JUDY GOOLER VS US BANK NATIONAL ASSOCIATION, ET AL

Tentative Rulings

Case Number: EC065074    Hearing Date: January 31, 2020    Dept: NCD

TENTATIVE RULING

Calendar: 12

Date: 1/31/20

Case No: EC 065074

Case Name: Gooler v. US Bank National Association, as Trustee, et al.

MOTION TO EXONERATE BOND

Moving Party: Plaintiff Judy Gooler

Responding Party: Defendant MGA Investment Group, LLC

RELIEF REQUESTED:

Enter order exonerating preliminary injunction bond and releasing bond to plaintiff.

SUMMARY OF FACTS:

Plaintiff Judy Gooler alleges that she was the owner of real property located at 415 Lotone Street, Monrovia, California, 91016 (“subject property”). On December 7, 2005, plaintiff executed a note of $740,000 in favor of defendant Express Capital Lending and a Deed of Trust on the subject property, naming Chicago Title Company as trustee and MERS as beneficiary. Plaintiff alleges that at the time Express was not a depository entity receiving consumer deposits as defined by the banking industry, so at the time possessed no claim to the funds loaned but was merely a conduit for the true provider of the funds. On March 13, 2012, the deed of trust was assigned by MERS to defendant US Bank. On May 16, 2012, defendant Quality Loan Servicing was substituted as trustee. On May 16, 2012, a notice of default was recorded.

On January 18, 2015, a Rescission of Notice of Default was recorded by Quality. On July 6, 2015, Quality recorded a Notice of Default, attaching a 2011 Declaration. On October 9, 2015, a Notice of Sale was recorded by Quality. On March 16, 2016, defendant MGA Investments Group, LLC (“MGA”) purchased the property at a trustee’s sale.

Plaintiff alleges that defendants cannot establish possession and proper transfer of the Note and Deed of Trust, so that the sale of the subject property in March of 2016 is void.

The file shows that on June 10, 2016, the court granted an application for a preliminary injunction, restraining defendants from further eviction action and from making further alterations, encumbering or selling the subject property. Plaintiff has posted an undertaking in the sum of $50,000.

After a series of demurrers by the various parties, on January 27, 2017, the court heard an unopposed demurrer to the Second Amended Complaint brought by defendant MGA, which was sustained without leave to amend.

On February 3, 2017, the court heard a demurrer and motion to strike with respect to the Second Amended Complaint brought by the defendants Specialized Loan Servicing, LLC, U.S. Bank National Association and MERS. The demurrer was sustained without leave to amend and the motion to strike deemed moot. The court also heard a motion for entry of dismissal pursuant to CCP § 581 (f)(1) filed by defendant MGA, evidently brought ex parte. The court signed and filed an order sustaining defendant MGA’s demurrer to the SAC, and the minute order notes, “Judgment of Dismissal with Prejudice of Defendant MGA Investment Group, LLC is signed and filed this date,” and “Order Dissolving Preliminary Injunction is signed and filed this date.”

A notice of appeal was filed by plaintiff on April 7, 2017.

At a Status and Trial Setting Conference on August 30, 2017, counsel for defendant MGA Investments Group informed the court that the appeal was dismissed on June 8, 2017 by the court of appeal, and on July 8, 2017 the dismissal became final.

Defendant MGA then brought a motion to enforce the liability of plaintiff on the $50,000 bond for the entire sum of the bond.

The motion was originally heard on September 29, 2017. The court issued its detailed tentative ruling, which was to enforce the liability of plaintiff only in the sum of $17,650, calculated to include lost rental income from June 2016 to February of 2017 at $3,000 per month, plus attorneys’ fees of $29,000, less an offset for rental income of $11,350 paid by another tenant at the property.

At the hearing, plaintiff pointed out to the court that the UD trial resulted in a judgment for MGA and against Gooler in the sum of $10,000 for rent during the preliminary injunction period, so that rent should not be awarded twice. In addition, MGA argued that it was seeking rent only during the bond period June 2016 to February 2017. The court order states, “Court vacates its Tentative Ruling and orders a Trial to be set pursuant to Section 996.440(d)….” for January 19, 2018, with a supplemental briefing schedule set.

On January 19, 2018, the court set the motion for hearing on March 20, 2018, set a discovery schedule, and required witness lists and exhibit lists to be exchanged and brought to court on the trial date.

On March 14, 2018, MGA filed a Notice of Withdrawal of Motion to Enforce Bond, stating it “hereby withdraws its Motion to Enforce Bond…”

ANALYSIS:

Plaintiff brings this motion seeking to have the court exonerate the bond, arguing that the appeal of the judgment of dismissal of MGA in this case was dismissed on June 8, 2017, and the dismissal became final thirty days later, on July 8, 2017. MGA filed a timely motion to enforce the bond but withdrew the motion on March 14, 2018. Plaintiff argues that defendant MGA then had until July 8, 2018, one year after the appeal became final, to file another motion to enforce the bond, but failed to do so, so the bond should be exonerated.

The procedures for pursuing a bond are set forth at CCP section 996.440, which provides:

“(a) If a bond is given in an action or proceeding, the liability on the bond may be enforced on motion made in the court without the necessity of an independent action. (b) The motion shall not be made until after entry of the final judgment in the action or proceeding in which the bond is given and the time for appeal has expired or, if an appeal is taken, until the appeal is finally determined. The motion shall not be made or notice of motion served more than one year after the later of the preceding dates.”

(Emphasis added).

There is no dispute that the appeal was dismissed on June 8, 2017. [Ex. D].

The Order issued by the court of appeal here was dated June 8, 2017, and stated, “It appearing that the appellant is in default pursuant to Rule 8.100(g), California Rules of Court, the appeals filed April 7, 2017, are dismissed.” [Ex. E]. The order also states:

“NOTICE: This order becomes final in 30 days and thereafter is not subject to rehearing or modification. This time cannot be extended (Cal. Rules of Court, rule 8.264(b)(1)). Any party desiring reinstatement must file a motion within 15 days of the date of this order.”

[Ex. D].

CRC Rule 8.264(b)(1) provides:

“(b) Finality of decision

“(1) Except as otherwise provided in this rule, a Court of Appeal decision in a civil appeal, including an order dismissing an appeal involuntarily, is final in that court 30 days after filing.”

The appeal here accordingly was “finally determined” thirty days after June 8, 2017, or July 8, 2017. This required MGA to file a motion to be made and notice served no later than July 8, 2018. MGA did not do so, but affirmatively withdrew the motion it had timely made, and did not file another motion within the time permitted.

Under CCP § 995.360:

“A bond given in an action or proceeding may be withdrawn from the file and returned to the principal on order of the court only if one of the following conditions is satisfied:

(a) The beneficiary so stipulates.

(b) The bond is no longer in force and effect and the time during which the liability on the bond may be enforced has expired.”

(Emphasis added).

Plaintiff also relies on CRC Rule 3.1130(c), which provides:

“An original bond or undertaking may be withdrawn from the files and delivered to the party by whom it was filed on order of the court only if all parties interested in the obligation so stipulate, or upon a showing that the purpose for which it was filed has been abandoned without any liability having been incurred.”

The time during which the liability on the bond may be enforced has expired, the bond can no longer be enforced, and MGA essentially abandoned its pursuit of reimbursement to MGA for expenses for wrongful issuance of the preliminary injunction, or the purpose for which the bond had been filed.

MGA in opposition does not dispute these facts, or argue that the time deadline is somehow extended, or tolled, but argues broadly that the purpose of the bond here would be frustrated if this court exonerates the bond and does not order Gooler to pay the money judgment from the related UD case from the bond. The argument is that it is obvious from the court’s order granting the preliminary injunction and requiring the bond that the court intended that MGA be paid its lost profits, and the court should not allow Gooler to benefit from her own wrongdoing. The opposition requests that the court deny the motion to exonerate the bond, and instead order the payment to MGA of sums from the bond.

It is certainly true that the bond was required to be filed by plaintiff in this matter pursuant to CCP § 529 (a), under which if a court grants a preliminary injunction it “must require an undertaking on the part of the applicant to the effect that the applicant will pay to the party enjoined any damages, not exceeding an amount to be specified, the party may sustain by reason of the injunction, if the court finally decides that the applicant was not entitled to the injunction.”

However, MGA does not dispute that the time within which it was permitted to make or serve a notice of motion to enforce the liability on the bond has expired, so the potential merit of any such motion is irrelevant. The motion accordingly is granted, and the bond is ordered exonerated.

RULING:

Motion for Order to Exonerate Preliminary Injunction Bond is GRANTED.

The court finds that plaintiff has established that the under CCP §996.440, a motion for liability on the subject bond was required to be made and served no more than one year after the appeal in this matter was finally determined, which occurred on July 8, 2017. [Ex. D; CRC Rule 8.264(b)(1)]. The only motion made prior to the expiration of the time period was withdrawn on March 14, 2018, and not other timely motion has been made or served. Plaintiff has accordingly established that the bond is no longer in force and effect and the time during which the liability on the bond may be enforced has expired, pursuant to CCP § 995.360 (b).

The court further finds, pursuant to CRC Rule 3.1130(c) that plaintiff has made a sufficient showing that the purpose for which the subject bonds were filed has been abandoned without any liability having been incurred. The facts and timeline are not disputed by the opposition. The court orders that the Undertaking Under Section 529 CCP filed on June 15, 2016 in this matter, is discharged, released and exonerated, and further orders that the original bond be withdrawn from the file and delivered to the party by whom it was filed, plaintiff Judy Gooler.