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This case was last updated from Los Angeles County Superior Courts on 06/04/2019 at 06:24:54 (UTC).

EVERETT CAIN ET AL VS RENOVATE AMERICA INC ET AL

Case Summary

On 05/30/2017 EVERETT CAIN filed a Contract - Business lawsuit against RENOVATE AMERICA INC. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judge overseeing this case is TERESA A. BEAUDET. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****3146

  • Filing Date:

    05/30/2017

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Contract - Business

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judge

TERESA A. BEAUDET

 

Party Details

Plaintiffs and Petitioners

CAIN EVERETT

STEWART CLAUDIA

HILLARD JOHN

Defendants and Respondents

CALIFRONIA GREEN ENERGY CENTER

RENOVATE AMERICA INC

GO GREEN ENERY CENTER

NATIONAL RENEWABLE ENERGY CENTER

WESTERN RIVERSIDE COUNCIL OF GOVERNMENTS

ENERGY ENTERPRISES USA INC

BISMOOT LIRON

HASSIDIM BENYAMIN

ATTAL OFIR SHLOMO

COUNTY OF SAN DIEGO

COUNTY OF KERN

VILDORF RAMI

TOP DESIGN INC.

NATIONSTAR MORTGAGE LLC

COUNTY OF RIVERSIDE

BENISTY ILAN

ENERGY REMODELING INC.

9 More Parties Available

Attorney/Law Firm Details

Plaintiff and Petitioner Attorneys

HILLER DAVID

HILLER DAVID WESLEY

Defendant and Respondent Attorneys

AKERMAN LLP

REED SMITH LLP

HINSHAW & CULBERTSON LLP

ABDULAZIZ GROSSBART & RUDMAN

BEST BEST & KRIEGER LLP

DAVID R. SOCHER

HALL GRIFFIN LLP

MILLER JESSE LUKE

WITCHER RACHEL CHRISTINE

MAROOTIAN SHARICE BABOUMIAN

SANCHEZ-BEHAR DANIEL

WANG WILLIE

YAEGER JACQUELINE COLLETTE

SOCHER DAVID ROBERT

 

Court Documents

Answer

3/11/2019: Answer

Order - Dismissal

5/7/2019: Order - Dismissal

PROOF OF SERVICE RE: OPPOSITION TO TOINT MOTION TO COMPEL ARBITRATION

11/30/2017: PROOF OF SERVICE RE: OPPOSITION TO TOINT MOTION TO COMPEL ARBITRATION

Minute Order

11/20/2017: Minute Order

PROOF OF SERVICE RE DEFENDANTS' AMENDED NOTICE OF JOINT 1) MOTION TO COMPEL ARBITRATION OF PLAINTIFFS' COMPLAINT AND 2) MOTION FOR STAY PENDING ARBITRATION

11/13/2017: PROOF OF SERVICE RE DEFENDANTS' AMENDED NOTICE OF JOINT 1) MOTION TO COMPEL ARBITRATION OF PLAINTIFFS' COMPLAINT AND 2) MOTION FOR STAY PENDING ARBITRATION

NOTICE OF RULING RE DEFENDANT OCWEN LOAN SERVICING, LLC?S DEMURRER TO COMPLAINT

11/1/2017: NOTICE OF RULING RE DEFENDANT OCWEN LOAN SERVICING, LLC?S DEMURRER TO COMPLAINT

NOTICE RE ORDER FOLLOWING CASE MANAGEMENT CONFERENCE

11/2/2017: NOTICE RE ORDER FOLLOWING CASE MANAGEMENT CONFERENCE

DECLARATION OF JACQUELINE C. YAEGER RE MEET AND CONFER PURSUANT TO CODE OF CIVIL PROCEDURE SECTION 430.41(A)(3)

10/10/2017: DECLARATION OF JACQUELINE C. YAEGER RE MEET AND CONFER PURSUANT TO CODE OF CIVIL PROCEDURE SECTION 430.41(A)(3)

DEFENDANTS COUNTY OF KERN, COUNTY OF RIVERSIDE AND COUNTY OF SAN DIEGO'S NOTICE OF DEMURRER; DEMURRER; ETC

10/10/2017: DEFENDANTS COUNTY OF KERN, COUNTY OF RIVERSIDE AND COUNTY OF SAN DIEGO'S NOTICE OF DEMURRER; DEMURRER; ETC

Unknown

10/17/2017: Unknown

NOTICE OF CASE MANAGEMENT CONFERENCE

6/22/2017: NOTICE OF CASE MANAGEMENT CONFERENCE

PROOF OF SERVICE SUMMONS & COMPLAINT

7/5/2017: PROOF OF SERVICE SUMMONS & COMPLAINT

PROOF OF SERVICE SUMMONS & COMPLAINT

7/5/2017: PROOF OF SERVICE SUMMONS & COMPLAINT

NOTICE OF CASE MANAGEMENT CONFERENCE

7/17/2017: NOTICE OF CASE MANAGEMENT CONFERENCE

Unknown

9/5/2017: Unknown

REQUEST FOR DISMISSAL

9/12/2017: REQUEST FOR DISMISSAL

DECLARATION OF ZACKARY WEBER IN SUPPORT OF DEFENDANT RENOVATE AMERICA, INC.'S 1) MOTION TO COMPEL ARBITRATION OF PLAINTIFFS' COMPLAINT AND 2) MOTION FOR STAY PENDING ARBITRATION

9/15/2017: DECLARATION OF ZACKARY WEBER IN SUPPORT OF DEFENDANT RENOVATE AMERICA, INC.'S 1) MOTION TO COMPEL ARBITRATION OF PLAINTIFFS' COMPLAINT AND 2) MOTION FOR STAY PENDING ARBITRATION

REQUEST FOR DISMISSAL

9/21/2017: REQUEST FOR DISMISSAL

119 More Documents Available

 

Docket Entries

  • 05/07/2019
  • at 08:30 AM in Department 50, Teresa A. Beaudet, Presiding; Status Conference (re 1) Dismissal of Stewart arbitration parties, 2) status of petition to confirm Cain arbitration award, 3) status of brining in Western Riverside Council of Governments, 4) Trial Setting Conference) - Held

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  • 05/07/2019
  • Minute Order ( (Status Conference re 1) Dismissal of Stewart arbitration part...)); Filed by Clerk

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  • 05/07/2019
  • Order - Dismissal; Filed by Court

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  • 05/07/2019
  • Notice (Amended Notice of Hearing on Petition); Filed by Everett Cain (Plaintiff)

    Read MoreRead Less
  • 04/30/2019
  • Notice of Hearing on Petition; Filed by Everett Cain (Plaintiff)

    Read MoreRead Less
  • 04/30/2019
  • Memorandum of Points & Authorities; Filed by Everett Cain (Plaintiff); Claudia Stewart (Plaintiff)

    Read MoreRead Less
  • 04/30/2019
  • Declaration (In Support of Motion); Filed by Everett Cain (Plaintiff); Claudia Stewart (Plaintiff)

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  • 04/30/2019
  • Motion for Leave to Amend (First Amended Complaint); Filed by Everett Cain (Plaintiff)

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  • 04/30/2019
  • Petition to Confirm Arbitration Award; Filed by Everett Cain (Plaintiff)

    Read MoreRead Less
  • 04/30/2019
  • Notice (of Association of Counsel); Filed by Everett Cain (Plaintiff); Claudia Stewart (Plaintiff)

    Read MoreRead Less
273 More Docket Entries
  • 07/05/2017
  • PROOF OF SERVICE SUMMONS & COMPLAINT

    Read MoreRead Less
  • 07/05/2017
  • PROOF OF SERVICE SUMMONS & COMPLAINT

    Read MoreRead Less
  • 07/05/2017
  • PROOF OF SERVICE SUMMONS & COMPLAINT

    Read MoreRead Less
  • 07/05/2017
  • PROOF OF SERVICE SUMMONS & COMPLAINT

    Read MoreRead Less
  • 07/05/2017
  • PROOF OF SERVICE SUMMONS & COMPLAINT

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  • 06/22/2017
  • Notice of Case Management Conference; Filed by Clerk

    Read MoreRead Less
  • 06/22/2017
  • NOTICE OF CASE MANAGEMENT CONFERENCE

    Read MoreRead Less
  • 05/30/2017
  • COMPLAINT FOR DAMAGES; CAUSES OF ACTION, FRAUD - INTENTIONAL MISREPRESENTATION; ETC

    Read MoreRead Less
  • 05/30/2017
  • Complaint; Filed by Everett Cain (Plaintiff); Claudia Stewart (Plaintiff); John Hillard (Plaintiff)

    Read MoreRead Less
  • 05/30/2017
  • SUMMONS

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Tentative Rulings

Case Number: BC663146    Hearing Date: February 08, 2021    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

EVERETT CAIN, et al.,

Plaintiffs,

v.

RENOVATE AMERICA, INC., et al.,

Defendants.

Case No.: BC 663146

Hearing Date: February 8, 2021

Hearing Time: 10:00 a.m.

[tentative] order RE:

motion to compel arbitration of

plaintiffs’ second amended

complaint and motion for stay

pending arbitration

Background

Plaintiffs Everett Cain (“Cain”) and Claudia Stewart (“Stewart”) (jointly, “Plaintiffs”) filed this action on May 30, 2017, asserting 20 causes of action against 20 defendants. Plaintiffs are homeowners over 65 who allege that they were victims of the “HERO Program,” a form of public-private financing for clean energy home improvements paid through the homeowner’s property taxes. Plaintiffs allege that while they were promised that the program would allow them to save money on energy costs, after they entered the program, their energy costs remained the same but their property tax bills increased. When Plaintiffs were unable to pay those assessments, mortgage companies stepped in to pay those taxes, and then began demanding reimbursement and threatening foreclosure as a result. Plaintiffs also allege that the various defendants were all involved in signing Plaintiffs up for the program and sought damages and injunctive relief to prevent collection on the underlying loans.

Since the complaint was filed, many of the defendants have been dismissed, settled out, or have judgments against them. Many of the causes of action have also been dismissed. In particular, on December 13, 2017, the Court issued an order compelling Plaintiffs to arbitrate their claims against a number of defendants, including Renovate America, Inc. (“Renovate”). Subsequently, Plaintiffs dismissed their claims against Renovate with prejudice. The arbitration was completed, and on March 6, 2019, an arbitration award was issued in favor of Plaintiffs and against the remaining defendants. The arbitration award was confirmed on June 17, 2019.

After the arbitration, Plaintiffs decided to pare down their lawsuit significantly by focusing on a class action cause of action for injunctive relief and on one defendant, Wilmington Bank, NA, as Trustee of Hero Funding Trusts 2014-1, 2014-2, 2015-1, 2015-2, 2015-3, 2016-1, 2016-2 (“Wilmington”).[1] The operative Second Amended Complaint (“SAC”) was filed on March 12, 2020. In the SAC, Plaintiffs allege that as part of their participation in the Hero Program, they signed contracts agreeing that they would pay back the loan on the home improvements (such as solar panels) via additional assessments on their property tax bills, thus creating a security interest in Plaintiffs’ properties. (SAC, ¶¶ 2-3, Exs., A, B.) Plaintiffs allege that prior to the filing of this lawsuit but after the underlying loans were funded, Wilmington was assigned the security interests created by the other defendants, and in particular Renovate America, Inc. (“Renovate”). Plaintiffs allege that the security interests held by Wilmington are void pursuant to Civil Code section 1804.1, subdivision (j).

Wilmington now moves to compel arbitration. Plaintiffs oppose.

Request for Judicial Notice

The Court denies Plaintiffs’ request for judicial notice.

Legal Standard

In a motion to compel arbitration, the moving party must prove by a preponderance of evidence the existence of the arbitration agreement and that the dispute is covered by the agreement. The burden then shifts to the resisting party to prove by a preponderance of evidence a ground for denial (e.g., fraud, unconscionability, etc.). ((Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413-414); (Hotels Nevada v. L.A. Pacific Center, Inc. (2006) 144 Cal.App.4th 754, 758.)

Generally, on a petition to compel arbitration, the court must grant the petition unless it finds either (1) no written agreement to arbitrate exists; (2) the right to compel arbitration has been waived; (3) grounds exist for revocation of the agreement; or (4) litigation is pending that may render the arbitration unnecessary or create conflicting rulings on common issues. ((Code Civ. Proc., § 1281.2); (Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218-219.)

“California has a strong public policy in favor of arbitration and any doubts regarding the arbitrability of a dispute are resolved in favor of arbitration.” ((Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677, 686.) “This strong policy has resulted in the general rule that arbitration should be upheld unless it can be said with assurance that an arbitration clause is not susceptible to an interpretation covering the asserted dispute.” ((Ibid. [internal quotations omitted].) This is in accord with the liberal federal policy favoring arbitration agreements under the Federal Arbitration Act (“FAA”), which governs all agreements to arbitrate in contracts “involving interstate commerce.” (9 U.S.C. section 2, et seq.; (Higgins v. Superior Court (2006) 140 Cal.App.4th 1238, 1247.)

Discussion

A party moving to compel arbitration can establish that an arbitration agreement exists simply by attaching a copy of the agreement to its petition without necessarily following the “normal procedures of document authentication.” ((Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1058); (see also Condee v. Longwood Management Corp., supra, 88 Cal.App.4th at p. 219 [“A plain reading of the statute indicates that as a preliminary matter the court is only required to make a finding of the agreement’s existence, not an evidentiary determination of its validity.”].)

Wilmington seeks to compel arbitration pursuant to the arbitration provisions contained in Home Improvement Contracts (“HIC”) entered into by Stewart with Crown Home Center, Inc. (“Crown”) and by Cain with Energy Remodeling, Inc. (“Energy”) for the purchase and installation of a solar energy system in their respective homes. (Miller Decl., ¶¶ 6-7, Exs. 1, 2.) Both HICs reference the HERO Program. Notably, these HICs (and in particular, the arbitration provisions contained therein) were the basis for the Court’s December 13, 2017 order compelling arbitration of Plaintiffs’ claims in the original Complaint, including Plaintiffs’ claims against Renovate, who was not a party to the HICs. The Court found that pursuant to the doctrine of equitable estoppel, Renovate was entitled to compel arbitration because Plaintiffs’ claims against Renovate arose out of and related directly to the HICs and that the claims against renovate were inextricably intertwined with the claims against Crown and Energy. (See 12/13/17 Order.) Based on essentially the same reasoning, Wilmington now argues that Plaintiffs’ claims in the SAC also arise out of and are directly related to the HICs, and so they must be arbitrated.

Under the doctrine of equitable estoppel, “a nonsignatory defendant may invoke an arbitration clause to compel a signatory plaintiff to arbitrate its claims when the causes of action against the nonsignatory are ‘intimately founded in and intertwined’ with the underlying contract obligations.” ((Molecular Analytical Systems v. Ciphergen Biosystems, Inc. (2010) 186 Cal.App.4th 696, 706.) “The focus is on the nature of the claims asserted by the plaintiff against the nonsignatory defendant.” ((Id. at p. 715.) “Claims that rely upon, make reference to, or are intertwined with claims under the subject contract are arbitrable.” (Ibid. .)

Thus, the Court begins with a review of the causes of action asserted in the SAC.

The first cause of action is for declaratory and injunctive relief for rescission/avoidance of lien pursuant to Civil Code section 1804.1, subdivision (j). That section provides that “[n]o contract or obligation shall contain any provision by which: The seller takes a security interest, other than a mechanics’ lien, in the buyer’s real property which is the buyer’s primary residence where the buyer is a person who is 65 years of age or older and the contract is for a home improvement, as defined in Section 7151.2 of the Business and Professions Code.” Plaintiffs allege that Wilmington was assigned the security interests originally granted to the “sellers” (Renovate) of the Hero Program loans, and as such, the security interests that Wilmington now holds in Plaintiffs’ properties are void. (SAC, ¶¶ 38-42.) Plaintiffs seek an injunction against Wilmington prohibiting it from initiating collection procedures on any delinquent assessment by a class member without a prior judicial determination that the assessment lien was not obtained as a result of a violation of Civil Code section 1804.1. (SAC, ¶ 43.) Plaintiffs also seek an injunction with respect to any funds that are paid to or collected by Wilmington as a result of any assessment lien by a class member requiring that the funds be held in trust and not paid or released to any party without a prior judicial determination that the assessment lien was not obtained as a result of a violation of Civil Code section 1804.1. (SAC, ¶ 43.) Finally, Plaintiffs seek a declaration that the assessment lien placed on their homes was obtained in violation of Civil Code section 1804.1. (SAC, ¶ 44.)

The second cause of action is for violation of Business & Professions Code section 17200. Plaintiffs allege that Renovate’s selling of home improvements and financing through the Hero Program violated Civil Code section 1804.1, subdivision (j), and Wilmington, as assignee of the security interest obtained by the financing, is subject to the avoidance of that security interest. (SAC, ¶¶ 45-46.)

Wilmington contends that it should be allowed to compel arbitration of Plaintiffs’ claims in the SAC as an alleged assignee of Renovate, analogizing to the parties in Molecular Analytical Systems v. Ciphergen Biosystems, Inc., supra, where the Court of Appeal held that an arbitration provision contained in a License Agreement was enforceable against a non-signatory assignee of the rights under the same License Agreement. (186 Cal.App.4th at pp. 701, 717.) But the Court notes that the assignment at issue in the SAC is for the security interest in Plaintiffs’ homes obtained through the Hero Program’s financing scheme. Unlike in Molecular Analytical Systems, the assignment in the instant case is not of all of Renovate’s rights, and more importantly, Renovate itself is not a signatory to the HICs.

Next, Wilmington argues that Plaintiffs’ claims rely on and presume the existence of the HICs. In the SAC, Plaintiffs allege that Renovate maintained a list of contractors whose work it promoted as part of its efforts to convince homeowners to purchase energy efficient home improvements and that Renovate worked with these contractors to encourage the sale of the home improvement services and the HERO financing mechanism. (SAC, ¶ 10.) Wilmington argues that the claims asserted against it derive exclusively from the work performed in accordance with the HICs. Wilmington contends that without the HICs, there would be no financing from Renovate, and without financing from Renovate, there would be no security interest to assign to Wilmington.

Plaintiffs counter that the claims in the SAC arise out of the assessment contracts that created the security interests and not the HICs, and there is no arbitration clause in any of the assessment contracts or financing applications signed by Plaintiffs. Plaintiffs further argue that while the HICs were necessary steps, as a matter of causation, to the creation of the security interests, this fact does not mean that the claims in the SAC rely on any term or provision in the HICs. ((See Jensen v. U-Haul Co. of California (2017) 18 Cal.App.5th 295, 306 [finding that the plaintiffs’ complaint did not “rely or depend on the terms” of the agreement containing the arbitration provision and that “none of their allegations are in any way founded in or bound up with the terms or obligations of that agreement”]); (Goldman v. KPMG, LLP (2009) 173 Cal.App.4th 209, 229-230 [noting that “equitable estoppel applies only if plaintiffs' claims against the nonsignatory are dependent upon, or inextricably bound up with, the obligations imposed by the contract plaintiff has signed with the signatory defendant”].) Plaintiffs assert that their theory of liability is based on Renovate’s actions as a “seller” of home improvement services because Renovate included the prohibited security interest in its financing contracts with Plaintiffs. Voiding Wilmington’s security interests is thus not dependent on the HICs.

Here, the Court notes that the prohibition set forth in Civil Code section 1804.1, subdivision (j) contains multiple elements. In order for a contract to be found void, the contract has to be one where (1) the seller takes a security interest in the primary residence of a buyer who is 65 years of age or older, and (2) the contract is for a home improvement. It is undisputed that Plaintiffs are alleging that Renovate is the “seller” that has taken a security interest, and that Renovate then assigned its rights to the security interest to Wilmington. However, although Plaintiffs argue in their opposition that the contract at issue is Renovate’s assessment contract, it is unclear how Renovate’s assessment contract is a “contract for a home improvement.” Indeed, the gravamen of the SAC appears to be that the HERO Program, to the extent that the homeowner participants are over 65 years of age, itself violates Civil Code section 1804.1, subdivision (j) because the program necessarily results in the taking of a security interest on a homeowner’s property. (See SAC, ¶ 1.) But based on the allegations in the SAC, the HERO Program has two necessary components: (1) the home improvements (memorialized by the HICs), and (2) the financing (memorialized by the assessment contracts). It is worth noting that Plaintiffs allege that the HERO Program “dictated what improvements contractors could make under the program, established rates for various items and services that were binding on its contractor sales force, and otherwise used HERO Program contractors’ personnel as conduits through which the HERO Program transaction was initiated and closed.” (SAC, ¶ 11 [emphasis added].) Thus, while the HICs in of themselves do not result in a violation of Civil Code section 1804.1, subdivision (j), it is the HICs coupled with the assessment contracts that give rise to a violation. Based on this, the Court finds that the claims in the SAC are inextricably bound up with the HICs, and application of equitable estoppel to compel arbitration of Plaintiffs’ claims is appropriate.

  1. Stay

Code of Civil Procedure section 1281.4 provides that the court shall stay the action or proceeding if the court has ordered arbitration. (Code Civ. Proc., § 1281.4).) Accordingly, the case is stayed pending completion of arbitration between Plaintiffs and Wilmington.

Conclusion

Based on the foregoing, the Court grants Wilmington’s motion to compel arbitration.

The Court orders that the entire action is stayed pending completion of arbitration of Plaintiffs’ arbitrable claims.

The Court sets an arbitration completion status conference on February 8, 2022, at 10:00 a.m. in Dept. 50. The arbitrating parties are ordered to file a joint report regarding the status of the arbitration by January 26, 2022, with a courtesy copy delivered directly to Dept. 50.

Wilmington is ordered to provide notice of this Order.

DATED: February 8, 2021

___________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court


[1] On July 2, 2019, Plaintiffs filed an Amendment to Complaint naming Wilmington in place of a Doe defendant.

Case Number: BC663146    Hearing Date: January 06, 2021    Dept: 50

 

 

Superior Court of California

County of Los Angeles

Department 50

everett cain, et al.,

Plaintiffs,

vs.

wilmington bank, na, et al.

Defendants.

Case No.:

BC663146

Hearing Date:

January 6, 2021

Hearing Time:

10:00 a.m.

ORDER RE:

APPLICATION FOR ADMISSION PRO HAC VICE

Clark A. Donat (“Movant”) applies to the Court for admission pro hac vice to appear on behalf of Defendant Wilmington Bank, NA, Trustee of: HERO Funding Trusts 2014-1, 2014-2, 2015-1, 2015-2, 2015-3, 2016-1, and 2016-2 (“Wilmington”) in the instant case.

The application is submitted with a declaration by Movant made under penalty of perjury and is in compliance with the requirements set forth in California Rules of Court Rule 9.40(d). Accordingly, the unopposed application is granted.

Wilmington is ordered to provide notice of this ruling.

DATED: January 6, 2021

________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court

Case Number: BC663146    Hearing Date: January 31, 2020    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

EVERETT CAIN, et al.,

Plaintiffs,

v.

RENOVATE AMERICA, INC., et al.,

Defendants.

Case No.: BC 663146

Hearing Date: January 31, 2020

Hearing Time: 8:30 a.m.

[tentative] order RE:

motion to quash service of summons on doe amendment to complaint

Background

Plaintiffs Everett Cain and Claudia Stewart (jointly, “Plaintiffs”) filed this action on May 30, 2017, asserting 20 causes of action against 20 defendants. Plaintiffs are homeowners over 65 who allege that they were victims of the “HERO Program,” a form of public-private financing for clean energy home improvements paid through the homeowner’s property taxes. Plaintiffs allege that while they were promised that the program would allow them to save money on energy costs, after they entered the program, their energy costs remained the same but their property tax bills increased. When Plaintiffs were unable to pay those assessments, mortgage companies stepped in to pay those taxes, and then began demanding reimbursement and threatening foreclosure as a result. Plaintiffs also allege that the various defendants were all involved in signing Plaintiffs up for the program and sought damages and injunctive relief to prevent collection on the underlying loans.

Since the complaint was filed, many of the defendants have been dismissed, settled out, or have judgments against them. Many of the causes of action have also been dismissed. Plaintiffs have since indicated their intent to simplify this action by focusing on one cause of action for injunctive relief and on one defendant, Wilmington Bank, NA, as Trustee of Hero Funding Trusts 2014-1, 2014-2, 2015-1, 2015-2, 2015-3, 2016-1, 2016-2 (“Wilmington”). Plaintiffs assert that as part of their participation in the Hero Program, they signed contracts agreeing to they would pay back the loan on the home improvements (such as solar panels) via additional assessments on their property tax bills, thus creating a security interest in Plaintiffs’ properties. Plaintiffs allege that prior to the filing of this lawsuit but after the underlying loans were funded, Wilmington was assigned the security interests created by the other defendants, and in particular Renovate America, Inc. (“Renovate”). Plaintiffs contend that the security interests held by Wilmington are void pursuant to Civil Code section 1804.1, subdivision (j). Plaintiffs had never before asserted a claim for injunctive relief based on Civil Code section 1804.1, subdivision (j), and so on April 30, 2019, Plaintiffs moved for leave to amend their complaint to seek injunctive relief on a class basis on behalf of other homeowners over 65 similarly situated based on the Civil Code section 1804.1, subdivision (j) claim.

On July 2, 2019, Plaintiffs filed an Amendment to Complaint naming Wilmington in place of a Doe defendant. On August 1, 2019, Plaintiffs filed an Update to Court re Case Status, in which Plaintiffs state that they elected to serve Wilmington so that it could respond directly to the proposed class allegations, to the motion for leave to amend, and to all other outstanding issues in the case. Plaintiffs assert that on July 8, 2019, Plaintiffs served on Wilmington by personal service the Doe amendment, the summons, and a copy of the operative non-class action First Amended Complaint in this action.

Wilmington now moves to quash service of the summons and the Doe amendment. Plaintiffs oppose.

Request for Judicial Notice

The Court grants Wilmington’s request for judicial notice as to Exhibits A and B.

Discussion

“When the plaintiff is ignorant of the name of a defendant, he must state that fact in the complaint . . . and such defendant may be designated in any pleading or proceeding by any name, and when his true name is discovered, the pleading or proceeding must be amended accordingly[.]” ((Code Civ. Proc., § 474.) “Section 474 allows a plaintiff in good faith to delay suing particular persons as named defendants until he has knowledge of sufficient facts to cause a reasonable person to believe liability is probable.” ((McOwen v. Grossman (2007) 153 Cal.App.4th 937, 943); (see also Fuller v. Tucker (2000) 84 Cal.App.4th 1163, 1170 [“The phrase ‘ignorant of the name of a defendant’ is broadly interpreted to mean not only ignorant of the defendant’s identity, but also ignorant of the facts giving rise to a cause of action against that defendant.”].) “The fact that the plaintiff had the means to obtain knowledge is irrelevant.” ((McOwen v. Grossman, supra, at pp. 943-944); (see also Mishalow v. Horwald (1964) 231 Cal.App.2d 517, 523-524 [“However, whether plaintiffs could or could not have ascertained the [names of Doe defendants] before suit was filed is immaterial to the issue here, for ignorance of the facts is the critical issue, and whether it be due to misfortune or negligence is not relevant.”].) Nevertheless, a defendant named by a Doe amendment may challenge the amendment “by way of an evidence-based motion, which argues that the plaintiff ‘unreasonabl[y] delayed’ his or her filing of the challenged amendment.” ((A.N. v. County of Los Angeles (2009) 171 Cal.App.4th 1058, 1067.) A Doe amendment can be successfully challenged if the defendant establishes that the plaintiff unreasonably delayed his or her filing of the Doe amendment after learning a defendant’s identity and that the delay was prejudicial to the defendant. ((Id. at pp. 1066-1067); (see also Id. at p. 1068 [discussing plaintiff’s counsel’s declaration and stating that “we see no express statement explaining the dates upon which A.N.'s counsel learned the names of the Doe Defendants, nor do we see any explanation of whether and why their identities could not have been learned before August 2007”].)

Wilmington argues that Plaintiffs’ attempt to substitute Wilmington as a Doe defendant at this late stage is the result of unreasonable delay and would result in undue prejudice.

Plaintiffs present evidence that their counsel did not learn of Wilmington’s involvement and the legal theory under which Wilmington could be charged until March 2019. (Hiller Decl., ¶ 15; Swiderski Decl., ¶ 2.) Civil Code section 1804.1, subdivision (j) provides that “[n]o contract or obligation shall contain any provision by which: The seller takes a security interest, other than a mechanics’ lien, in the buyer’s real property which is the buyer’s primary residence where the buyer is a person who is 65 years of age or older and the contract is for a home improvement, as defined in Section 7151.2 of the Business and Professions Code.” Plaintiffs’ theory is that Wilmington was assigned the security interests originally granted to the “sellers” (Renovate) of The Hero Program loans, and as such, the security interests that Wilmington now holds in Plaintiffs’ properties are void. ((Civ. Code, § 1804.2); Hiller Decl., ¶ 15.) The Court notes that Wilmington does not offer any evidence that Plaintiffs (or their counsel) had knowledge of either Wilmington’s involvement or the basis for the Civil Code section 1804.1, subdivision (j) claim prior to March 2019. The only relevant inquiry when determining whether to allow a Doe amendment is whether the plaintiff unreasonably delayed after discovering either the identity of the Doe defendant or the facts supporting liability against the Doe defendant.[1] Prejudice to the Doe defendant is not a consideration until this first element is met. (See Mishalow v. Horwald, supra, 231 Cal.App.2d at pp. 524-525 (discussing the Doe defendant’s unmeritorious argument that he will suffer prejudice if brought in as a defendant almost three years after plaintiff’s counsel knew his identity and his involvement in the surgery at issue in the medical malpractice case).) Here, it appears to be undisputed that Plaintiffs did not delay filing the Doe Amendment after discovering the basis for liability against Wilmington.

Perhaps recognizing that the cases interpreting Code of Civil Procedure section 474 militate in favor of allowing Plaintiffs’ Doe amendment, Wilmington argues that the specific facts of this case support preventing Plaintiffs from proceeding with their lawsuit against Wilmington.[2] First, Wilmington points out that Plaintiffs have completed an arbitration since filing this action and that Wilmington was, for obvious reasons, unable to participate. Wilmington contends that the claims adjudicated in arbitration involve the claims Plaintiffs seeks to assert against Wilmington, and so it would be unjust to bind Wilmington to the findings in the arbitration award. But, as noted by Plaintiffs, there is no basis for finding that Wilmington will be bound by the judgment or the findings made in the arbitration. Plaintiffs propose to proceed against Wilmington on a novel theory—that the security interests held by Wilmington are void pursuant to Civil Code section 1804.1, subdivision (j). Further, Plaintiffs do not take the position that Wilmington’s liability on the section 1804.1, subdivision (j) claim is tied to any of the claims already adjudicated against Renovate. Indeed, Plaintiffs argue that at the time the lawsuit was filed, liability under section 1804.1, subdivision (j) did not lie against Renovate (or any other party) because by that time, the security interests had already been assigned to Wilmington.

Second, and related to the above, Wilmington argues that any claims against Wilmington should be dismissed because it is being sued as the alleged assignee of interests held by a party previously dismissed with prejudice (i.e., Renovate). Wilmington argues that, as an assignee of the Hero Program-related security interests, its involvement in this case is directly tied to that of Renovate. Because Renovate has since been dismissed with prejudice, Wilmington argues that Plaintiffs are barred from attempting to bring any claims against it. However, as noted by Plaintiffs, there is no suggestion that Wilmington has been assigned all of Renovate’s rights, and in particular, any defenses Renovate may have had against this lawsuit. The assignment at issue is simply those of the Hero Program security interests.

Finally, Wilmington argues that the proposed claim for violation of Civil Code section 1804.1, subdivision (j) is arbitrable. Even assuming that Wilmington is correct, the fact that the proposed claim is arbitrable does not weigh against allowing the lawsuit to go forward against Wilmington.

Conclusion

Based on the foregoing, the Court denies Wilmington’s motion to quash. At the hearing, the Court will discuss with the parties the time to respond to the complaint, the proposed motion to amend the complaint and the status of the pending motion for stay pending petition for coordination.

Plaintiffs are ordered to provide notice of this Order.

DATED: January 31, 2020

___________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court


[1] The Court also notes that, to the extent that the parties have raised statute of limitations concerns, the inquiry for Code of Civil Procedure section 474 purposes is limited only to whether “the requirements of section 474 are met.” (McOwen v. Grossman, supra, 153 Cal.App.4th at p. 943.) In McOwen, as in this case, the original complaint was filed within the statute of limitations but the Doe amendment was filed after the applicable statute of limitations had run. (Ibid. .) In identifying where the trial court erred, the Court of Appeal stated: “The error in this case . . . is in identifying the issue in terms of the statute of limitations. The issue, however, is not when the cause of action against the newly named defendant accrued, i.e., whether the statute of limitations bars the action against respondent. This cannot be the issue since the complaint was filed within the statute of limitations and because the complaint, as filed, named Doe defendants. The statute of limitations is not at issue under these circumstances. . . . . ‘In such situations, Code of Civil Procedure section 474 permits plaintiffs to bring in defendants if the requirements of section 474 are met. If so, that defendant is considered a party to the action from its commencement.’” (Ibid., quoting Fuller v. Tucker, supra, 84 Cal.App.4th at pp. 1169-1170.)

[2] The Court also notes that these arguments are better characterized as arguments against granting Plaintiffs leave to amend their complaint to add the Civil Code section 1804.1, subdivision (j) claim against Wilmington and against granting Plaintiffs leave to add class allegations. Though Plaintiffs’ motion for leave to amend is not technically being heard at the same time, the Court acknowledges that many of the arguments do or will overlap.

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