SVETLANA BUZINA ET AL VS CHARLES STREET INVESTMENTS INC ET A

Tentative Rulings

Case Number: ****5265    Hearing Date: May 28, 2021    Dept: 32

Background

A. Complaint

Plaintiffs Svetlana Buzina and Arkady Buzin (“Plaintiffs”) commenced this action again Defendants Charles Street Investments Inc., Charles Street Investments, LLC, Inaam Rashed Naeem, Shahid Naeem, and Cardenas Three LLC (“Defendants”) on September 8, 2017. On November 22, 2017, Plaintiff’s filed a First Amended Complaint (“FAC”) asserting causes of action for (1) Quiet Title; (2) Rescission Based on Violation of Home Equity Sales Contract Act (California Civil Code section ;1695 et seq.); and (3) Damages based on Violation of Home Equity Sales Contract Act (California Civil Code ;1695 et. seq.) against C3. The FAC alleges in pertinent part as follows.

This is a case involving a sale of real property. Plaintiffs allege that in an effort to avoid losing the property to foreclosure, Plaintiffs signed a Purchase Agreement on or about April 2017 prepared by Defendant Shahid Naeem with Charles Street Investment, LLC. Defendant Shahid Naeem presented Plaintiffs allegedly with an offer in which “a buyer would purchase the Subject Property for $1,800,000 giving Plaintiffs the option to continue to live in the property, and to invest their equity from the proceeds from the current sale of the property, for improvements and updates.” (FAC, para. 20.) Plaintiffs allege that Inaam Rasheed Naeem signed the Purchase Agreement and the Equity Sharing Addendum, for Charles Street Investments, LLC. Plaintiffs allege that the contracts prepared by Defendants, Shahid Naeem with Charles Street Investment, LLC, and or Inaam Rasheed Naeem, the Equity Purchaser, meet the requirements set forth in Civil Code ;1695 et. seq. that include but are not limited to a provision requiring an equity purchaser to provide an equity seller with a specified “Notice of Cancellation” advising of the right to cancellation in accordance with Civil Code ;1695. Defendants argue that in connection with the conveyance of the property, C3 loaned Charles Street Investments Inc. $1,560,000.00, which was secured by a Deed of Trust encumbering the property.

Plaintiffs argues that as the contracts do not comply with the terms set forth in Civil Code ;1695 et. seq., Plaintiffs are entitled to rescind the sale and are entitled to recover damages and attorney’s fees.

B. Course of Proceedings

On March 3, 2021, Defendant Cardenas Three LLC (“C3”) filed a motion for summary judgment.

Defendant asserts that it is entitled to summary judgment because Plaintiffs cannot maintain their cause of action for quiet title against C3 because: (1) equitable title cannot defeat legal title; and (2) C3 is a bona fide encumbrancer.

Discussion

Defendants move for summary judgment on the only remaining cause of action alleged by Plaintiffs in the First Amended Complaint. Defendants argue that Plaintiffs cannot maintain their cause of action for quiet title against C3 because: (1) equitable title cannot defeat legal title; and (2) C3 is a bona fide encumbrancer.

A. Equitable Title Cannot Defeat Legal Title

Defendant argues that Plaintiffs’ quiet title cause of action against C3 fails as a matter of law because equitable title cannot defeat legal title.

“It has been repeatedly held in this state that an action to quiet title will not lie in favor of the holder of an equitable title as against the holder of a legal title.” (G.R. Holcomb Estate Co. v. Burke (1935) 4 Cal.2d 289, 297.)

In their moving papers, Defendant addresses Plaintiffs as claimed holders of equitable title to the Property. Defendant argues that C3 had no involvement in the sale of the Property, the Seller’s Listing Agreement, the Notice of Trustee’s Sale, the Purchase Agreement, the Equity Sharing Addendum, or the 2017 Grant Deed. Notably, Defendants identify evidence that establishes Plaintiffs as claimed holders of equitable title to the property.

Defendant submits a separate statement of undisputed material facts in support of their motion. However, Plaintiffs fail to submit any opposition brief, separate statement, or evidence. Defendant submits evidence that, on May 5, 2017 a Grant Deed was recorded with the Los Angeles County Recorder’s Office conveying the Property to defendant Charles Street Investments Inc. (SSUMF No. 7; Appendix of Evidence, Exhibit 7) On May 4, 2017, Charles Street Investments Inc. borrowed the principal sum of $1,560,000.00 from C3, which said loan was secured by a Deed of Trust encumbering the Property and recorded on May 5, 2017, with the Los Angeles County Recorder’s Office. (SSUMF No. 8; Appendix of Evidence, Exhibit 8) On January 1, 2018, Plaintiffs filed a “Summary of Your Assets and Liabilities and Certain Statistical Information” in bankruptcy court in which they describe their interest in the Property as an “equitable interest.” Based on this evidence, Defendant has met its burden of showing that there are no triable issues of material fact on Plaintiffs’ quiet title cause of action. Furthermore, because Plaintiffs have not submitted an opposition, Plaintiffs have not met their burden of raising a triable issue. Accordingly, Defendant is entitled to summary judgment.

B. C3 is a bona fide encumbrancer

Defendant is also entitled to summary judgment based on its evidence that it is a bona fide encumbrancer. The general rule is that “[a] good faith encumbrancer for value who first records takes its interest in the real property free and clear of unrecorded interests.” (First Fidelity Thrift & Loan Ass'n v. Alliance Bank (1998) 60 Cal.App.4th 1433, 1440–1441.) “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.” (Id.) “A ‘good faith’ encumbrancer is one who acts without knowledge or notice of competing liens on the subject property.” (Id.) Defendant C3 contends that the C3 Deed of Trust is a valid position lien encumbering the property. C3 presents evidence that it parted with valuable consideration ($1,560,000.00) in exchange for the C3 Deed of Trust. (SSUMF No. 29.) C3 also presents evidence that it had no notice of any competing interest in the Property. (SSUMF Nos. 19-25.)

Accordingly, based on this evidence that C3 is a bona fide encumbrancer, C3 is entitled to summary judgment.

Conclusion

For the foregoing reasons, Defendant’s motion for summary judgment is GRANTED.