MOTION FOR SUMMARY JUDGMENT AND/OR ADJUDICATION
on a 25% reduction of the total fees and costs since Defendant prevailed as to 75% of the causes of action addressed in the motion.
13. GUNN VS. GREEN MEADOWS HOME HEALTH CARE, INC 2023-01370855 1. MOTION FOR TERMINATING SANCTIONS 2. MOTION TO BE RELEVED AS COUNSEL OF RECORD
NO TENTATIVE RULING 14. SOLIMAN VS. LAWYERS TITLE COMPANY MOTION FOR SUMMARY JUDGMENT AND/OR ADJUDICATION
Plaintiff/Cross-Defendant Salaheldin S. Soliman’s (“Soliman”) motion for: (1) summary judgment of Defendant/Cross-Complainant PFN Lending Group, Inc.’s (“PFN”) Cross -Complaint or, in the alternative, summary adjudication of PFN’s two causes of action therein; and (2) summary adjudication of Soliman’s Second Cause of Action for Declaratory Relief alleged in the First Amended Complaint (“FAC”) is DENIED.
Soliman’s Objections to Declaration of March Shenkman are SUSTAINED as to Objection Nos. 2 and 4 and OVERRULED as to the remaining.
Summary Judgment/Adjudication as to PFN’s Cross-Complaint: The Cross-Complaint alleges Soliman is the owner of the real property located at 2712 North Bently Street, Orange, CA 92867 (“Property”). (Cross-Complaint, ¶ 6.) In 2023, PFN loaned Soliman $519,000 evidenced by a balloon note executed by Soliman in favor of PFN (the “Note”). (Cross -Complaint, ¶¶7-8.) The Note was secured by a 2023 Deed of Trust executed by Soliman and recorded against the Property. (Cross-Complaint, ¶9.) The 2023 Deed of Trust recorded in the Official Records of Orange County on November 3, 2023, as Instrument No. 2023000269729 (the “2023 DOT”) identifies Soliman as borrower and PFN as Lender and beneficiary. (Soliman Separate Statement of Undisputed Material Facts (“UMF”) 4.)
Prior to the 2023 DOT, a Deed of Trust executed by the Property’s former owners, Kevin and Michelle Kane, had been recorded against the Property in the Official Records of Orange County on July 17, 2006, as Instrument No. 2006000473983 (“2006 DOT”). (Soliman RJN, Ex. D.) On February 17, 2024, a Notice of Default based on a default under the 2006 DOT was recorded against the Property. (Soliman RJN, Ex. A, ¶11). On July 10, 2024, PFN’s counsel advised Soliman’s counsel that the Section 4 covenant in the 2023 DOT required Soliman to discharge the senior lien —the 2006 DOT —and that failure to do so was a default; Soliman refused to discharge the senior lien. (Soliman RJN, Ex.
A, ¶12).
PFN’s Cross-Complaint alleges two causes of action against Soliman: (1) breach of contract and (2) declaratory relief.
The breach of contract cause of action alleges that Soliman breached the 2023 DOT by failing to “promptly discharge” the 2006 DOT in compliance with Section 4 of the 2023 DOT. (Cross-Complaint, ¶ 18.) The declaratory relief cause of action seeks a declaration that Soliman is obligated under the 2023 DOT to pay off and discharge the 2006 DOT. (Cross-Complaint, ¶ 22.) Soliman moves for judgment on both causes of action on the grounds Section 4 does not require him to discharge the 2003 DOT.
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Section 4 of the 2023 DOT states:
“Charges; Liens. Borrower shall pay all taxes, assessments, charges, fines, and impositions attributable to the Property which can attain priority over this Security Instrument, leasehold payments or ground rents on the Property, if any, and Community Association Dues, Fees, and Assessments, if any. To the extent that these items are Escrow Items, Borrower shall pay them in the manner provided in Section 3.
Borrower shall promptly discharge any lien which has priority over this Security Instrument unless Borrower: (a) agrees in writing to the payment of the obligation secured by the lien in a manner acceptable to Lender, but only so long as Borrower is performing such agreement; (b) contests the lien in good faith by, or defends against enforcement of the lien in, legal proceedings which in Lender’s opinion operate to prevent the enforcement of the lien while those proceedings are pending, but only until such proceedings are concluded; or (c) secures from the holder of the lien an agreement satisfactory to Lender subordinating the lien to this Security Instrument.
If Lender determines that any part of the Property is subject to a lien which can attain priority over this Security Instrument, Lender may give Borrower a notice identifying the lien. Within 10 days of the date on which that notice is given, Borrower shall satisfy the lien or take one or more of the actions set forth above in this Section 4. Lender may require Borrower to pay a one-time charge for a real estate tax verification and/or reporting service used by Lender in connection with this Loan.”
(UMF 5 [emphasis added].)
Courts interpret a deed of trust, an executed contract, under the rules of interpretation applicable to contracts in general. (Thoryk v. San Diego Gas & Elec. Co. (2014) 225 Cal.App.4th 386, 397.) “A contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful.” (Civ. Code § 1636.) “When a contract is reduced to writing, the intention of the parties is to be ascertained from the writing alone, if possible ...” (Civ. Code § 1639.)
The words are to be understood “in their ordinary and popular sense.” (Civ. Code § 1644.) Further, “[t]he whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other.” (Civ. Code § 1641.) “ ‘ “As a rule, the language of an instrument must govern its interpretation if the language is clear and explicit. [Citations.] A court must view the language in light of the instrument as a whole and not use a ‘disjointed, single -paragraph, strict construction approach’ [citation].” If possible, the court should give effect to every provision. [Citations.] An interpretation which renders part of the instrument to be surplusage should be avoided. [Citations.]’ ” (See Nat’l City Police Officers’ Ass’n v. City of Nat’l City (2001) 87 Cal.App.4th 1274, 1279.)
Soliman contends Section 4 is a loan-maintenance covenant, not a retroactive title-risk transfer. Soliman argues Section 4 is titled “Charges; Liens” and the first sentence in the first paragraph requires borrower to pay taxes, assessments, charges, fines, impositions, leasehold payments, ground rents, and association dues which “can attain priority” over the lender’s security. Soliman argues the second paragraph contains a discharge covenant which requires that once such a lien exists and “has priority,” t he borrower must discharge it, arrange payment, contest it in good faith, or obtain subordination.
Soliman argues the notice sentence in the second paragraph expressly connects the two parts, directing that when the Lender identifies a lien that “can attain priority,” the Borrower shall “satisfy the lien or take one or more of the actions set forth above in this Section 4.” (UMF 5.) Based on the foregoing, Soliman contends Section 4 applies to a priority maintenance during the life of the loan and does not apply to borrower indemnity for a prior owner’s mortgage debt already recorded years before the 2023 DOT.
Soliman’s interpretation of Section 4 fails to address the plain language of the “promptly discharge” covenant of the second paragraph: “Borrower shall promptly discharge any lien which has priority over this Security Instrument ...” The provision uses the all - encompassing term “any.” Read in its ordinary and popular sense, “any” does not provide a carve out for liens that already existed when the 2023 DOT was recorded.
Further, PFN argues Section 4 contains two distinct operative phrases describing two distinct categories of liens. The first paragraph and the notice mechanism address liens that “can attain priority”—a forward looking, conditional provision describing liens that may arise and obtain priority during the life of the loan (e.g., tax or assessment liens). The second paragraph, the discharge covenant, by contrast, addresses a lien that “has priority”— a present-tense provision describing liens that already hold priority like the 2006 DOT.
In support, PFN has submitted the declaration of its CEO and President, Marc Shenkman, who states that at the time the 2023 DOT was provided to Soliman, PFN would have intended that the provision
stating, “Borrower shall promptly discharge any lien which has priority over this Security Instrument[,]” applied to all prior recorded deeds of trust, including the Senior DOT. (Notice of Errata re: Shenkman Decl., ¶ 7.) Further, Shenkman states, to avoid surplusage, at the time that the PFN DOT was provided to Soliman, PFN would have intended that Section 4 of the PFN DOT addressed both (i) liens with priority that existed on the Property as of the recording of the PFN DOT, and (ii) liens that gained priority after the recording of the PFN DOT. (Shenkman Decl., ¶ 9.)
Shenkman also states that based on his involvement in the loan industry for over 38 years, he has come to understand that Section 4 of a Fannie Mae/Freddie Mac uniform instrument form deed of trust Form 3005, as an industry custom and practice, is interpreted in the loan industry as referring to two types of liens that a borrower is obligated to discharge: (i) liens with priori ty that existed prior to the recording of the deed of trust, and (ii) liens that gained priority after the recording of the deed of trust. (Shenkman Decl., ¶ 13.)
Considering the evidence presented in opposition, the language of the 2023 DOT is fairly susceptible of either one of the interpretations advanced by Soliman and PFN.
“ ‘ “[W]hen the meaning of the language of a contract is doubtful or uncertain and parol evidence is introduced in aid of its interpretation, ‘the question of meaning is one of fact.’ [Citation.] The contract ... language is sufficiently broad, uncertain in its meaning to require an examination into extrinsic circumstances to ascertain the intent of the parties. In such circumstances it is the primary duty of the trial court to construe the language after a full opportunity afforded to all parties in the case to produce evidence of facts, circumstances and conditions surrounding its effect and the conduct of the parties relating thereto. [Citation.] Such duty is not performed, cannot be performed by the summary judgment procedures.” ’ ” [Citation.] (Leep v. Am. Ship Mgmt. (2005) 126 Cal.App.4th 1028, 1041.)
Given the ambiguity inherent in the agreement in this case, summary adjudication is not appropriate as to either the breach of contract or declaratory relief cause of action alleged in PFN’s Cross-Complaint.
Therefore, summary adjudication as to the Cross-Complaint is DENIED.
Summary Adjudication as to Soliman’s FAC: Soliman seeks summary adjudication of his second cause of action for declaratory relief. Soliman’s declaratory relief cause of action seeks a declaration that Soliman is not obligated under Section 4 of the 2023 DOT to pay off and discharge the 2006 DOT. (FAC, ¶ 31.) This is the opposite of the declaration sought by PFN in its declaratory relief cause of action as alleged in its Cross-Complaint.
For the reasons discussed as to the Cross-Complaint, summary adjudication of the declaratory relief cause of action is also DENIED.
Moving party to give notice.