Case Number: EC066364 Hearing Date: February 01, 2019 Dept: A
Bank of New York Mellon v Nazaryan
MOTION FOR SUMMARY JUDGMENT OR SUMMARY ADJUDICATION
Calendar: 8
Case No: EC066364
Hearing Date: 2/1/19
Action Filed: 4/12/17
Trial: 3/4/19
MP: Plaintiff The Bank of New York Mellon, as Trustee for CIT Home Equity Loan Trust 2003-1
RP: Defendant Marine Nazaryan
ALLEGATIONS:
This is a declaratory relief and quiet title action involving the property located at 1068 Rosedale Avenue, A, Glendale, CA 91201. Plaintiff The Bank of New York Mellon, as Trustee for CIT Home Equity Loan Trust 2003-1 asserts that it has a security interest in the property, stemming from a deed of trust recorded in 2003 (“2003 DOT”).
On March 7, 2006, the court in a family law matter (In re the Marriage of Marine Nazaryan and Sarkis Tonoyan, LASC No. BD383714) entered judgment, which was recorded in the Los Angeles County Recorder’s Office. The judgment states that Defendant Sarkis Tonoyan’s gift of the property to Defendant Ripsime Tonoyan was a sham transaction and thus awarded the property to Defendant Marine Nazaryan. However, Plaintiff alleges the judgment fails to mention Plaintiff’s 2003 DOT.
The complaint, filed April 12, 2017, alleges causes of action for: (1) declaratory relief; (2) to impress an equitable lien; and (3) quiet title.
RELIEF REQUESTED:
Plaintiff moves for summary judgment against Defendant Marine Nazaryan (“Nazaryan”). Alternatively, Plaintiff moves for summary adjudication on the following issues:
No triable issue of material fact exists as to the 1st cause of action because the undisputed material facts show both the validity and enforceability of the 2003 DOT.
No triable issue of material fact exists as to the 1st or 2nd cause of action because the undisputed material facts show the 2003 DOT is a valid encumbrance against the subject property as of February 28, 2003.
No triable issue of material fact exists as to the 3rd cause of action because the undisputed material facts show that Nazaryan took title to the property subject to the 2003 DOT.
No triable issue of material fact exists as to the 3rd cause of action because the undisputed material facts show that any interests held by Albert M. Graham in the property, if valid, is subordinate to Plaintiff’s interest in the property.
DISCUSSION:
Declaratory Relief (1st cause of action)
“Any person interested under a written instrument … or under a contract, or … in, over or upon property… may in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action or cross-complaint … for a declaration of his or her rights and duties in the premises, including a determination of any question of construction or validity arising under the instrument or contract.” (CCP §1060.) Declaratory relief is allowed if the seeking party presents two essential elements: “(1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to [the party’s] rights or obligations.” (Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909.)
In the complaint, Plaintiff alleges that it has a security interest encumbering the property, which stems from the 2003 DOT. (Compl., ¶37.) Plaintiff alleges there is an actual controversy between the parties because Defendants dispute the existence of the 2003 DOT, such that Plaintiff seeks a judicial determination on the parties’ rights and interest as to the security interests in the property. (Id., ¶¶38-41.)
In support of the motion, Plaintiff provides evidence that in 1998, Sarkis Tonoyan took title to the property as his sole and separate property and that Nazaryan quitclaimed any interest she may have in the property to Sarkis Tonoyan. (Fact 1-3.) In 2002, Sarkis Tonoyan quiclaimed the subject property to his sister, Ripsime Tonoyan and she held title to the property as her sole and separate property. (Fact 4-5.) On February 20, 2003, Ripsime Tonoyan (as the sole owner of the property) executed a Promissory Note in the amount of $100,000, which was secured by the subject property by a deed of trust recorded on February 28, 2003 (“2003 DOT”). (Fact 6-7.) Plaintiff is the current beneficiary of the 2003 DOT. (Fact 8.) Thereafter, on December 30, 2004, Ripsime Tonoyan executed a promissory note and deed of trust securing a loan against the property in favor of Greenpoint Mortgage Funding, Inc., which was recorded on January 14, 2005. (Fact 9.) The 2003 DOT was subordinated to the deed of trust recorded on January 14, 2005. (Fact 10.) Albert M. Graham then recorded 4 deeds of trust secured by the property: a deed of trust dated March 9, 2005 for $50,000, recorded on April 11, 2005; a deed of trust dated July 27, 2005 for $50,000, recorded on January 27, 2009; a deed of trust dated May 10, 2007 for $100,000, recorded on July 5, 2007; and a deed of trust dated August 17, 2012 for $232,491.41, recorded on August 22, 2012. (Fact 11.)
On March 7, 2006, the Family Court in Case No. BD383713 issued a Judgment granting ownership of the property to Nazaryan, but the Judgment did not address the recorded liens on the property including the 2003 DOT. (Fact 12-13.) The Family Court’s Nunc Pro Tunc Order dated March 28, 2007 too did not address the recorded liens. (Fact 14.) From March 2009 to May 2013, Nazaryan made payments on the loan secured by the 2003 DOT in the total amount of $23,064.98, but the loan is presently in default. (Fact 15-17.)
Based on the aforementioned facts, Plaintiff argues there is an actual controversy between the parties regarding whether the 2003 DOT is a valid and enforceable lien against the property when Nazaryan was awarded title to the property in 2006. In particular, Plaintiff argues that at the time Ripsime Tonoyan obtained the loan in 2003, Nazaryan admitted she held no ownership interest in the property from 1998 to 2006. Plaintiff has upheld its initial burden on the declaratory relief cause of action.
In opposition, Nazaryan provides evidence from the Family Court Judgment, wherein the court invalidated and voided Nazaryan’s quitclaim deed and the interspousal transfers from Nazaryan to Sarkis Tonoyan, and that Sarkis Tonoyan’s quitclaim deed to Ripsime Tonoyan was a sham and void. (Pl.’s Add’l Fact 3, 10, 12.) Upon entry of Judgment, the court found that Nazaryan held titled as her sole and separate property as of 1998 and that Ripsime Tonoyan had not title on the property to deed as security for a promissory note. The Family Court stated in its Judgment of Dissolution order that Nazaryan did not receive any consideration for giving up her community property rights to the property, Nazaryan was not aware she was giving up such rights, Sarkis Tonoyan had breached his fiduciary duties and committed fraud in relation to the property, Sarkis Tonoyan’s transfer of the property to Ripsime Tonoyan was a sham transaction. (Pl.’s RJN, Ex. F [Judgment at ¶¶3(j)-(k), 6].)
Thus, Nazaryan has raised triable issues of material fact showing that at the time Ripsime Tonoyan had obtained a loan and the 2003 DOT was recorded, Ripsime Tonoyan was not the correct title holder of the property. Nazaryan also argues that she was not the borrower on the loan, did not execute the 2003 DOT that Plaintiff is seeking to enforce, and there is no evidence that Ripsime Tonoyan acted as Nazaryan’s agent or that she ratified the loan.
Nazaryan also argues another triable issue of material fact exists because CIT Group/Consumer Finance, Inc. (the original lender for the 2003 DOT; hereinafter “CIT Group”) should have been on notice that there were defects in the title. She provides evidence that Sergo Tonoyan took title to the property via a grant deed recorded on October 26, 1998, and then Sarkis Tonoyan transferred title to Ripsime Tonoyan via a quitclaim deed recorded on May 24, 2002. (Pl.’s Add’l Fact 9.) Nazaryan argues that there is no documents showing conveyance of title from Sergo Tonoyan to Sarkis Tonoyan or any documents showing that Sergo and Sarkis are the same person. (See Pl.’s RJN, Exs. A-C.) This is relevant to whether CIT Group was in fact a bona fide encumbrancer for value on the property. Thus, Nazaryan raises triable issues regarding whether CIT Group was on notice of defects in the title. (See Melendrez v. D & I Investment, Inc. (2005) 127 Cal.App.4th 1238, 1251 [“The elements of bona fide purchase are payment of value, in good faith, and without actual or constructive notice of another’s rights. [Citations] The same elements exist to determine whether a party who takes or purchases a lien is a bona fide encumbrancer.”] [Internal quotation marks and citations omitted]; see also Fidelity Thrift & Loan Ass’n v. Alliance Bank (1998) 60 Cal.App.4th 1433, 1445.)
As there are triable issues of material fact, the Court will deny the motion for summary judgment, or in the alternative, summary adjudication as to the 1st cause of action for declaratory relief. As many considerations must be accounted for in making a judicial determination regarding the title to the property and whether Plaintiff’s 2003 DOT encumbers the property, this matter is better left to be resolved in trial.
Equitable Lien (2nd cause of action)
“An equitable lien is a right to subject property not in the possession of the lienor to the payment of a debt as a charge against that property.” (Farmers Ins. Exchange v. Zerin (1997) 53 Cal.App.4th 445, 453.) “The basis of equitable liens is variously placed on the doctrines of estoppel, or unjust enrichment, or on the principle that a person having obtained an estate of another ought not in conscience to keep it as between them; and frequently it is based on the equitable maxim that equity will deem as done that which ought to be done, or that he who seeks the aid of equity must himself do equity.” (Id.)
“An encumbrancer in good faith and for value means a person who has taken or purchased a lien, or perhaps merely the means of obtaining one, and who has parted with something of value in consideration thereof. [Citation.] In addition, a ‘good faith’ encumbrancer is one who acts without knowledge or notice of competing liens on the subject property.” (Brock v. First South Savings Assn. (1992) 8 Cal.App.4th 661, 667; see Triple A Management Co., Inc. v. Frisone (1999) 69 Cal.App.4th 520, 530.)
Plaintiff moves for summary judgment/adjudication on the 2nd cause of action to impress an equitable lien, arguing that the 2003 DOT is a valid encumbrance against the subject property as of February 28, 2003. In the 2nd cause of action, Plaintiff requests that the Court impress an equitable lien on the property for Plaintiff’s 2003 DOT as of the original recording date of February 28, 2003, alleging that Defendants had actual or constructive notice of Defendants’ 2003 DOT. (Pet., ¶¶43-44.)
Specifically, Plaintiff argues that it was an encumbrancer in good faith at the time Ripsime Tonoyan executed the2003 DOT. Plaintiff argues that at the time it extended the loan, Ripsime Tonoyan was the record owner the property and Plaintiff relied on the chain of title confirming this. However, this cause of action faces the same issues raised with regard to the 1st cause of action. As discussed above, there are triable issues of material fact regarding whether CIT had actual or constructive notice of Nazaryan’s claim to the property or her lis pendens notice when Ripsime Tonoyan signed the 2003 promissory note and DOT. Plaintiff has not provided any declarations or evidence otherwise from CIT regarding its notice or lack thereof.
In addition, Plaintiff argues that though a Notice of Lis Pendens was recorded in relation to the Nazaryan/Tonoyan divorce proceeding on February 18, 2003 (i.e., 10 days before the 2003 DOT was recorded), it failed to identify Ripsime Tonoyan (purported owner of the property) anywhere on the document and the notice would not appear when a grantor/grantee index search is performed. (Fact 18-20.) Plaintiff relies on the declaration of Lori Hilburg, an expert witness who conducted a search of the grantor/grantee index, regarding a 2005 deed of trust that was at issue in LAS Case No. BC576120. (Pl.’s RJN, Ex. O.) Thus, Plaintiff argues that Nazaryan cannot rely on the Notice of Lis Pendens to raise a triable issue of material fact. However, Ms. Hilburg’s declaration was filed with the court in Department 56 on November 9, 2015 in a different case. While the Court may take judicial notice of court records, the Court declines to accept the truth of the matters asserted in the document. (Evid. Code § 452(d); Board of Pilot Commissioners v. Superior Court (2013) 218 Cal.App.4th 577, 597.) Additionally, Nazaryan argues that Plaintiff also cannot rely on the holding in the prior/separate action because this action involves a loan that was a non-purchase money loan that did not inure to the benefit of Nazaryan or the property.
Finally, as pointed out by Nazaryan, Plaintiff has not shown that her equities are inferior to Plaintiff’s equities. (See Golden Eagle Ins. Co. v. First Nationwide Financial Corp. (1994) 26 Cal.App.4th 160, 171 [doctrine of superior equities].) Whether an equitable lien should be created or recognized to exist is a highly fact-specific sort of question because each context has its own equitable considerations. (Farmers Ins. Exchange v. Smith (1999) 71 Cal.App.4th 660, 665, fn. 3.) As such, this matter is better left resolved by the trier of fact during trial, where the appropriate remedy (if any) may be fashioned.
Nazaryan additionally argues that Plaintiff has not shown that it can satisfy the statute of frauds (i.e., that Nazaryan personally signed the mortgage or is legally liable for the signature of another) or that she ratified the subject loan. (See Opp. at pp.16-19.) Plaintiff argues that Nazaryan ratified the loan because she made several payments on the 2003 DOT, totaling $23,064.98. However, the Court need not address this as Plaintiff has not upheld its initial burden and there are other triable issues of material fact. However, a review of the 2003 DOT reveals that Nazaryan was not a signatory to the 2003 DOT (see Pl.’s RJN, Ex. E), nor has Plaintiff provided any evidence that Nazaryan ratified the 2003 DOT or endorsed any fraudulent acts. (See Rakestraw v. Rodrigues (1972) 8 Cal.3d 67, 70-71.)
Thus, the Court will deny the motion for summary judgment, or in the alternative, summary adjudication as to the 2nd cause of action.
Quiet Title (3rd cause of action)
Plaintiff moves for summary judgment/adjudication on the 3rd cause of action for quiet title, arguing that Nazaryan took the title to the property subject to the 2003 DOT and that any interest held by Albert M. Graham in the property, if valid, is subordinate to Plaintiff’s interest in the property. In the complaint, Plaintiff alleges its entitlement to quiet title to the property regarding whether the fee interest is encumbered by the 2003 DOT and whether other security interests (such as Mr. Graham’s four deeds of trust) are junior to the 2003 DOT. (Compl., ¶¶46, 48.)
Plaintiff relies on the same facts, evidence, and arguments as above, namely, that the 2003 DOT was validly recorded on February 28, 2003, Nazaryan had constructive notice of the 2003 DOT at the time of her family law judgment, and that she ratified the loan.
For the same reasons as above, the motion as to this cause of action cannot be adjudicated at summary judgment/adjudication stage as there are triable issues of material fact. Adjudication of quieting title and declaratory relief are better left for trial.
Further, a plaintiff moving for summary judgment/adjudication meets its burden of showing there is no defense to a cause of action if that party has proved each element of the cause of action entitling the party to judgment on the cause of action. (CCP §437c(p)(1).) Here, Plaintiff has failed to do so in upholding its initial burden on each of the causes of action. Thus, the Court cannot, at this time, reach a determination on Issue 4 (regarding Mr. Graham’s four deeds of trust), as this requested relief relies on whether the 2003 DOT is valid in the first place. In addition, considering Issue 4 separately would not dispose of the entire cause of action for quiet title, as this is only one of the two requested relief sought in this cause of action by Plaintiff.
The Court will deny the motion for summary judgment, or in the alternative, summary adjudication as to the 3rd cause of action.
RULING:
Deny Plaintiff’s motion for summary judgment, or in the alternative, summary adjudication.