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8/9/2019 Nguyen Chase Motions Rule 60(b) and 55 Re Default Judgment
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JOHN M. SORICH(CA Bar No. 125223)
jsorichC2adorno.com
THEOÙ'QREE. BACON (CA Bar NO.1 15395)
§~aC~~siö15f&kmyOO (CA Bar No.1 69442)
cyooC2adorno.com
ADOltOYOSS ALVARADO & SMITH
A Professional Corporation
1 MacArthur Place, Suite 200
Santa Ana, California 92707
Tel: (714) 852-6800
Fax: (714) 852-6899
Attorneys for Defendants
CHASE BANK USA, N.A. and CHASE
HOME FINANCE LLC
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT
OF CALIFORNIA
PAUL NGUYN, an individual; and
LAUR NGUYEN, an individual,
Plaintiffs,
CASE NO.: CV09-4589 AHM (AJWx)
JUDGE: Hon. A. Howard Matz
DEFENDANTS' NOTICE OF
MOTION AND MOTION FOR
RELIEF FROM JUDGMENT
UNDER
RULE 60(b) of
FEDERAL
RULES OF CIVIL PROCEDURE
AND RELIEF FROM DEFAULT
UNDER RULE 55(c);
MEMORANDUM OF POINTS AND
AUTHORITIES IN SUPPORT
THEREOF
v.
Chase Bank USA, N.A.; Chase Home
Finance, LLC; First American Loanstar
Trustee Services; Sydney
Funding and
Realty, Inc.; Sidney Tran, an Individual;
Nexus Escrow, Inc.; Jolm Ng~yen,an
Individual; Joseph Son Cao Tran, and
Individual; Reafty Savers Inc.; Ngyyen
Paul Tuan, an Individual; and DOES 1
through 50, inclusive,
(FRCP.Rules60(b) and
55(c) )
CTRM: 14
DATE: November
8, 2010
TIME: 10:00 a.m.
ActionFiled: June 25, 2009
Defendants.
TO PLAINTIFFS AND ALL INTERESTED
PARTIES:
NOTICE IS GIVEN that under Rule 60(b)
of Federal Rules of Civil Procedure
( FRCP ), on November 8, 2010 at 10:00 a.m. or as
soon
thereafter
as the matter can
be heard in Courtroom 1 4 of the above-entitled Court, defendants Chase Bank USA,
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MOTION FOR RELIEF FROM DEFAULT JUDGMENT
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N.A. ( Chase Bank )
and
Chase Home Finance LLC ( Chase
Home, and collectively
Defendants ) wil move this Court for Relief from the Default Judgment entered on
September 15,2010. The grounds forthe Motion are as follows:
. Excusable neglect of
Defendants' counseL.
. Attorney negligence is an
extra-ordinary circumstance justifying relief
under Rule 60(b)(6).
. The Judgmentis void because the
Court
exceeded its authority in
entering Defendants' default, as any failure to
follow the Court orders was not
fraudulent conduct on the
part
of
Defendants and
did
not relate to the merits
of the
case. Rule 60(b)(4).
For the same reasons, under Rule 55(c) ofFRCP, Defendants wil move this
Court to set aside the
entry of default on August23, 2010.
Counsel for
Defendants . met and conferred with Plaintiffs. on September 29,
2010 regarding the grounds
for this
Motion. Therefore,Defendantshaveinet the
requirements
of Local Rule 7-3. See, Local Rule
7-3.
DATED: October
5,2010
ADORNO YOSS ALVARADO & SMITH
A Professional Corporation
By: lsi S. Christopher Yoo
JOHN M. SORICH
S. CHRSTOPHER YOO
¿msIrBS\~eEes1~lJ~A. and CHASE
HOME FINANCE LLC
2
MOTION FORRELlEF FROM DEFAULT JUDGMENT
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TABLE.OF CONTENTS
Page
I. SUMMARY OF ARGUMENT....................................................................... 1
II. STATEMENT OF RELEVANT FACTS........................................................3
A. Subject Loan..........................................................................................3
B. Court Order Issuing Injunction Enjoining Foreclosure......................... 3
C. Defendants Failure to File Status Report Regarding Status of
Settlement Conference ..........................................................................4
D. Agreement Between Plaintiffs and Defendants to çontinue Trial
Date and Allow Defendants to File Cross-Complaint .... ...................... 5
III. DEFENDANTS SHOULD BE
RELIEVED FROM
DEFAULT
JUDGMENT, BECAUSE DEFENDANTS FAILUR TO FILE PRE-
TRIAL
CONFERENCE STATEMENT WAS DUE TO EXCUSABLE
NEGLECT ......................................................................................................6
IV. DEFENDANTS SHOULD NOT BE LIABLE FOR THE NEGLIGENCE
OF THEIR COUNSEL....................................................................................9
V. CONDUCT
OF DEFENDANTS OR
DEFENDANTS COUNSEL
DID
NOT RISE TO THE
LEVEL OF
FRAUDULENT OR INTENTIONAL
CONDUCT THAT
WOULD
WARRNT ENTRY OF DEFAULT AND
DEFAULT JUDGMENT ................................................................................9
VI. FOR THE SAME
REASONS THATTHEDEFAULT JUDGMENT
ß~?~ullfJJJL~f£Es~~~d~~~~lüJ~rn~~~.?~..........ll
VII. CONCLUSION..............................................................................................12
1
NO
lICE OF MallON AND MallON 10 DISMISS COMPLAIN I
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TABLE OF AUTHORITIES
Page
Cases
Bateman v. United States Postal Service,
231 F.3d 1220,1223 (9th Cir. 2000)...........................................................................7
Brf4fF~3d ~~~~2~6f7th.ßiff~(8)...............................................................................6
Community Dental Services v. Tani,
282 F.3d 1164, 1169 (9th Cir 2002)............................................................................9
Employee Painter's Trust v. Ethan Enterprises, Inc.,
480 F.3d 993, 1000 (9th Cir. 2007).............................................................................7
Hot 7 U.tl~O~: 413-14 (1897).....................................................................................10
Mendoza v. Wight Vineyard Management,
783 F.2d 94r, 945-946
(9t1 Cir. 1986) .................................................................. 7, 11
Phoceene So us
Marine, S.A. v. Us. Phosmarine, Inc.,
682 F .2d 802, 805-06 (9th Cir. 1982)...... .................... ........................................ 10, 11
Pioneer Investment Services Co. v. Brunswick Associates LTD Partnership,
507 US 390, 394 (1993) .............................................................................................. 7
R04t7f S~1;~s16T(i98Ôr~~~~....................................................................................10
Securities and Exchange Comrnissionv. Seaboard Corp.,
666 F .2d 414, 416- 17 (9th Cir.1982) .......... ..... .......... ............ ............................. 10, 11
TCi4~11d i~í ,I696r~the¿;~2QÓB~~~~~~~~............................................................... 1 1
Televideo Systems, Inc. v. H~identhal,
826 F.2d 915,916-917 (9t1 Cir. 1987) ........................................................................9
ya~9m¡~od Vi ~qtt9tl~i;: öó'ff).....................................................................................8
Statutes
15 USC § l635(b)...........................................................................................................9
Rule 55 c) of
the Federal Rules of
Civil Procedure .....................................................11
Rules
FRCP Rule 60(b ).........................................::............................................................6, 11
11
NO I ICE OF MO I ION AND MO I ION I a DISMISS COMPLAIN I
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TABLE OF AUTHORITIES
Page
FRCP Rule 5 5( c). ............. ....................... .... ............. ........................ .........................1, 11
FRCP Rule 60(b)............................................................................................................. 1
FRCP Rule 60(b )(1) ... ..... ....... ..... ....... ........ .................. ............ ..... ................ ................1 i
FRCP Rule 60(b )(3) ........................................................................................................ 9
FRCP Rule 60(b)(4)........................................................................................................9
FRCP Rule 60(b)( 6) ........................................................................................................ 9
iii
NOIICE OF MallON AND MalIaN 1 DISMISS COMPLAIN I
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MEMORANDUM.OF POINTS AND AUTHORITIES
Defendants Chase Bank USA, N.A. ( Chase Bank ) and Chase Home Finance
LLC ( Chase Home, and collectively Defendants'l) hereby submit the following
memorandum of points and authorities in support of their Motion for Relief from
Default Judgment entered on September 15,2010 under Rule 60(b) of
Federal Rules
of Civil Procedure ( FRCP ) and their Motion to Set Aside Default under Rule 55( c)
ofFRCP.
I. SUMMARY OF
ARGUMENT
On August 23, 2010, the Court entered default against Defendants because of
their counsel's failure to file required pre-trial documents and because of a perceived
lack of compliance with certain prior orders (See, Pacer Docket NO.1 15).
Specifically, the Court cited the following:
. On November 17,2010, the Court ordered Defendants to
cancel
foreclosure of the subject property, but
Defendants continued with foreclosure on two
separate occasions.
. Defendants' failure to file a status report regarding referral of this matter
for a settlement conference before
Magistrate JudgeWistrich
. Defendants' failure to file apretrial conference statement.
As a result of the
the Court entered
default
Defendants on
August 23, 20l0, and issued a default
judgment on September 15,2010. However, for
the reasons set forth below, Defendants respectfully request that they
be relieved from
the Default Judgment, because
any failure to comply with the court orders were due to
excusable neglect of
Defendants .and/orDefendants' counsel for the following
reasons.
First, with respect perceived failure to comply with the order to cancel
foreclosure, the Court acknowledged in its January 26, 2010 order that the foreclosure
trustee, Loanstar, when forward with the foreclosure despite having been advised by
Defendants' counsel that it was enjoined from doing so. With respect to the second
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I occasion on or about June 28, 2010, the foreclosure notice
was issued inadvertently
and thereafter retracted immediately after Plaintiffs brought it to the attention of
Defendants counseL.
Second, with respect to the failure of the parties to complete a settlement
conference by the deadline of
May 31, 2010, the case was in active discovery during
the Spring of 20 1 0, including written discovery, and it was not until the depositions of
Plaintiffs in late May
2 1 that it became apparentthatthere were other parties who
were dismissed by Plaintiffs who may bear responsibility for the acts giving rise to
Plaintiffs' lawsuit. Defendants' counsel did initially contact the clerk for Judge
Wistrich and provided dates to Plaintiffs in November 2009. However, in
light of
factual disputes with the Plaintiffs, it was necessary to undertake discovery. This
information is offered as an explanation, not an excuse. Responsibility for the failure
to complete the settlement conference lies with Defendants' counsel, not the
Defendants.
Third, the failure to file a pretrial conference statement is the result of the
inadvertence and excusable neglect of
Defendants' counseL. As noted in documents
previously filed with the Court, Defendants counsel and
Plaintiff
had reached an
agreement to seek the continuance of trial in order to bring into the case
certain other
parties who bear some responsibility for the
events giving rise to Plaintiffs' claims.
The mistake by Defendants' counsel was the failure to file the motion to continue trial
at an earlier time iii the action. Theparties were in agreement that these other
parties,
who Plaintiffs had previously dismissed, were necessary
to achieve full and complete
resolution of this matter. It should be noted that Defendants were not the only party
who initially failed to file a pretrial
conference statement, the Plaintiffs did not file
one either, yet only the Defendants were
punished
by the Court.
For the reasons set forth above, Defendants respectfully request the Court to set
aside the default judgment, and allow the parties to litigate this matter on the merits.
11/
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II. STATEMENT OF RELEVANT
FACTS
A. Subject Loan
Plaintiffs obtained a loan in the amount of $250,000.00 ( Loan ) in connection
with the property located at 16141 Quartz Street, Westminster, California 92683
( Subject Property ). The Loan was secured by a deed of
trust encumbering the
Subject Property that was recorded with the Orange County Official Records on
December 12,2007 as instrument
number 2007000731120 ( DOT ). The DOT
identifies Chase Bank as the lender and Plaintiffs as the borrowers. See, Request for
Judicial Notice ( RJ ), 1, attached to the
Motion to Dismiss the First Amended
Complaint. Pacer Docket No. 35. A Notice of
Default and Election to Sell Under
Deed of Trust ( NOD ) was recorded pursuant to the DOT on March 19, 2009 with
the Orange County Official Records as instrument number 2009000131 148 due to
Plaintiffs' failure to make monthly mortgage
payments. The NOD states that as of
March 18,2009, the amount arrears under
the Loan was 14,372.75. See RJ,
Exhibit 2. A Substitution of
Trustee
pursuant
to the DOT was recorded on April 22,
2009 with the Orange County OfficialRecordsas instrument number 2009000197524.
First American Loanstar Trustee
Services was namedthe new trustee of
the
DOT. See
RJN, Exhibit 3, Pacer Docket No. 35. An Assignment of Deed of
Trust was recorded
on 30, 2009, with
Recorder as instrument number
2009000215727. All beneficial interest under the DOT was assigned to IPMorgan
Chase Bank, N.A. ( JPMorgan ). See RJN, Exhibit4, Pacer
Docket No. 35. A Notice
of Trustee's Sale was recorded pursuant to the DOT on
June 24, 2009 with the Orange
County Official Records as instrument
number 200900033 1959. SeeRJ, Exhibit 5,
Pacer Docket No. 35.
B. Court Order Issuing Injunction Enjoining
Foreclosure
On August 3, 2010, the Court issued apreliminary injunction enjoining
foreclosure sale of
the SubjectProperty. Pacer Docket No. 45. On November 17,
2010, the Court further ordered Defendants to actually cancel foreclosure of
the
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Subject Property. Pacer Docket No. 94. On January 4,2010, Plaintiff
filed a motion
for contempt against Defendants and Loanstar for the re-initiation of
the foreclosure.
Pacer Docket 99. However, in its Order of January 26, 2010, the Court recognized
that the foreclosure was re-initiated without any fault of
Defendants. The Court stated
in its Order, Defendants Chase Bank USA, N.A. and Chase Home Finance LLC have
submitted to the Court evidence that they took measures to comply with its order to
cancel the foreclosure sale and any related
proceedings.
Specifically, on November
16,2009, their counsel sent an email to Loanstar's counsel, notifying Loanstar that the
Court had ordered cancellation of all
foreclosure proceedings and instructing them to
cancel the sale. Pacer Docket No. 105.
The second foreclosure was initiated on June 28, 2010 but rescinded on July 8,
2010 - two days after Paul Nguyen contacted Defendants' counseL. This inadvertence
by Defendants was remedied within six
days of
being
contacted by Plaintiffs. See
Declaration of S. Christopher Yoo ( Yoo Declaration ),if 4, Exhibit A. In fact, this
issue was resolved without the necessity of any Court intervention.
C. Defendants'Failure to File Status ReportRegarding
Status of
Settlement Conference
Counsel for Defendants
did contact Judge Wistrich's clerk, and provided
available dates toMr. Nguyen November 16,2009. Yoo Declaration,if 5, Exhibit
B. From then on, due to the inadvertence of Defendants' counsel,
the actual
settlement conference was not scheduled. This failure
is the
fault of
Defendants'
counseL. However, this issue was addressed with Mr.
Nguyen at his deposition on
May 27, 2010, and Defendants' counsel attempted to
schedule
a date for a settlement
conference up to the time of the Scheduling Conference on August 23, 2010.
However, judge Wistrich did not want to schedule a
settlement conference once the
deadline to complete the settlement conference had passed as of
May 31,2010. ¡d. It
was the fault of Defendants' counsel by not filing a status report regarding the
status of
a settlement conference. However, this was an oversight, and not done intentionally
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or maliciously to either offend the Court or to take improper advantage in litigation.
The case was in active discovery during the Spring of 20 1 0, including written
discovery, and it was not until the depositions of Plairitiffs in late May 2010 that it
became apparent that there were other parties who were dismissed by Plaintiffs who
may bear responsibility for the
acts giving rise to Plaintiffs' lawsuit. ¡d.
D. Agreement Between
Plaintiffs and
Defendants to Continue Trial
Date
and Allow
Defendants toFileCross-Contplaint
On May 27, 2010, Paul Nguyen's deposition was taken, and
on May 28,2010,
the deposition of
Laura Nguyen was taken per
the parties' agreement
because Mrs.
Nguyen was not available for deposition on
May 21, 201 0,
as originally noticed.
After the depositions, it becameapparentthatthe other parties
besides
Defendants
may be responsible for the alleged forgery of Laura
Nguyen s signature on certain loan
documents. Based on
Plaintiffs' deposition
testimonies, itbecame apparent that
Joseph Cao Son Tran, Angel Tran,SydneyFunding,and Nexus Escrow, Inc. may be
responsible for possibly forging Ms.
Nguyen's signature. Thus,
on
May 27, 2010,
Defendants immediately made a title
claim to Fidelity
National Title Insurance
Company ( Fidelity ) to seek indemnification for
forgery. Yoo Declaration, ir 6,
Exhibit C. Defendants werehopefulthatFidelity would
accept
the title claim, and
either resolve. the inatter promPtly
or assumethedefenseof this actiol1iiiPlac~of
Defendants' counsel and relieve Defendants of
the unnecessary burden ofincurring
attorneys' fees and
costs in this action.
In this regard, Plaintiffs agreed to stipulate to continue
the trial date to allow
Defendants to file a cross-claim against
Joseph Cao SOn Tran, Angel Tran, Sydney
Funding, and Nexus Escrow, Inc. This agreement by
Plaintiffs is
expressly
acknowledged in Plaintiffs' Response to Order to Show Cause ( 0SC ) Re: Failure to
Prosecute, and Plaintiffs' Unilateral
Pretrial
Conference Statement,irir 10- 18. Pacer
Docket NO.1 08.
In fact, on August 17,2010, Paul Nguyen sent an email to Defendants' counsel
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again reiterating his intention to agree to a stipulation to
continue the trial date and
leave for Defendants to file a cross-complaint. Yoo Declaration, ii 8, Exhibit D. In
response, on August 19, 2010, Defendants' counsel forwarded to Plaintiffs the
proposed cross-complaint and the proposed stipulation to continue the trial date.
Because Plaintiffs had objections to the proposed cross-complaint, on August 20,
2010, Defendants' counsel forwarded the revised cross-complaint. Y 00 Declaration,
ii 8. Up to the
date of the Pretrial
Conference
on August
23, 2010, Defendants'
counsel believed that the trial date would be
postponed to allow Defendants to file a
cross-complaint against certain third parties so that the
entire matter could be resolved
in one lawsuit. Y 00 Declaration, ii 9. The failure to file the pretrial conference
statement was due to Defendants' mistaken understanding that the parties would
continue the trial date and allow Defendants to prosecute the cross-claims.
The Default Judgment was entered against Defendants on September 15, 2010.
See, Pacer Docket Number 127.
III. DEFENDANTS. SHOULD..BE.RELIEVEDFROMDEFAULT
JUDGMENT, BECAUSEDEFENDANTS FAILURE TO.
FILE
PRE-
TRIAL CONFERENCESTATEMENT WAS
DUETO EXCUSABLE
NEGLECT
FRCP Rule 60(b) governs amotion to seek relieffrom a default
judgment. If
the moving party can show mistake, inadvertence, surprise or excusable neglect, the
court may set aside a judgment. FRCP 60(b). A Rule60(b) motion must be brought
within 1 year from the entry of
judgment. FRCP 60(c)(I); Brandon v. Chicago Board
of Ed., 143 F.3d 293, 296 (7th Cir. 1998). Thus, this
Motion is timely.
The factors for excusable
neglect are:
CD prejudice to other side
CD length of delay and its potential impact on judicial proceedings
CD the reason for the delay, including whether it was within the
reasonable control of the movant, and
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. whether the movant acted in good faith.
Pioneer Investment Services Co. v. Brunswick Associates LTD Partnership, 507 US
390, 394 (1993).
The Supreme Court stated that all relevant circumstances must be taken into
account in determining whether the neglect was excusable. Pioneer Investment
Services Co. v. Brunswick Associates LTD Partnership, 507 US at 395.
As to default judgments, the following factors are considered:
. whether default resulted from defendant's culpable conduct
(devious, deliberate, wilful or bad faith failure to respond)
.. whether defendant has meritorious defense; and
. whether reopening the default judgment would prejudice plaintiff.
Employee Painter's Trust v. Ethan Enterprises, Inc. 480F.3d 993, 1000 (9th Cir.
2007).
Moreover, excusable neglect
covers negligence onthe part of counseL.
Bateman v. United States Postal Service, 231 F.3d 1220, 1223
(9th Cir. 2000).
Additionally, the Ninth Circuit has expressed a . strong
judicial preference for
adjudication on the merits. See Mendoza v. Wight Vineyard
Management, 783 F.2d
941, 945-946 (9th Cir. 1986). These
Rule 60(b) grounds are liberally interpreted
when used on a motion for
Id.
As stated above, Defendants' counsel did 110t file a pretrial conference
statement, because the parties
agreed to stipulate to continue the trial date to
allow
Defendants an opportunity to file a cross-complaint. See, Yoo Declaration, irir 7-9,
Exhibit D. In fact, Plaintiffs cannot dispute that they agreed to continuance of the
trial date and leave for Defendants to .file a cross-coinplaint other third parties. See,
Yoo Declaration, irir 7-9, Exhibit D. Even
as of August i 7,2010, Paul Nguyen sent
an email confirming his agreement to continue the trial and leave for Defendants to
file a cross-complaint. See, YooDeclaration, ir 8, Exhibit D.
If the default judgment is to be set aside, there is no prejudice to Plaintiffs,
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because Plaintiffs have not made any payment under the subject loan since December
2008. In fact, there is no pending foreclosure. See, Y 00 Declaration, iT 10, Exhibit
E. Thus, a short delay in resolution of
this matter wil not prejudice Plaintiffs.
Once the default judgment is set aside, Defendants wil be ready for trial within
a week of
the Court's notice. Additionally,
based on the concurrently filed Motion to
Alter or Amend the Default Judgment, there is a meritorious defense to Plaintiffs'
contention that Defendants
have forfeited
their
entitlement to the loan proceeds. See
concurrently filed Motion to Alter or Amend
Default Judgment. Based on the 9th
Circuit law, Plaintiffs are not
entitled to forfeiture of the subject loan, because until
there is an acknowledgement of rescission
by the lender or the decision maker's
adjudication of rescission, a plaintiffwouldsimply be advancing a claim for
rescission. Yamamoto v. Bank of
New York, 329 F.3d 1167, i 172 (9th Cir. 2003).
Moreover, testimony at trial
wil demonstrate that at
minimum, Paul Nguyen
was contributorily negligent for entering
into aJoantransaction without his wife's
knowledge or consent. In this
matter, Mr. Nguyen obtained a
loan without his wife's
consent or knowledge. In
fact, in Laura
Nguyen's reply to the objection to the
proposed judgment, she
stated she was a stranger to
the transaction, and did not
receive any proceed from the
loan transaction. See, Pacer DocketNo. 122, page 3.
Thus, Defendants have
affirmative defenses of estoppel, unclean hands, contributory
negligence, and other defenses againstPaulNguyen. Inshort, Paul
Nguyen's
decision
to obtain a residential loan without knowledge and COnsent
of
his wife led to his wife's
signature purportedly being forged by others.
Thus, the failure to file the pretrial
conference
statement was
due to the
mistaken understanding of Defendants' couiisel that
because the
parties would
continue the trial date and allow Defendants
to file a cross-claim against certain third
parties, Defendants would not have to file a pretrial conference statement.
Defendants' failure was not the result ofany malice, devious intent, or bad faith failure
to comply with any court order. Thus, Defendants' failure to file a pretrial conference
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statement was a result of excusable neglect on the part of
Defendants' counsel, and
as a result the default judgment should be set aside.
iv. DEFENDANTS
SHOULD NOTBE LIABLE FOR THE NEGLIGENCE
OF THEIR COUNSEL
In addition to Rule 60(b)(3), there is a catch all provision of
Rule 60(b)(6) that a
default can be set aside for all other reasons that justifies relief. Some courts treat
extreme or gross attorney negligence as an extra-ordinary circumstances justifying
relief under Rule 60(b)( 6). An unknowing client should not be held liable on the basis
of a default judgment resulting from an attorney's grossly negligent conduct.
Community Dental Services v. Tani, 282 F.3d 1164,1 169
(9th Cir 2002).
Here, the mistake was. the belief
of
Defendants' counsel that the trial date would
be postponed, and therefore, Defendants' counsel believed that a pretrial conference
statement would not be necessary. Defendants should not suffer the Draconian result
of a default judgment wherein the Loan proceeds in the sum of $250,000 are forfeited,
and also be required to pay in excess of$58,000to Plaintiffs under 15 USC § 1635(b)
due to their counsel's failure to file a pretrial conference statement. Here, the totality
of circumstances warrants setting aside
the
default judgment entered against
Defendants under Rule 60(b)(6).
v. CONDUCT OFDEFENDANTSORDEFENDANTS'COUNSELDID
NOT
RISE TO
THELEVELOF
FRAUDULENT OR INTENTIONAL
CONDUCT THAT WOULD.
WARRNT
ENTRY .OF.DEFAULT AND
DEFAULT JUDGMENT
Rule 60(b)( 4) states that the Court can provide arelief from a judgment if the
judgment is void.
The court has the inherent power to dismiss cases or enter defaults. However,
there are limits to the court s inherent power. In this regard, the court in Televideo
Systems, Inc. v. Heidenthal, 826F.2d 915,916-917 (9th Cir. 1987) states that the court
has inherent powers to dismiss cases or enter default judgments for failure to
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prosecute, contempt of the court, or abusive litigation practices. Roadway Express,
Inc. v. Piper 447 U.S. 752, 764 (1980). However, there are limits to the court s
inherent power to do so. The need for the orderly administration of justice does not
permit violations of due process. See Phoceene Sous Marine, s.A. v. Us. Phosmarine,
Inc., 682 F.2d 802,805-06 (9th Cir.1982) (recognizing that wilful deceit and conduct
utterly inconsistent with the orderly administration of justice would merit the
imposition of severe sanctions, but
finding
that because defendant's deceit-falsely
stating that he was too il to attend trial-was unrelated to the merits of
the controversy
the sanction was inconsistent with due process. The decision was based principally on
the notion that a party should not be deprived of his opportunity to defend based on
factors unrelated to the merits of
his case.); Securities and
Exchange Commission v.
Seaboard Corp., 666 F.2d 414,416-17 (9th Cir.1982) (finding that a default
j
udgment
against the defendant for failure to pay
a fine when the
defendant had complied with
an order to give a deposition was punitive and
a violation of
due process as the court
could not presume that the case lacked
merit); Hovey v. Elliott, 167 U.S. 409,413-14
(1897) (finding that courts may not strike an answer and enter a default merely to
punish a contempt of court unrelated
to
merits of case). These cases state thatthe
Couii s inherent power to enter default should
be based on some type of fraudulent
conduct of a party that impedes one s fight to conduct
discovery and
which lead to the
merits of
the case. See, Securities and
Exchange Commission v. Seaboard
Corp., 666
F.2d at 416-17.
Here, the Court entered default against Defendants based on the Court's
conclusion that Defendants violated
certain court orders and failed to file a pretrial
conference statement. Pacer
Docket No. 115. However, for the reasons
set forth
above, Defendants' failure to comply with the Courtorder was not intentional and was
merle the result of inadvertence of their counseL. Especially
as to the failure to file a
pretrial conference statement, such a failure was a result of the mistaken belief that the
trial date would be postponed to allow Defendants to file a cross-complaint. In light
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of
the totality of
the circumstances, Defendants should not be deprived of
their due
process right to defend against the claims asserted by Plaintiffs based on the factors
unrelated to the merits of the case. The cases identified above hold that even a
conduct that may be in contempt of the court would not warrant a default being
entered against that party if
unrelated to the merit of
the case. Phoceene Sous Marine,
s.A. v. Us. Phosmarine, Inc., 682 F.2d at 805-06; Securities and Exchange
Commission v. Seaboard Corp., 666F.2d at 416- 1 7. The conduct
has to be
fraudulent and utterly inconsistent with the
orderly administration of justice.
Defendants respectfully state that their inadvertence in this case does not rise to
the level of intentional conduct that relates to the merit of the case that would warrant
entry of default. Thus, Defendants' du.eprocess rights
would be violated if the default
and default judgment are not set aside.
VI. FOR THESAMEREASONSTHATTHEDEFAULT JUDGMENT
SHOULD
BE SET. ASIDE
UNDER RULE 60(b), THE ENTRY OF
DEFAULT. SHOULD
BESET ASIDE UNDER
RULE .55(c)
On
August
23, 2010, the Court
entered default as
to Defendants. The court can
set aside the entry of default for good cause.. Inthe9thCircuit, the
standard for
good cause to set aside the default is the same standard as the excusable
negligel1ce .stanciarciiincierRule6Q(i:)(l) t()setasicietheJiicigl1el1t. TQl Group Life
Insurance Plan v. Knoebber,244 F.3d 691, 696
(9thCir. 2001).
In this regard, the 9th
Circuit has
expressed
a strong judicial preference for
adjudication on the merits.SeeMendozav. Wight Vineyard Management, 783F .2d
941, 945-946 (9th Cir. 1986). Rule 5S(c), provides in
full that: For
good cause
shown the court may set aside an entry
of default and, if
a judgment by default has
been entered, may likewise set it aside in
accordance
with Rule 60(b) .
Because the standard is the same under RuleS 5( c) as Rule 60(b)( 1), for the
reasons state above, Defendants respectfully request that the default entered on August
23, 2010 be set aside.
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VII. CONCLUSION
For on the foregoing reasons, Defendants respectfully request that the Court
grant their Motion, and set aside the default that was entered on August 23, 2010 and
the default judgment that was entered on September 15, 2010.
DATED: October 5,2010
ADORNO YOSS ALVARADO & SMITH
A Professional Corporation
By: lsi S. Christopher Yoo
JOHNM. SORICH
S CHRISTOPHER YOO
¿ms1 BS\~e6es1~lJ~A. and CHASE
HOME FINANCE LLC
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DECLARATION
OF S.CHRISTOPHERYOO
I, S. Christopher Yoo, declare as follows:
1. I am a member with the law firm of Adorno, Yoss, Alvarado & Smith, a
Professional Corporation, attorneys of record
herein for defendants Chase Home
Finance LLC ( Chase
Home )
and Chase Bank USA, N.A. ( Chase Bank and
collectively Defendants ) in the above-captioned action ( Action ). I have been duly
admittedto practice law in
the
State of
California
and before
this District.
2. I am submitting this Declaration in support of the Motion to be Relieved
from Default and Default Judgment. If called
as a witness in this matter, I am
competent to testify of my own personal
knowledge, to
the best of my recollection, as
to the matters set forth in this
Declaration.
3. On August 3, 2010, the Court
issued a preliminary injunction enjoining
foreclosure sale of
the SubjectProperty.PacerDocketNo. 45. On November 17,
2010, the Court further ordered
Defendants to actually
cancel foreclosure
of the
Subject Property. Pacer DocketNo.94. OnJanuary 4,2010, Plaintiff
filed a motion
for contempt against
Defendants
and Loanstarfor there-initiation of the foreclosure.
Pacer Docket 99. However in its OrderofJanuary26 2010 the Court recognized
that the foreclosure wasre-initiatedwithoutanyfaultofDefendants. The Court stated
in its Order, Defendants
Chase Bank USA,N.A.andChaseHomeFinanceLLC have
submitted to the Court evidence that
they
took measures to comply with its
order to
cancel the foreclosure sale and
any related
proceedings. Specifically on November
16, 2009, their counsel sent an email. to
Loanstar' s counsel, ·
notifying Loanstar that the
Court had ordered cancellation of all foreclosure. proceedings
and instructing them to
cancel the sale. Pacer Docket
No. 105.
4. The second foreclosure was initiated
on June 28, 2010
but rescinded on
July 8, 2010 - TWO days after Paul Nguyen contacted Defendants' counseL. This
inadvertence by Defendants was remedied
within six
days of
being contacted by
Plaintiffs. Attached hereto as Exhibit A isa true and correct copy of
the Notice of
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Mrs. Nguyen was not available for deposition on May 21, 2010, as originally noticed.
After the depositions, it became apparent that the other parties besides Defendants
may be responsible for the alleged forgery of
Laura Nguyen s signature on certain loan
documents. Based on Plaintiffs' deposition testimonies, it became apparent that
Joseph Cao Son Tran, Angel Tran, Sydney Funding, and Nexus Escrow, Inc. may be
responsible for possibly forging Ms. Nguyen's signature. Thus, on May 27, 2010, my
office immediately made. a title claim
to Fidelity National Title Insurance Company
( Fidelity ) to seek indemnification for forgery. A true and correct copy of
the title
claim letter is attached hereto as
Exhibit C. Unfortunately, to date, Fidelity
has not
yet accepted the title claim. I was.hopeful that Fidelity would accept the title claim,
and
assume the defense of
this actionin place of
Defendants'
counsel and relieve
Defendants of
the unnecessary burden of incurring
attorneys' fees and
costs in this
action.
7. Since
May 28, 2010, Plaintiffs repeatedly agreed to stipulate to continue
the trial date to allow Defendants
to
file across-claim against JosephCao Son Tran,
Angel Tran, Sydney Funding,
and Nexus Escrow, Inc. This
agreement by
Plaintiffs is
expressly acknowledged
in Plaintiffs'Responseto Order
to Show
Cause
( OSC ) Re:
Failure to Prosecute, andPlaintiffs UnilateralPretrialConference Statement, iiii 10-
18. Pacer Docket No. 108.
8 In fact,
on August 17, 2010,
Paul
Nguyen sentan email to my attention
again reiterating
his intention to agree to a stipulation to continue the trial date and
leave for Defendants to
file a cross-complaint. A true and correct copy of Mr.
Nguyen's email of August 17,2010 is attached hereto as
Exhibit D. In response, on
August 19, 2010, I forwarded
to Plaintiffs the proposed cross-complaint
and the
proposed stipulation to continue the trial.date. Because Plaintiffs had objections to the
proposed cross-complaint, on August 20, 2010, I forwarded the revised cross-
complaint.
9. Up to the date of
the Pretrial Conference on August 23,2010, I believed
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that the trial date would be postponed to allow Defendants to file a cross-complaint
against certain third parties so that the entire matter could be resolved in one lawsuit.
The failure to file the pretrial conference statement was due to my mistaken
understanding that the parties would continue the trial date and allow Defendants to
prosecute the cross-claims. Our office's failure to file a pretrial conference was not
the result of any malice, devious intent, or bad faith failure to comply with any court
order.
10. Attached hereto as Exhibit E is a true and correct copy of an email
dated August 31, 2010 from Paul Nguyen setting forth all loan payments made by him
under the subj ect loan. As indicated in the August 31, 2010 email, the last payment
made by Plaintiffs under the subject loan was on
December 17,2008.
declare under penalty of perjury under the laws
of the State of California and
the United States of America that the foregoing is true and correct.
Executed on October 5, 2010at Santa Ana, California.
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EXHIBIT
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Branch :FOl,User :A052
Comment:
Station Id :YUUP
Recorded InOfficial Records¡ Ora.nge County
Tom Daly, Clerk-Recorder
Recording requested by:
LSI Tille Company
When Recorded Mail To:
NDEx West. L.L.C.
15000 Surveyor Boulevard, Suite 500
Addison, Texas 75001.9013
APN : 107-903-44
Property A.ddress:
16141 QUARTZ ST
WESTMINSTER, CALIFORNIA 92683
9.00
2010000328766 11 :28am 07/12/10
217405 N38 1
0.000.000.000.000.000.000.000.00
111111111111111111111111 11111111111111111111111111~I11111111111111111111111111
RND20100187502242
Sp.1ci: 3búvl th¡~ line ror Rccorderls; usc only
Trustee Sale No.: 20100187502242
Title Order No.: 100378592
NOTICE OF RESCISSION OF NOTICE OF DEFAULT
NOTICE IS HEHEßY GIVEN THAT: NDEX WEST, LLC us agent for the
Trust dated l20712007, executed by PAUl. NGUYEN AND LAUnA NGUYEN,
obligations in favor of CHASE RANK USA, N.A., as Beiiel1ci¡lry Hceorncdon
2007000731120 of offcial records in the Offce of the Recorder of ORANGE
land therein as more fully described on the above referenced deed of trusC
beneficiary under a Deed of
as Tiustor, to . secure certain
12112/2007 as Instrument No.
County, California describing
Whereas, the present beneficiary under that certain Deed of Trust herein above described, recorded a Notice of
Default and Election to Sell. Said Notice was R~corded on 06/2R/2010 as Instrument No, 2010000303698 in
the offce of the Recorder of ORANGE County. California, of omcial records.
NOW; THEREFORE, NOTICE IS HEREBY GIVEN THAT: the present Beneficiary andlor the Trustee,
and/or the agent of the Trustee, does hereby rescind, cancel and withdniw s¡iid Notice of Brcach and Notice of
Default and Election to Sell; it being understood, however, thar this rescission shall nol in any manner be
coiistn.ied as
aiving or alTecting any breach or default¡nisti present or tunire under said Deed of Trust, or as
impairing any right or remedy thereunder, but is, and shall be deemed to be, only
an election, without prejudice,
not t 1 cause a sale to be made pursuant to said Notice, and shall no iv¡iy jcopardize or impair any right, remedy or
privilege secured .to the Beneficiary
and/or the Trustee, under said Deed of Trust, nor modifY nor
alter in any
respect any of the terms, covenants, conditions or obligations thereof, and said Deed of Trust and all obligations
secured thereby are hereby reinstaied and sh,,1I he and rei ,iin in fmce and effcct the same as if said Notice of
Breacli and Notice of Default and Election to Sell had not been made and given,
DATED: 07/08/20iO
By: Randy MidC:leton
FCUS_NOR_NOD.rpt- (05112110) I Ver-12
Page lof1
ORANGE,CA
Document: RE 2010.328766
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Branch :F01,User :A052 Comment:
Station Id :YUUP
Recorded In Official Records, Orange County
Tom DalYJ Clerk-Recorder
Recording requested by:
LSI Title Company
When Recorded Mail To:
NOEx West, LL.C.
15000 Surveyor Boulevard. Suite 500
Addison, Texas 75001-9013
APN #: 107-903-44
Propert Address:
16141 QUARTZ ST
WESTMINSTER, CAUFOllNIA 92683
9.00
2010000329423 03:34pm 07/12/10
217405 N38 1
0.000.000.000.000.000.000.000.00
1111111111111111111111111111111111111111111111111 1~I11111111111111111111111111
RND20100187502242
Space above ih¡~ line for Rccurdcr';: ui-c only
Trustee : hile No.: 20100187502242
Title Ordcr No.: 100378592
NOTICE OF RESCISSION OF NOTICE OF DEFAULT
NOTICE is HEllEBY GIVEN THAT: NnEX WEST, LLC "' ,gent for the beneficimy under a Deed of
Trust dated 1210712007, executed by PAUL NGUYEN ANn LAURA. NGUYEN. as. Trustor. to seeurecertain
obligations in favor of CHASE BANK lJSA,N.A., as Beneficiary Recorded on iiiiil2007 as Instrument No.
2007000731120 of offcial records in the Offce of the Recorder of ORANGE County, Caliornia describing
land therein as more fully described on the above referenced deed of
rust.
Whereas, thc present beneficiary under that certain Deed of Trust herein above described, recorded a
Notice of
Default and Election to SelL. Said Notice was Recorded on 0612812010 as Instrument No. 2010000303698 in
the omce of the Recorder of ORANGE County, California, of oftcini records.
NOW; THEREFORE. NOTICE is IlEREBY GIVEN THAT: the present Beneliciary nnd/or the Trustee,
andlor the agent of the Trustee, does hereby rescind, cancel and withdrmv said
Notice of Breach and Notice of
Default and Election tù Sell; it being understood, however, that this resdssion shall nùt in any
manner be
construed as waiving or affecting any breacb or default past, present at future under
said Deed or Tnist,or as
impairing any right or remcdy thereunder,but is, and shall be deemed to be, only an clection. without prejudice,
not to cause a sale to he made pursuant to said Notice, and shall no way jeopardize orinipair nny right,
remedy ùr
privilège secured .to the Beneficiary and/or the Trustee, under said Deed of TlUst, nOr modify nor alter in any
respect any
of the terms, covennnts, conditions or obligations thereof, and said Deed of Trust and all obligations
secured hereby are hereby reinstated and shall be and remain in force lind effect the same ~s if said Notice of
Breach and Notice or Default and Election to Sell had not been made and given.
By:
Randy Midc;le~on
FCl S_NOR_NOD.rpl - (05/12110) / Vcr-12
Pa~e I of I
ORANGE,CA
Document: RE 2010.329423
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1 MacArthur Place
Suite 200
Santa Ana, California 92707
Phone: (714) 852-6800
Fax: (714) 852-6899
www.adorno.com
CALIFORNIA
FLORIDA
GEORGIA
MASSACHUSETIS
MISSOURI
NEW JERSEY
NEW
YORK
TEXAS
WASHINGTON
WASHINGTON, D.C.
Tuyet T. Tran
(714) 852-68DD
May
27, 2010
VIAFEDEx
Fidelity National Title Insurance Company
Attn: Claims Department
17911 Von Karman Avenue, Suite 300
Irvine, California 92614-6253
Re: Policy No.: 27-041-06-22145
Order No.: 30146667
Borrowers: Paul Nguyen and LauraNguyen
Property: 16141 Quartz Street, Westminster, California 92683
NOTICE OF TITLE CLAIM
Dear Sir or Madam:
This finn has been retained
to represent Chase Bank USA,N.A. ( Chase Bank ) and
Chase Home Finance LLC ( Chase
Home ) in
the below-referenced
lawsuit
and inmaking a
claim under the above-referenced title policy. Chase Bank.
is the original named insured under
the Loan Policy of
Title Insurance issued on December 13,2007 under Order Number 30146667
( Policy ) by
Fidelity National Title hîsurance Company ( Fidelity ).
Paul Nguyen and Laura Nguyen (collectively Plaintiffs )
obtained
a loan from Chase
Bank for the sum of $250,000 ( Loan ). The deed
of
trust securng the Loan
and encumbering
the real property commonly lmownas 16141
Quartz
Street, Westminster, California
92683
( Subject Property ) was recorded on December 12, 2007
as
instruent number 2007000731120
in the Orange County Official Records ( DOT ). The DOT identifies Chase Bank as the lender,
and Piaintiffs as the borrowers.
As explained below, the validity and
enforceability of the DOT is being disputed by
._____~Eiaintiffsjn.JLiaw.suit fi1Qdinfu~JJnitedSJ.at~s Central Distrigt Court andentitled,J-=aul Ngiy,l?l _
and Laura Nguyen v. Chase BánkUSA, N.A., et al.,Case No.CV09-4589 AHM (AJWx). A
copy of
the Second Amended Complaint ( SAC ), which is the operative complaint, is enclosed
for your reference in regard to the title claim stated in this letter.
1130552.1
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Ca e 2:09-cv-04589-Ahiv1-AJW Document 96 Filed 11/2,J1 ,û09 Page 1 of 21
FILËO
1 PAUL NGUYN
LAUR
NGUYN
2 16141 QUARTZ STREET
WESTMISTER, CA 92683
3 TELEPHONE: 714) 360-7602
4 Plaintiffs
In Pro Persona
2009HOV 23 PM 2: 00
CLERK i u.s. DiSTRICT COURt
CEHTR At D1sr onrA lifo
LOS ANGELES
BY
5
6
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UNITED STATES
DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
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12 PAUL NGUYEN, an individual; and
LAURA NGUYEN, an individual,
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Plaintiffs,
v.
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Chase Bank USA, N.A.; Chase Home
finance, LLC; First American Loanstar
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Trustee Services; Joseph SonCao Tran,
18 an Individual; and DOES 1 through 50,
inclusive,
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DEMAND FOR JURY TRIAL
· Defendants
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COMES NOW, Plaintiffs PAUL NGUYEN AND LAURA NGUYEN
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(hereinafter Plaintiffs or NGUYEN ) file this civil action alleging that their
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INTRODUCTION AND NATURE OF CONTROVERY
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Tnis is a Truth-in- Lending ('TILA ) and Real Estate Settlement Procedure ACÍ
("RESPA") case in which Plaintiff
Paul Nguyen was fraudulently induced to
enter into a loan and PAUL NGUYEN and his wife LAUR NGUYEN
executed a deed of trst encumbering their home ( Mortgage Loan ) through the
use of
unfair and deceptive acts and practices in violation ofthe Truth-in-
Lending Act and the Real Estate Settlement Procedures Act, as well as state
laws. Fraudulent representations concerning the payment terms of the Mortgage
Loan were made to the Plaintiffs to induce PAUL NGUYEN to
enter into the
Mortgage Loan. In addition, material
disclosures in relation to the Mortgage
Loan, required pursuant to the Truth-in-Lending Act and its implementing
Regulation, and required pursuant to the Real Estate Settement
Procedures Act
and its implementing Reguiation, were concealed from the NGUYEN. Nor were
the NGUYEN provided with a proper number of
notices of
their right to cancel
the transaction within the time period required by law, all in violation of
PLAINTIFFS' clearly established Tights under federal and state. statutory and
common law. In addition, Defendant Chase
Bank USA N.A., and/or its agent,
intentionally forged the signature of
Plaintiff
LAURA NGUYEN onto the Deed
of Trust and other documents related to the Mortgage Loan with the intention of
harming the Plaintiffs as part ofa scheme to prevent the Plaintiffs
from
knowing
the true term and conditions ofthe Mortgage Loan
prior to entering into that
Mortgage Loan and preventing the Plaintiffs
from rescinding the Mortgage Loan
if and when they ever discovered the true terms and
conditions of
the MOligage
Loan by using the forged Deed of Trust as the basis for arguing that the
... YlaintiifLJight tQ. re~c;ind th~~M2ijgag~ Lq(. li:I gerJederal J:~VI~h~g~~pir a:
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This action seeks rescission ofthe Mortgage Loan and statutory, compensatory,
and punitive damages to vindicate the violation of
the NGUYEN s federal and
state rights.
The NGUYEN also seeks punitive damages against the Defendants in order to
punish and set example for the wrongful conduct in violating federal and state
laws resulting in injury and damages to the NGUYEN.
The NGUYEN also seeks reasonable costs oflitigation, including, but not
limited to, attorneys fees.
JURISDICTION AND VENUE
This action arises under 15 U.S.C. § 1635,12 C.F.R. § 226,15 U.S.C. §§ 2601
and 2614 12C.F.R. § 3500 and under California statutory and common law.
This Cour has jurisdiction over the Federal c1aimsin this action based on 18
U.S.c. §§ 1331 and 1343 and 42 U.S.C. § 1983 which confer original
jurisdiction on federal distrct courts in suits to
address the deprivation of rights
secured by federal law. This
Cour also has supplemental jurisdiction over the
pendant state law claims becausethe state law claims
are
so related to the federal
claim that they form part of the same case
or controversy under Article III of the
United States Constitution, pursuant to 28 U.S.C.§ 1367.
The unlawful conduct, ilegaLpractices, andactscomplainedQf alleged iiithis
complaint were all commtted in the Central Distrct of California and the
involved real propert is located in the Central District of California. Therefore
venue properly lies in this District, pursuant to 12 U.S.c. § 2614 and 28 U.S.C. §
1391(b).
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PARTIES
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Plaintiff
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Plaintiff
PAUL NGUYEN and LAURA NGUYEN are resident ofVvestminster,
California, and the real propert secured by a deed of trst under the Mortgage
Loan is located in Westminster, California.
Defendants
Plaintiffs are informed and believe and
thereon allege, that Defendant Chase
Bank USA, N.A. (hereinafter Chase Bank ) is a national banking institution
whose exact business form is unknown and at all times mentioned herein was
conducting business in California. Plaintiffs aæ informed and believe that
Defendant Chase Bank is the owner of
the Mortgage Loan.
10. Plaintiffs are informed and believe, and thereon allege, that Defendant Chase
Home Finance LLC ( Chase Home Finance ) is a wholly owned subsidiary of
Chase Bank and at all times mentioned herein was
conducting business in
California. Plaintiffs are informed and believe that Defendant Chase Home
Finance is the servicer of
the Mortgage Loan.
1 1. Plaintiffs are informed and believe, and thereon allege, that Defendant First
American Loanstar Trustee Services ( Trustee Services ) whose exact business
form is unr-..own and at all times mentioned
herein was conducting business in
California. Plaintiffs are informed and believe that Defendant Trustee Services
is the subsequent trstee of
the
Mortgage Loan and
an agent of
Chase Bank.
12. Plaintiffs are informed and believe, and thereon allege, that Defendant Joseph
Cao Son Tran, a licensed real estate broker and Notary Public which licenses
were issued by the California Department of
Real Estate, at all time mentioned
herein acting on behalf ofhil1self, Sydney Funding, Nexus Escrow and Realty
. Savers.andis_auJlent a~1illg on behalf of Chase Ban, was conductil1g~ L~11~a~.
in California.
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Mortgage Loan and were affixed on said documents by Defendants.
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state and federal law and as a result of
the false, fraudulent, and/or deceitful
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Up to December 7, 2007, Defendant Joseph Son Cao Tran didnot provide
Plaintiff
Paul Nguyen with any document related to the mortgage loan.
Neither Defendant Joseph Son Cao TrannOl SYDNEY FUNDING disclosed the
relationship between SYDNEY FUNDING and NEXUS ESCROW to Plaintiff.
Plaintiff
PAUL NGUYEN appeared at Defendant NEXUS ESCROW on
December 7, 2007 to signed mortgage documents.
Plaintiff
LAURA NGUYEN
did not appear at NEXUS ESCROW to sign
documents, nor was requested to do so.
Defendant Joseph Son Cao Tran acting as a licensed broker in
aranging the
loan, also appeared at NEXUS ESCROW and acted as notary public of
documents that signed by Plaintiff
PAUL NGUYEN.
Plaintiff
Paul Nguyen executed a promissory note and security agreement for
that purpose, which transaction is a consumer credit transaction within the
meaning of
TIL
A, 15 U.S.c. § 1602 andRegulationZ § 226.2.6.
Plaintiff
Laura Nguyen
never executed a promissory
note and security
agreement for that purpose.
On
or about
January 2009 Plaintiffs discovered
forged
signature of
Laura
Nguyen to the Deed of
Trust.
Plaintiff
Laura Nguyen
never appeared before a notarý public, Joseph Son Cao
Tran or received two
(2)
copies of a Notice of
Right to Cancel from any person
or entity, or from the notary.
Plaintiff Laura Nguyen are informed and believe, and thereon allege, that all
purported signatures of
Plaintiff
Laura Nguyen that were affixed on mortgage
loan is forgeries which included the deed of trust in connection \vith the
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representations made tothePlaintiffsconceming the tenus of
the Mortgage
Loan, Plaintiffs are entitled to rescind the Mortgage Loan.
On April 6, 2009, Plaintiffs sent via U.S. PosIcertiñed mail, notified Chase of
their rescission of the loan under TILA and offer to tender. Additional copies
were also sent via U.S. Post certified mail to Chase Home Finance LLC, c/o
First American Loan Star Trustee Services and JP Morgan Chase Bank, NA clo
Chase Home Finance LLC.
Again on April
13, 2009, Plaintiffs again sent via U.S. Post certiñed mail,
notified Chase of their rescission of the loan
under TILA and offer to tender.
Plaintiffs are also informed and
believe and
thereon allege, that the Defendant
and one or more of
its agents conspired to withhold
disclosing the Truth-in-
Lending Disclosure
Form required
by federal law and that in furtherance of
said
conspiracy the Defendant forged
Plaintiff
Laura
Nguyen's signatures on the
Deed of
Trust or authorized
and ratified such forged
signatures.
That the Mortgage loan entered into is a federally related mortgage loan as that
term is defined in
the Real
Estate Settlement Procedures Act
at 12 U S C §
2602(1).
Defendants Chase Bank USA, N.A.; Chase Home Finance, LLC; First American
Loanstar Trustee Services; and Joseph Son Cao Tranare individuals and
businesses that regularly
offer or extend
credit
and
provide applications for
home mortgage to consumers.
In addition to acting as the mortgage broker andChase's agent in the transaction
resulting in the entering into of the
Mortgage Loan, Sydney Funding and Sidney
Tran also acted as
the SettlementAgenttli.lOughits wholly owned subsidiary
NEXUS ESCROW in
connection
with
the
consuIlationand closing of the
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~~~~~~Mortgage-Loan.~~Nei1beLy-dney-Funding,jts~J2iincil)als nor Cliase ß~~L ..~ .~.~~......
disclosed to the Plaintiffs thatthe entity acting as Mortgage Broker would also
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be acting as the Settlement Agent and would be receiving fees and other fuds in
connection with such role at any time prior to the delivering of
the final
Settlement Statement to Plaintiff after entering into the lv10rtgage Loan.
Plaintiffs are informed and believe, and thereon allege, that Chase gave and
Sydney Funding accepted and received fees, payments and other things of
value
in return for the referral of the Mortgage Loan by Sydney Funding to Chase.
Such giving accepting of the settlement agent fees and other things of value in
return for the referral of
the Mortgage Loan by Sydney Funding to Chase was in
violation of 12 U.S.C. § 2607(a).
Plaintiffs are further informed and believe that Defendant Joseph Son Cao Iran
acted as broker in arranging such mortgage loan ilegally acted as notary public.
Plaintiffs are informed and believe, and thereon allege, that because of the
forgery of
Plaintiff
Laura Nguyen's signature to one or more documents, and
because of
the failure to deliver required form under Truth-in-Lending
Disclosure to the Plaintiffs prior to the closing of the Mortgage Loan, the value
of Sydney Funding's mortgage brokeringservices and its settlement
services
provided by its wholly owned subsidiary, Nexus Escrow, was $ 0.00. Plaintiffs'
further allege that, since Sydney Funding and its subsidiary were paid and
received a fee from Chase as mortgage broker in excess of$lO,OOO.OO, such
payment to Sydney Funding and its subsidiary represented payment for services
that were not actually performed in violation of 12 U.S.C. § 2607(b).
The acceptance of fees from Chase by Defendants SYDNEY FUNDING, Sidney
Tran, NEXUS ESCROW, John Nguyen and Joseph Son Cao Tran for
performing broker services that were not actually performed and Chase's
payment of that fee for broker activities represents an unlawful kickback and/or
-.uBgamed-fee-uuder-RSEAbe.cause_tlie.amQllnt received by these Defen~(l?-t~
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and paid by Chase was not reasonably related to the performance of lawful
services.
Plaintiffs are informed and believe, and thereon aìlege, that Chase should have
mown that Sydney Funding, Sidney Tran, Nexus Escrow, John Nguyen, and
Joseph Son Cao Tran did not earn the broker fees because common industr
practices are that lenders follow underwting standards that demand a review of
originations by mortgage brokers and therefore lenders typically
know that
brokers have performed the services required and in a lawful manner. Plaintiffs
are informed and believe, and thereon allege, that if Chase had reviewed the loan
origination documents properly, either before or after the closing of the
Mortgage Loan, Chase would have learned of the obvious indications that
Sydney Funding was not properly performng its role as a mortgage broker.
Plaintiffs also allege that neither Sydney Funding, Sidney Tran or Joseph Son
Cao Tran ever offered Plaintiffs the option to pay a lower amount of settlement
fees and charges in addition to failing to disclose to Plaintiffs that Sydney
Funding would also be performng services as the Settlement Agent through its
wholly owned subsidiary in
connection with the Mortgage Loan and Joseph Son
Cao Tran would also be performng notary services
at the time of settlement.
The agency responsible for enforcing RESPA. and its implementing regulation
Regulation X the United
States Department of Housing and Urban
Development ( HUD ), issued a Statement of Policy in 1 999 establishing two -
part test for determning the legality of certain lender payment to mortgage
brokers under RESP A as follows:
(1) Vlhether goods or facilities were actually furnished or the servi ces were
actually furished or the services were actually performed for the
...... ---oompensatioll-paid,-and;----
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48. In conspiring and acting in concert as herein alleged, Chase, either directly or
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managing agent, acted wilfully and with the intent to cause injury to the
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(2) Whether the payments are reasonably related to the value of the goods or
facilities that were actually furnished or services that were actually
performed.
In 2001, BUD clarified its interpretation of §§ 2607(a) and (b) when it issued its
RESPA Statement of
Policy 2001-1 entitled Clarification of
Statement of
Policy
1999- 1 Regarding Lender Payments to Mortgage Brokers, and Guidance
Concerning Unearned Fees Under Section8(b). ( Statement of
Policy 2001-1.)
BUD's 2001- 1 Policy of Statement explains that the second prong of its two-part
test to determne the legality of lender payments to mortgage brokers may not be
satisfied when the loan brokers does not offer the borrower the option to pay a
lower amount of total fees upfront.
Plaintiffs are informed and believe, and thereon allege, that Chase and others
knowingly and wilfully conspired and agreed among themselves to commt the
acts described of
herein with the intent to deprive Plaintiff of an amount to be
deteni1Ined and proven at trial but in an amountthat exceeds 15,000.00.
Plaintiffs. are informed and believe, and thereon allege, that Chase andits agents
did the acts and things herein alleged
pursuant to, and in furtherance of, the
conspiracy and
above-alleged agreement.
Plaintiffs are informed and believe,
and thereon allege, that Chase and its agent
furthered the conspiracy by cooperation
or lend aid and encouragement to, or
ratified and adopted the acts of each other.
As a proximate result of the n¡rongful acts herein alìeged, Plaintiffs has suffered
damages in an amount to be determined and proven at trial but in an amount that
exceed 15,000.00.
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Plaintiff. Chase is guilty of
malice, oppression, and/or fraud in
conscious
disregard of the Plaintiffs' rights, thereby waranting an assessment of punitive
damages in an amount appropriate to punish Chase and to deter others from
engaging in similar conduct.
FIRST CLAIM
FOR
RELIEF
(Against
Defendant Chase,.Joseph.SonCao Tran,
and DOES 1 - 50 for Fraud bv Fon ery)
Plaintiffs re-al1egeand incorporate
by reference in this Claim for Relief each
allegation set forth in paragraph 1 through 48
above.
On or about December 7 2007 Chaseand/or its agents intentionally forged
signature of
the Plaintiff
Laura Nguyen onto the Deed
of
Trust and other
documents related to the
Mortgage Loan with the intention of harmng the
Plaintiffs.
The forgery by Chase and/or its agents was undertaken as part of a scheme to (i)
prevent
Plaintiffs from knowing
the true
terms
and
conditions of the Mortgage
Loan prior to entering into that
Mortgage Loan
and
(ii) preventing Plaintiffs
from rescinding the Mortgage Loan if
and
when they ever discover the tre
terms and
conditions of thel v1ortgage Loan
by using the forged deed of trust as
the legal basis for arguing
that the
Plaintiffs right to rescind the
MortgageLoan
under federal law
had expired.
52. Plaintiffs are informed and
believe, and
thereon allege, that Chase and/or its
agents knew that (i) forged signatures ofthe Plaintiff
Laura Nguyen on the Deed
of Trùst and other dOCll Tents related
to the Mortgage Loan, or (ii) knew of the
forged signatures
of
the Plaintiff on the DeedofTrust,cOl1spired to defraud the
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on the Deed of Trust and the other documents related to the Mortgage Loan were
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undertaken to further the fraud of concealíng from the Plaintiffs the true teims
and conditions of the Mortgage Loan and to thereafter create and unlawful
defense to any attempted rescission ofthe Mortgage Loan by the
Plaintiffs in the
event the Plaintiffs discovered the tre terms and conditions of the Mortgage
Loan and attempted to assert
their rights of
rescission under California and or
federal law.
The forgery
of
Plaintiff
Laura Nguyen s signature on the Deed of
Trust, in
addition to failure to provide Notice of
Right to Cancel were made with the
intent to deceive Plaintiffs and to deprive them of their rights under California
and federal law.
At the time that the forgeries of
Plaintiff
Laura Nguyen signatures and
concealment from PlaintIff of the tre terms and conditions of the Mortgage
Loan, Plaintiffs were unaware of the fact that her signature had been, or were to
be, forged on the Deed of
Trust and other documents related to the Mortgage
Loan and were unaware of the tre terms and conditions of the Mortgage Loan.
Plaintiffs relied to their detriments onthe aforementioned concealment of
the
tre terms and conditions of the
Mortgage Loan which concealment was
effectuated by the withholding of
the
disc1
0 sure under
the Truth-in-Lending as
required by federal1aw and by forging the Plaintiffs signatures on said Deed of
Trust for the fraudulent purpose of
using the forged Deed of Trust as a basis for
depriving the
Plaintiffs oftheIr legal rights pursuant to California and federal
law in the event the Plaintiffs learned the true terms and provisions of
the
Mortgage Loan.
Chase and/or its agents intentionally forged the signature of
the Plaintiff on the
Deed of
Trust and
other documents related
to the Mortgage Loan proximately
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The aforementioned acts, omissions, and fraud by forgery conducted by Chase
and/or its agents alleged above were fraudulent, malicious and oppressive
conduct which subjected Plaintiffs to cruel and unjust hardship in conscious
disregard of
Plaintiffs rights,