17 )
Defendants. )
18 J
AND RELATED CROSS-ACTION )
19 )
20

21 John Denton, Convservator of the Estate of Edward F. Niderost and Successor Trustee of

22 the Edward F. Niderost Trust hereby lodges his opposition to Plaintiff’s Demurrer to the Second

23 Amended Cross-Complaint (“SACC”)and request for leave to conform to proof at trial.

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I. Leave to Amend to Conform to Proof At Trial Must Be Granted.
25
To the extent that the Court is inclined to sustain any of portion of Plaintiff’s Demurrer,
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CCP section 576 speciﬁes that any judge, at any time before or aﬁer commencement of trial, in
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the furtherance ofjustice, and upon such terms as may be proper, may allow the amendment of
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any pleading or trial conference order. The strong policy favoring liberal allowance of

i
OPPOSITION
amendments to pleadings applies even when the request is made during trial. Consolidated
World Investments, Inc. v. Lido Preferred Ltd. (1992) 9 Cal App. 4th 373, 383. A motion for
leave to amend the complaint to conform to proof may be made at any time during trial, so
long
as a judgment has not yet been entered. South Bay Building Enterprises, Inc. v. Riviera Lend-

Lease, Inc. (1999) 72 Ca1.App.4“‘ 111. 1124—1125.

II. Plaintiﬁ’s Demurrer as To the Eighth Cause of Action Must Be Overruled
Plaintiff contends that the eighth cause of action fails to state facts that constitute a cause

of action for violation of business and professions code section 17200.

(a). John Denton is the conservator and successor trustee.
10
The SACC speciﬁes that Edward F. Niderost is the Cross-Complainant who brings the
11 I

action on behalf of and in the name of the Cross-Complainant. (Page 2, lines 18-19). As the
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conservator of Mr. Niderost, Mr. Denton can legally bring claims, and defend claims on behalf
13
of Mr. Niderost as an individual. To the extent that any claim involves property owned by the
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Edward F. Niderost Revocable Trust, then Mr. Denton can legally bring a claim or defend a
15
claim on behalf of the trust.
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(b) & (c) The SACC speciﬁes how the loan was “arranged” and that Mr. Cook
17
received funds as a result of the transaction.
18
Plaintiff ﬁrst alleges that the Eighth Cause of Action does not articulate what Wayne a.
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Cook did to “arrange” a loan and claims that the broker must expect to receive or actually
20
receive compensation in order to “arrange a loan”. Plaintiff is igloring the references, at page 6,
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lines 10-13 of the SACC that specify that Mr. Cook arranged the ﬁnancing for the Miller
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Mansion by obtaining a loan ﬁom Dr. Matthew Fine. At page 6, lines 13-14, of the SACC,
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Cross-Complainant speciﬁes that in connection with the arranging of a loan that “Mr. Cook took
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money from Mr. Niderost in connection with the sale transaction.”
25
However, California Business and Professions Code section 10131 provides that a real
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estate broker is “a for compensation or in expectation of a compensation, regardless
person who,
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of the form or time of payment, does or negotiates to do one or more of the following acts for
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another or others: . ..(d) Solicits borrowers or lenders for or negotiates loans. .. or collects

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OPPOSIIION 2 c ,...
payments or performs services for borrowers or lenders or note owners in connection with loans
secured directly or collaterally by liens.” Plaintiff is avoiding any possible reference to it as a
unlicensed real estate broker, as he is likely aware that a mortgage loan broker owes to both

lender investor and borrower a ﬁduciary duty of highest good faith and is charged with duty of

fullest disclosure of all material facts concerning transaction that might affect lender investor’s

or borrower’s decision. Barry v. Raskov (1991) 232 Cal.App. 3d 447.
Plaintiff cites various case law, including Gibb v. Berger (2004) 123 Cal. App 4th 396,
400 as providing the deﬁnition for “arranging a loan” and claims that Park Terrace Limited v.

Teasdale (2002) 100 Cal.App.4th 802, 806 adds a requirement that in order to ‘arrange a loan’

10 that the broker must receive or expect to receive compensation for arranging the loan. Gibb and
11 Park Terrace Limited involve claims of a usurious loan. Del Mar v. Caspe (1990) 222 Cal.App.
12 3d 1316, 1328 is also discussed within Gibb and also involves usurious claims. None of these

13 cases involve the speciﬁc fact pattern at issue here, that an unlicensed individual arranged a loan

14 in violation of the Business and Professions Code. The foregoing cases and the various
15 deﬁnitions within them are all within the context of Civil Code section 1916.1 which explicitly
16 deﬁnes the references usurious loans. All of these cases involved with respect to Plaintiff’s
17 claim t, speciﬁcally the deﬁnition of loan arranged by a person licensed as a real estate broker,

18 within the context of Civil Code section 1916.1.

19 Admittedly, Froid v. Fox (1982) 132 Cal.App. 3d 832, 839 does hold that with respect to

20 Business and Professions Code Section 10130 a real estate broker is deﬁned as a “person who,

21 for compensation or an expectation of compensation does or negotiates to do” speciﬁed acts

22 dealing with real estate for another. Stickel v. Harris (197) 196 Cal. App. 3d 575, 582 resolves

23 the issue that when a “broker” is the recipient of a loan secured by real property owned by the
24 broker, a broker’s license is not required. However, a license is required when a ‘broker’

25 engages in activities as the agent for another. Id. See also Stout v. Admonds (1986) 180 Cal.

26 App. 3d 6, 69-70; Froid v. Fox (1982) 132 Cal.App. 3d 832, 839-840; Robinson v. Murphy
27 (1979) 96 Cal. App. 3d 763, 767-768. Mr. Cook is absolved ﬁom any liability for brokering a

28 loan only when such activities involves a broker and lender, each acting on his own behalf.

OPPOSITION 3
" "' "
Business and Professions Code section 10166.02 speciﬁes that any real estate broker who

“makes, arranges or services loans” is required, prior to acting as a mortgage loan oﬁginator,

must have a real estate license and obtain a real estate license endorsement as a licensed

mortgage loan originator. The SACC asserts that Mr. Cook did not have a real estate license and
that he arranged a loan for Dr. Fine.

Mathew Fine’s deposition was taken on February 24, 2021. During that deposition, Dr.
Fine testiﬁed that Wayne A. Cook contacted him that he had a lending opportunity. Dr. Fine

testiﬁed, at his deposition, that he did not use a loan broker. He speciﬁed that he dealt with Mr.

Cook regarding the origination of a promissory note and deed of trust in the amount of

10_ $500,000.00. This loan is the ﬁrst deed of trust on the real property which is the subject of this
11 proceeding. Dr. Fine testiﬁed that Mr. Cook chad called him about the loan, and let him know

12 that there was an opportunity to make a loan with respect to the property that Mr. Cook was
13 selling. Dr. Fine testiﬁed that he did not talk to Bill Chance (the only real estate agent and

14 broker involved with this transaction). Dr. Fine testiﬁed that Mr. Cook gave him the draﬁ note

15 and deed of trust to approve, and that Mr. Cook brought it to his ofﬁce. He further testiﬁed that
16 he did not communicate with a title company regarding this transaction. He further stated, under
17 oath, that Mr. Cook set the terms for this loan. True and correct excerpts of Dr. Fine’s deposition
18 transcript are attached to the Declaration of Sara M. Knowles, ﬁled concurrently herewith.

19 Mr. Cook received compensation for his efforts as the transaction sold and he received in

20 excess of $332,000 ﬁom Mr. Niderost and the sum of $500,000 from the proceeds of the Dr.

21 Fine Note. Mr. Cook arranged the loan in order that the transaction could close, and that Mr.

22 Niderost could purchase the manstion. In arranging the loan between Dr. Fine and Mr. Niderost,

23 Mr. Cook was acting as a broker. Mr. Cooks structured the loan, he arranged the ﬁnancing terms

24 between Dr. Fine on the one hand, and Mr. Niderost on the other.

25 (d) The Second Amended Complaint asserts that Mr. Niderost was harmed
26 The SAC asserts, clearly, that Mr. Niderost was harmed due to the fact that Mr. Cook

27 “has received ill-begotten gains, principally inﬂate value for the real property transferred, a down

28 payment as referenced above.” (SACC at lines 2-6.) Had Mr. Cook not arranged the loan

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OPPOSITION 'E‘L} MC
between Mr. Niderost and Dr. Fine, the real estate transaction would not have closed. Mr. Cook
would not have received $332,000 as a.-down payment, and Mr. Niderost would not have

purchased real property with an inﬂated price of $1,500,000. In addition, it remains to be

determined whether, in arranging the loan, Mr. Cook was acting on his own behalf, or a trustee
of his trust.

(e) Economic Harm is Asserted, Due to M. Cook’s Failure To Comply With the

Licensing Requirements.

First, whether there is or is not causation is an issue for the trier of fact. The SACC
referernces that Mr. Niderost was harmed. “To survive a demurrer, the complaint need only
10 allege facts sufﬁcient to state a cause of action each evidentiary fact that might eventually form
11 part of the plaintiff’s proof need not be alleged.” C.A. William S. Hart Union High School Dist.
12 (2012) 53 C.4th 861, 872. Had Mr. Cook been a licensed real estate agent, he would have been

13 required to make additional disclosures to Mr. Niderost and he would have owed Mr. Niderost a

14 ﬁduciary duty. In fulﬁlling that duty, he would necessarily have not sold the real property for

15 the inﬂated price of $1,500,000 nor would he have arranged loans that Mr. Niderost was not
16 capable of paying. Furthermore, had Mr. Cook not arranged the loan between Mr. Niderost and
17 Dr. Fine, the transaction would not have closed. The foregoing can be substantiated by proof at
l;
18 trial.

19 (f) Medina v. Safe-Guard Products, Internat, Inc. is not applicable to this case.

20 Plaintiff’s reliance on Medina v. Safe-Guard Products, Intemat, Inc. (2008) 164 Cal.
21 App. 4th106, 109-110 is not appropriate in this matter. Medina speciﬁcally deals with licensing

22 statutes involving insurance, not real estate. While Plaintiff would urge the court to adopt the
23 holding of that case in this matter, the fact is that this is an issue of law for the trier of fact to
24 consider. This case law has not be imported into the real estate contest and Plaintiff is
using its
25 demurrer as a basis to argue for new law. It is not appropriate for a demurrer.

26 (g) Claims that Mr. Niderost lost money are found within the SACC.
27 Plaintiff claims that Cross-Complaints have not alleged a loss of money or property, and
28 that they have no standing. This is contrary to the statements within the SACC, which specify

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OPPOSITION Z 'fﬂ'l‘if'tlcfl ’I’i 1!:
that Mr. Nidcrost overpaid for the Miller Mansion, that he paid $332,000 as a
deposit and that he
has been banned.

(h) The SACC Describes the Mr. Cook Arranged A Loan.
The SACC speciﬁes, at page 6, paragraph 30 that Mr. Cook structured ﬁnancing for the
Miller Mansion by obtaining a loan from Dr. Fine, in the amount of $500,000. At page 7,
paragraph 33 the SAC ﬁter discusses how Mr. Cook arranged the loan. The terms of the loan are
contained within documents incorporated into the SACC. The SACC speciﬁes that Mr. Cook
was not a licensed real estate agent or broker.

(i) There Is A Question of Fact As to Whether Wayne A. Cook Was Acting As A
10 Trustee.
11

12 Plaintiff asserts that there are no ultimate facts alleged that Wayne Cook, Trustee violated
13 any statute. Mr. Nidrost has asserted that Mr. Cook acted as an individual, there are no facts
14 currently known that Mr. Cook was acting as a trustee when he arranged the loan. The court is
15 requested to permit leave to amend based on conﬁrming facts presented at trial.
16
III. The Demurrer as to the First Cause of Action Must Be Overruled.
17
Plaintiff has ﬁled a Motion for Judgment on the Pleadings and has previously ﬁled a
18
demurrer attacking the First Cause of Action. Allowing Plaintiff to proceed with respect to a
19
demurrer as to the First Cause of Action, when the allegations subject to have attack were not
20
amended accounts to allowing “two bites at the same apple”
21

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(a) The SACC seeks damages for Financial Elder Abuse with respect to both Mr. Niderost
23
as an Individual and Mr. Niderost as Trustee.
24
The ﬁmds to purchase the Miller Mansion came ﬁ'om a variety of sources, owned
by Mr.
25
Niderost individually and held by him as a Trustee. As a result, both Mr. Niderost as an
26
individual and as a Trustee were harmed. For purposes of this action, the Court is requested to
27

OPPOSITION T'
treat Mr. Niderost, Individually, as the claimant for violation of elder abuse, as his trust is titled

as a revocable trust.

(b) There Is A Question of Fact As to Whether Wayne A. Cook Was Acting As A Trustee.
Plaintiff asserts that there are no ultimate facts alleged that Wayne Cook, Trustee violated

any statute. Mr. Nidrost has asserted that Mr. Cook acted as an individual, there are no facts

currently known that Mr. Cook was acting as a trustee when he arranged the loan. The court is

requested to permit leave to amend based on conﬁrming facts presented at trial.

10 The SACC speciﬁes the wrongﬁll conduct of Mr. Cook. Speciﬁcally, the Court is
11 directed to paragaphs II. b, c, d,e, g & h. Plaintiff is attempting to argue it’s case, claiming that
12 there is no logical connection between a person “not having a broker’s license and a purchaser

13 paying too much for real estate”. When that person is the same individual who arranges a

14 $5 00,000 loan because the buyer (Mr. Niderost) didn’t have the funds to purchase the over-

15 priced property, then there certainly is a logical connection.

16
IV. The SACC seeks cancellation of the promissory note held by Mr. Cook’s Trust.
17
The Ninth Cause of Action is not directed at Mr. Cook, individually. The request for
18

19 cancellation, however, is supported by actions taken by Mr. Cook, individually and as a trustee.

20 V. CONCLUSION

21 Plaintiff‘s demurrer must be overruled. There are sufﬁcient allegations to support the

22 ﬁrst cause of action for elder abuse, the eighth causes of action for unfair business acts and the
23
ninth cause of action for cancellation. In the alternative, the court is requested to allow
24
amendment based on conforming proof during trial.
25

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Respectﬁrlly submitted,
27
LELAND, MORRISSEY & KNOWLES LLP
28

'
OPPOSITION
Dated": April 4, 2021 by
Sara M. Knowles
m lama:
Attorneys for John Denton, Conservator of the
Estate of Edward F. Niderost, Individually and as
Successor Trustee of the Edward F. Niderost
Revocable Living Trust Dated November 8, 1998
@QNGUI-hwN-l

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OPPOSITION 'I 1")
‘
PROOF 0F SERVICE
I, Sara Knowles , declare:

I am a citizen of the United States and a resident of Butte County, State of California. I
am over the age of 18 years and not a pany to the within action. My business address is 1660
Humboldt Road, Suite 6, Chico, CA 95928.

I am familiar with the practices of Leland, Morn'ssey & Knowles, LLP whereby each
document is placed in an envelope, the envelope is sealed, the appropriate postage is placed
thereon and the sealed envelope is placed in the ofﬁce mail receptacle. Each day’s mail is
collected and deposited in a U.S. mailbox at or before the close of each day’s business.

On the date shown below, I caused to be served: OPPOSITION TO PLAINTIFF’S
DEMURRER T0 SECOND AMENDED CROSS COMPLAINT by:
MIL: Placed in the United States mail at Chico, California

10 Raymond L. Sandelman, Esq. Larry Lushanko, Esq.
196 Cohasset Road, Suite 225 1241 E. Mission Road
11
Chico, CA 95926-2284 Fallbrook, CA 92028
12 RagondQsandelmanlawcom ofﬁcteushankolawcom
Raoul J. LeClerc
13 P.O. Box Drawer 111
Oroville, CA 95965
14 rleclerc@leclerclawofﬁce.com

ELECTRONIC SER VICE: I caused a copy of the document(s) to be sent ﬁom e-
IIN

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mail address slmowles@chicolawver.com to the persons at the e-mail addresses
17 listed in the Service List. I did not receive, within a reasonable time aﬂer the
transmission, any electronic message or other indication that the transmission was
18 unsuccessful.

19 PERSONAL SERVICE: Delivery by hand to the addressee.

20 I declare under penalty of perjury under the laws of the State of California that the
foregoing is true and correct.
21
Executed on April 5, 2021, at Chico, California.
22

a M. Knowles
”A. Mew,
24

Proof of Service

Case Info

Judge

Mosbarger, Tamara L Track Judge’s New Case

Case No.

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Document Filed Date

April 05, 2021

Case Filing Date

April 22, 2020

County

Parties

Chance, William Cross Defendant
Chance, William Cross Defendant
Cook, Wayne A Cross Defendant
Cook, Wayne A Cross Defendant
Cook, Wayne A. Cross Defendant
Culley, Gene Cross Defendant
Culley, Gene Cross Defendant
Edward f Niderost, Individually and as Trustee of the Edward F Niderost Revocable Living Trust Dated November 8, 1998 Cross Complainant
Edward f Niderost, Individually and as Trustee of the Edward F Niderost Revocable Living Trust Dated November 8, 1998 Defendant
Edward f Niderost, Individually and as Trustee of the Edward F Niderost Revocable Living Trust Dated November 8, 1998 Cross Complainant
Edward f Niderost, Individually and as Trustee of the Edward F Niderost Revocable Living Trust Dated November 8, 1998 Defendant
Griffith, David Richard Attorney
John Denton, as Successor Trustee of the Edward F Niderost Revocable Living Trust Dated November 8, 1998 Cross Defendant
John Denton, as Successor Trustee of the Edward F Niderost Revocable Living Trust Dated November 8, 1998 Cross Defendant
Knowles, Sara M Attorney
Knowles, Sara M Attorney for the Defendant
Knowles, Sara M Attorney
Knowles, Sara M Attorney for the Defendant
LeClerc, Raoul J Attorney
LeClerc, Raoul J Attorney
Lushanko, Larry Gene Attorney
Lushanko, Larry Gene Attorney
Mid Valley Title and Escrow Company Cross Defendant
Mid Valley Title and Escrow Company Cross Defendant
Patterson, Lawrence Cross Complainant
Patterson, Lawrence Cross Defendant
Patterson, Lawrence Cross Complainant
Patterson, Lawrence Cross Defendant
Sandelman, Raymond Louis Attorney
Sandelman, Raymond Louis Attorney for the Plaintiff
Sandelman, Raymond Louis Attorney
Sandelman, Raymond Louis Attorney for the Plaintiff
Starrett, Amy Elizabeth Attorney
Starrett, Amy Elizabeth Attorney
Wayne A Cook, Trustee of the Wayne A. Cook 1998 Family Trust Dated 12/ Cross Defendant
Wayne A Cook, Trustee of the Wayne A Cook 1998 Family Trust Dated 12/29/98 Cross Defendant
Wayne A Cook, Trustee of the Wayne A Cook 1998 Family Trust Dated 12/29/98 Plaintiff
Wayne A Cook, Trustee of the Wayne A Cook 1998 Family Trust Dated 12/29/98 Cross Defendant
Wayne A Cook, Trustee of the Wayne A Cook 1998 Family Trust Dated 12/29/98 Plaintiff
Wayne A Cook, Trustee of the Wayne A. Cook 1998 Family Trust Dated 12/29/98 Cross Defendant
Wayne A Cook, Trustee of the Wayne A. Cook 1998 Family Trust Dated 12/29/98 Plaintiff
Williams, Erwin Cross Defendant
Williams, Erwin Cross Defendant
David Griffin Attorney
Brittney Lushanko-Bartlett Attorneys for Defendants
John Kelley Attorney
Sara Mostafa-Ray Attorney
Steven Knowles Attorney
Andrew Morrissey Attorney
William Goines Attorneys for Defendants
Breeanna Brewer Attorneys for Defendants
Richard Wirtz Attorney
Spencer Hugret Attorney
Krista Sabin Attorney
John Supple Attorneys for Defendants
Robert Deering Attorneys for Defendants
Robert Nolan Attorneys for Defendants
Karley Buckley Attorneys for Defendants
Stephen Garcia Attorney
Luis Gonzalez Attorneys for Plaintiffs
Jameson Sheehan Attorney

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Motion-Secondary: Wayne A Cook, Trustee of the Wayne A Cook 1998 Family Trust Dated 12/29/98 vs Edward f Niderost, Individually and as Trustee of the Edward F Niderost Revocable Living Trust Dated November 8, 1998

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