In the Matter of The Kais Bypass Trust, established under the Kais Family Trust dated March 2, 1994

1 2 3 4 5 6 7 8 SUPERIOR COURT OF CALIFORNIA 9 COUNTY OF SANTA CLARA 10 11 12 IN THE MATTER OF Case No. 25PR199964 13 THE KAIS BYPASS TRUST, established under 14 the KAIS FAMILY TRUST dated March 2, ORDER RE: RESPONDENT PENNYMAC LOAN SERVICES, LLC’S 15 1994. DEMURRER TO PETITIONERS DEBORAH SETTELMAYER AND 16 SAMUEL M. KAIS’S THIRD AMENDED 17 PETITION TO CANCEL DEED AND DEED OF TRUST; TO RECOVER 18 TRUST PROPERTY; FOR FINANCIAL 19 ELDER ABUSE; AND FOR FURTHER RELIEF 20 21 The above-entitled action came on for hearing before the Honorable Amber Rosen on 22 August 24, 2026 at 10:00 a.m. in Department 2. The matter having been submitted, the Court 23 finds and orders as follows: 24 INTRODUCTION 25 Petitioner Deborah Settelmeyer (“Deborah”) initiated this case by filing a petition to 26 remove Maria Kais (“Maria”) as trustee of the Kais Bypass Trust, which was created under the 27 28

1 terms of the Kais Family Trust dated March 2, 1994. 1 After multiple amendments, the currently 2 operative version of the petition is the third amended petition (“TAP”), filed May 18, 2026, 3 which is brought by both Deborah and Samuel Kais, Jr. (“Sam”) (collectively, “Petitioners”). 4 In its current iteration, the TAP alleges that settlors Maria and Samuel Kais, Sr. executed 5 the Kais Family Trust and, upon Samuel Kais, Sr.’s death, the Bypass Trust was created. In 6 2025, Maria, then 90 years of age and in a state of cognitive decline, transferred a Bypass Trust 7 asset, real property near Lake Tahoe (“the Tahoe Property”), to Thomas Kais (“Tom”) and his 8 girlfriend, Andrea Leslie (“Andrea”) for $1,650,000, a price well below market value, ostensibly 9 due to lack her lack of liquidity. (TAP, ¶ 3.)

The sale was structured such that Maria gifted Tom 10 and Andrea equity in the amount of $843,500. (TAP, ¶ 3.) “The result is that Tom and Andrea 11 Leslie obtained the Tahoe House worth approximately $2,600,000 for $806,500, with that 12 portion financed entirely by a bank loan, equating to a gift transfer of approximately $1,800,000 13 by Maria.” (TAP, ¶ 3.) The lender, PennyMac Loan Services, LLC (“PennyMac”), made a 14 conventional loan of $806,500 to Tom and Andrea, secured by a deed of trust recorded against 15 the Tahoe Property. (TAP, ¶¶ 34, 64.)

The sale resulted in proceeds of $559,015.79, which was 16 not returned to the Bypass Trust but was instead placed in a joint account belonging to Tom, 17 Maria, and non-party Connie Ajlouni. (TAP, ¶ 3.) When Tom learned that Petitioners had 18 discovered the sale, he fabricated documents showing a $2,400,000 sale price and a loan of 19 $1,500,000 from Maria to Tom. (TAP, ¶ 4.) 20 The TAP alleges that the settlors had intended to keep the Tahoe Property in the family 21 and that Maria signed a power of attorney in favor of Sam, giving him the authority to act to 22 preserve the Tahoe Property. (TAP, ¶ 8.)

The TAP asserts that the power of attorney was 23 irrevocable because it was coupled with an interest, namely a home equity line of credit 24 (“HELOC”) in the amount of $1,000,000, which Sam and his wife, non-party Elizabeth Kais 25 (“Elizabeth”) signed as co-obligors at Maria’s request. (Ibid.) 26 27 1 Because several of the individuals involved in this case share the same last name, the court will 28 refer to them by their first names. No disrespect is intended.

1 The TAP states the following causes of action: (1) removal of trustee, (2) cancellation of 2 deed, (3) cancellation of deed of trust, (4) violation of Penal Code section 496, (5) financial elder 3 abuse, (6) recovery of wrongfully transferred property (Prob. Code, § 850), (7) set aside sale for 4 violation of power of attorney, (8) recission of sale, and (9) breach of fiduciary duty. 5 In her opposition to the second amended petition, Maria asserted that she decided to sell 6 the Tahoe Property due to lack of liquidity and the financial strain of the HELOC on the San Jose 7 Property. (Opposition to Second Amended Petition, filed March 27, 2026, ¶ 5.) 8 Currently before the court is a demurrer by PennyMac, the lender for the above described 9 transaction involving the Tahoe Property, targeting the fourth, fifth, and sixth causes of action in 10 the TAP.

Deborah and Sam (collectively, “Petitioners”) have opposed the demurrer and 11 PennyMac has filed a reply. 12 DISCUSSION 13 I. Legal Standard 14 A demurrer may be utilized by “[t]he party against whom a complaint [] has been filed” 15 to object to the legal sufficiency of the pleading as a whole, or to any “cause of action” stated 16 therein, on one or more of the grounds enumerated by statute. (Code Civ. Proc., §§ 430.10, 17 430.50, subd. (a).) 2 The court in ruling on a demurrer treats it “as admitting all material facts 18 properly pleaded, but not contentions, deductions or conclusions of fact or law.” (Piccinini v. 19 Cal.

Emergency Management Agency (2014) 226 Cal.App.4th 685, 688, citing Blank v. Kirwan 20 (1985) 39 Cal.3d 311, 318.) “A demurrer tests only the legal sufficiency of the pleading. It 21 admits the truth of all material factual allegations in the complaint; the question of plaintiff’s 22 ability to prove these allegations, or the possible difficulty in making such proof does not 23 concern the reviewing court.” (Committee on Children’s Television, Inc. v. General Foods Corp. 24 (1983) 35 Cal.3d 197, 213-214.)

In ruling on a demurrer, courts may consider matters subject to 25 judicial notice. (Scott v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 743, 751.) 26 27 2 28 All further undesignated statutory references are to the Code of Civil Procedure.

1 Evidentiary facts found in exhibits attached to a complaint can be considered on demurrer. 2 (Frantz v. Blackwell (1987) 189 Cal.App.3d 91, 94.) 3 II. Merits of the Demurrer 4 PennyMac demurs to the fourth cause of action for violation of Penal Code section 496, 5 the fifth cause of action for financial elder abuse, and the sixth cause of action for return of trust 6 property (Prob. Code, § 850) on the ground of failure to state a claim. 7 A. Fourth Cause of Action: Violation of Penal Code section 496 8 PennyMac contends that the TAP fails to state a claim for a violation of Penal Code 9 section 496 because it does not allege facts showing that PennyMac received or concealed any 10 trust property, much less stolen property, or that PennyMac had any knowledge of any property 11 being stolen. 12 Penal Code section 496, subdivision (a) provides, “Every person who buys or receives 13 any property that has been stolen or that has been obtained in any manner constituting theft or 14 extortion, knowing the property to be so stolen or obtained, or who conceals, sells, withholds, or 15 aids in concealing, selling, or withholding any property from the owner, knowing the property to 16 be so stolen or obtained, shall be punished by imprisonment in a county jail for not more than 17 one year, or imprisonment pursuant to subdivision (h) of Section 1170.”

Penal Code section 496, 18 subdivision (c) provides, “Any person who has been injured by a violation of subdivision (a) or 19 (b) may bring an action for three times the amount of actual damages, if any, sustained by the 20 plaintiff, costs of suit, and reasonable attorney’s fees.” The elements of this claim are: “(1) that 21 the particular property was stolen, (2) that the accused received, concealed, or withheld it from 22 the owner thereof, and (3) that the accused knew that the property was stolen. (Finton 23 Construction, Inc. v.

Bidna & Keys, APLC (2015) 238 Cal.App.4th 200, 213.) A violation of the 24 statue requires some form of criminal intent. (Siry Investment LP v. Farkenhondehpour (2022) 25 13 Cal.5th 333, 361-362 (Siry).) 26 In Siry, supra, 13 Cal.5th at pp. 361-362, on which PennyMac relies, the California 27 Supreme Court explained that “not all commercial or consumer disputes alleging that a 28 defendant obtained money or property through fraud, misrepresentation, or breach of a

1 contractual promise will amount to a theft. To prove theft, a plaintiff must establish criminal 2 intent on the part of the defendant beyond ‘mere proof of nonperformance or actual falsity.’ 3 [Citation.] This requirement prevents ‘ “[o]rdinary commercial defaults” ’ from being 4 transformed into a theft. [Citation.] If misrepresentations or unfulfilled promises ‘are made 5 innocently or inadvertently, they can no more form the basis for a prosecution for obtaining 6 property by false pretenses than can an innocent breach of contract.’ [Citation.]” 7 Here, the TAP adequately pleads that Tom committed theft of the Tahoe Property.

The 8 TAP alleges that Tom expressed a desire to deprive the other beneficiaries of their interest in the 9 property, (TAP, ¶ 42), that he mislead Maria regarding her authority to convey trust assets, 10 (TAP, ¶ 83), and that he prepared false documents to cover up the low sales price for the Tahoe 11 Property, (TAP, ¶¶ 4, 19). (See Siry, supra, 13 Cal.5th at p. 351 [theft includes theft by fraud or 12 false pretenses].) It also alleges purportedly wrongful conduct on the part of PennyMac, 13 including that it had knowledge of the low sale price of $1.6 million due to its own appraisal in 14 the amount of $2,400,000; that it knew this was a family transaction, a type of transaction with a 15 high rate of fraud; and that it was aware of the high amount of the gift of equity but that it failed 16 to obtain a formal gift letter, as required federally, and that it did not look into whether Maria had 17 the authority to make such a gift. (TAP, ¶¶ 68, 69, 73, 75.) 18 That said, the property that was allegedly stolen is the Tahoe Property.

It cannot be 19 disputed that PennyMac did not receive the Tahoe Property. In fact, the TAP pleads that 20 “PennyMac holds an interest in a stolen asset.” (TAP, ¶ 71, see also ¶ 74 [“PennyMac chose to 21 ignore problematic closing documents, specifically the Trust Certification signed by Trustee 22 Maria Kais submitted to the Collaboration Portal by the Settlement Agent and assumed a security 23 interest in property that had been stolen and/or obtained through false pretenses.”].) PennyMac 24 contends that it did not possess the stolen property as the deed of trust gives it no right to 25 possession and no ownership interest in the property. “ ‘In practical effect, if not in legal 26 parlance, a deed of trust is a lien on the property.’ [Citation.]

It conveys title to the trustee only 27 so far as may be necessary to the execution of the trust for purposes of security. [Citation.] Thus, 28 ‘[t]he right to possession does not pass to the trustee or the beneficiary under a trust deed in the

1 absence of a special agreement.’ [Citation.] To summarize, a deed of trust carries none of the 2 incidents of ownership of the property, other than the trustee’s right to convey upon default, and 3 in the absence of a special agreement conveys no right of possession to the trustee or beneficiary. 4 [Citations.]” (Bailey v. Citibank, N.A. (2021) 66 Cal.App.5th 335, 353.) Thus, PennyMac did not 5 receive or possess the allegedly stolen property, the Tahoe Property, instead, it received a 6 security interest from the new owners of the property.

Petitioners cite no authority indicating that 7 this conduct can amount to receipt of stolen property under Penal Code section 496. Penal Code 8 section 496 applies when one receives or possesses stolen property. (Siry, supra, 13 Cal.5th at p. 9 355.) 3 The TAP fails to allege receipt or possession of the stolen Tahoe Property by PennyMac. 10 The court notes that Petitioners appear to plead that PennyMac is liable under Penal Code 11 section 496 for its own conduct in receiving the allegedly stolen property, rather than pleading 12 that PennyMac aided and abetted Tom’s alleged conduct in fraudulently obtaining the Tahoe 13 Property. (See TAP, ¶¶ 76 [“This conduct by Tom Kais, Andrea Leslie and PennyMac 14 constitutes a violation of Penal Code § 496(a), which prohibits receiving or retaining property 15 known to be stolen or obtained by fraud.”], 74 [“PennyMac . . . assumed a security interest in 16 property that had been stolen and/or obtained through false pretenses.”].)

Nonetheless, 17 PennyMac contends that it cannot be held liable under an aiding and abetting theory because the 18 TAP does not plead actual knowledge of Tom’s wrongful conduct. As discussed further below, 19 the court finds that the TAP fails to plead actual knowledge on the part of PennyMac. 20 Accordingly, the demurrer is SUSTAINED as to the fourth cause of action with 20 days’ leave to 21 amend. (See City of Stockton v. Superior Court (2007) 42 Cal.4th 730, 747 [“[i]f the plaintiff has 22 not had an opportunity to amend the complaint in response to the demurrer, leave to amend is 23 liberally allowed as a matter of fairness, unless the complaint shows on its face that it is 24 incapable of amendment. [Citations.]”].) 25 B.

Fifth Cause of Action: Financial Elder Abuse 26 3 27 Penal Code section 496 also applies when one “conceals, sells, withholds, or aids in concealing, selling, or withholding any property from the owner, knowing the property to be so stolen or 28 obtained[.]” (Siry, supra, 13 Cal.5th at p. 346.) But, the TAP does not state facts constituting any of these alternative theories.

1 As to the fifth cause of action, PennyMac contends that Petitioners have failed to allege 2 facts sufficient to state an elder abuse claim as to PennyMac because they have not alleged facts 3 to show that PennyMac wrongfully took any trust property or knowingly assisted in any alleged 4 financial elder abuse of Maria by Tom. 5 In order to state a claim for financial elder abuse, a plaintiff must plead and prove the 6 following: (1) the plaintiff was “elderly” within the meaning of the Elder Abuse Act (Welfare & 7 Institutions Code section 15600, et seq.), i.e., 65 years of age or older; (2) the defendant took or 8 retained the plaintiff’s property with the intent to defraud the plaintiff, for a wrongful use, or by 9 undue influence; (3) the plaintiff was harmed; and (4) the defendant’s conduct was a substantial 10 factor in causing in the plaintiff’s harm. (See CACI No. 3100; Welf. & Inst.

Code, § 11 15610.30.) 12 “Financial abuse” of an elder or dependent adult occurs when a person or entity does any of the following: 13 (1) Takes, secretes, appropriates, obtains, or retains real or personal property of an 14 elder or dependent adult for a wrongful use or with intent to defraud, or both. 15 (2) Assists in taking, secreting, appropriating, obtaining, or retaining real or personal property of an elder or dependent adult for a wrongful use or with intent 16 to defraud, or both. 17 (3) Takes, secretes, appropriates, obtains, or retains, or assists in taking, secreting, appropriating, obtaining, or retaining, real or personal property of an elder or 18 dependent adult by undue influence, as defined in Section 15610.70. 19 (Welf. & Inst.

Code, § 15610.30, subd. (a).) “A person or entity shall be deemed to have taken, 20 secreted, appropriated, obtained, or retained property for a wrongful use if, among other things, 21 the person or entity takes, secretes, appropriates, obtains, or retains the property and the person 22 or entity knew or should have known that this conduct is likely to be harmful to the elder or 23 dependent adult.” (Welf. & Inst. Code, § 15610.30 (b).) “For purposes of this section, a person or 24 entity takes, secretes, appropriates, obtains, or retains real or personal property when an elder or 25 dependent adult is deprived of any property right, including by means of an agreement, donative 26 transfer, or testamentary bequest, regardless of whether the property is held directly or by a 27 representative of an elder or dependent adult.” (Welf. & Inst.

Code, § 15610.30, subd. (c).) 28

1 A cause of action for elder abuse is statutory and, therefore, must be pleaded with 2 particularity. (Covenant Care, Inc. v. Superior Court (2004) 32 Cal.4th 771, 790.) “Accordingly, 3 [the] ‘[u]se of such terminology [as fraudulently and recklessly] cannot cure [the] failure to point 4 out exactly how or in what manner the [respondent] transgressed.’ [Citation.]” (Carter v. Prime 5 Healthcare Paradise Valley LLC (2011) 198 Cal.App.4th 396, 410.) 6 PennyMac contends that Petitioners have failed to allege a wrongful use of the property. 7 They rely on Stebley v.

Litton Loan Servicing, LLP (2011) 202 Cal.App.4th 522, 528, in which 8 the Court of Appeal stated, “ ‘It is simply not tortious for a commercial lender to lend money, 9 take collateral, or to foreclose on collateral when a debt is not paid. ... [A] commercial lender is 10 privileged to pursue its own economic interests and may properly assert its contractual rights.’ 11 [Citation.]” In Das v. Bank of America, N.A. (2010) 186 Cal.App.4th 727, 740 (Das), on which 12 PennyMac also relies, the Court of Appeal explained, “ ‘as a general rule, a financial institution 13 owes no duty of care to a borrower when the institution’s involvement in the loan transaction 14 does not exceed the scope of its conventional role as a mere lender of money.’ [Citation.]” Here, 15 PennyMac asserts that if it owed no duty to the borrower, Maria, it surely owed no duty to 16 Petitioners, who are merely beneficiaries of the trust that once held the Tahoe Property. 17 Nonetheless, “a bank may be liable for aiding and abetting a tort when it renders 18 substantial assistance to a tortfeasor during a business transaction, that is, knowingly aids the 19 commission of the tort. [Citation.]” (Das, supra, 186 Cal.App.4th at p. 741.)

In Das, the Court of 20 Appeal explained that California courts have adopted a common law rule whereby “[l]iability 21 may ... be imposed on one who aids and abets the commission of an intentional tort if the person 22 (a) knows the other's conduct constitutes a breach of duty and gives substantial assistance or 23 encouragement to the other to so act or (b) gives substantial assistance to the other in 24 accomplishing a tortious result and the person’s own conduct, separately considered, constitutes 25 a breach of duty to the third person. [Citations.]” (Id. at p. 744.)

Thus, where “a bank provides 26 ordinary services that effectuate financial abuse by a third party, the bank may be found to have 27 ‘assisted’ the financial abuse only if it knew of the third party’s wrongful conduct.” (Id. at p. 28 745.)

1 Here, although the TAP alleges that PennyMac knew of various suspicious 2 circumstances, it does not allege that PennyMac had actual knowledge of the fraudulent scheme 3 by Tom and Andrea. (See TAP, ¶¶ 68 [“PennyMac had actual knowledge of the fact that family 4 sales of property attach a high rate of fraud. PennyMac also knew this was a transaction that did 5 not involve real estate agents or brokers.”], 69 [PennyMac knew Sam, Sr. had died and had 6 access to trust provisions that could have enabled it to determine that the trust was irrevocable], 7 74 [same], 75 [stating facts PennyMac knew].)

Accordingly, the demurrer is SUSTAINED as to 8 the fifth cause of action with 20 days’ leave to amend. 9 C. Sixth Cause of Action: Return of Trust Property 10 With respect to the sixth cause of action, PennyMac maintains that the TAP Petitioners 11 does not allege facts sufficient to state a claim for wrongful transfer of property against 12 PennyMac because Petitioners have not alleged facts to show that PennyMac wrongfully took 13 any trust property or engaged in any bad faith, undue influence, or financial elder abuse. 14 Probate Code section 850, the statutory basis for the sixth cause of action, applies when “the 15 trustee has a claim to real or personal property, title to or possession of which is held by 16 another.” (Prob.

Code, § 850, subd. (a)(3)(B).) PennyMac asserts that it did not take and does not 17 hold the Tahoe Property because it received only a security interest and not possession of the 18 Tahoe Property. As discussed above, the TAP does not plead that PennyMac received or held the 19 Tahoe Property. Instead, it pleads that PennyMac received a security interest in the property. 20 That interest was not held by the trust and was created only upon the sale of the Tahoe Property. 21 (See, generally, Louis & Diederich v.

Cambridge European Imps. (1987) 189 Cal.App.3d 1574, 22 1586 [security interest is created when debtor with rights in the collateral has signed the 23 agreement and value has been given].) Notably, the prayer for relief seeks return of the Tahoe 24 Property to the Bypass Trust but only cancellation, and not return, of the deed of trust securing 25 PennyMac’s loan. (See TAP, prayer for relief, ¶¶ 6-7.) A cause of action for return of trust 26 property does not lie under the facts as pled in the TAP.

The demurrer is SUSTAINED as to the 27 sixth cause of action with 20 days’ leave to amend. 28 CONCLUSION

1 The demurrer is SUSTAINED as to the fourth, fifth, and sixth causes of action as to 2 PennyMac with 20 days’ leave to amend. 3 IT IS SO ORDERED. 4 5 Dated: ___________, 2026 ________________________________ HON. AMBER ROSEN 6 JUDGE OF THE SUPERIOR COURT 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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