Kurtz v. Calvo (1999)
C.A.4th 191 involved a buyer who gave a broker a $48,500 promissory note as a
finder's fee. However, the note was secured by a property other than the one purchased.
The real estate broker assigned the note to Kurtz. After foreclosure of the
property wiping out the lien, Kurtz sought a deficiency judgment. The San Diego
County Superior Court ruled that California's antideficiency judgment statute
barred a deficiency judgment as it was a purchase money loan.
The Court of Appeal
reversed holding that CCP580b does not apply as this was not a purchase-money
mortgage (this was a lien on a property owned for 3 years prior to giving the
lien).
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Washington Mutual Bank
v. Superior Court (1999) 75 C.A.4th 773.
This case was a class
action suit alleging that Washington Mutual Bank inflated charges beyond actual
costs for loan-related services. As an example, $50 was charged for a credit
report that only cost $15. Charges were also allegedly inflated for tax
services, flood certification, wire transfers, appraisals and recording. The
class action suit sought damages for unfair and deceptive business practices
(Business and Professions Code 17200), unjust enrichment, breach of fiduciary
duty, conversion and negligence.
The lender filed a
demurer arguing that state law claims should be dismissed since RESPA and
Regulation X (good faith estimate) preempt state law and neither provides for a
private right of action for violations. Washington Mutual took the position
that there was no prohibition against adding a charge to the actual costs.
The Superior Court ruled
that RESPA and Regulation X do not preempt state law. This decision was
affirmed by the Court of Appeal The case was remanded to trial on its merits.
The Court of Appeal
noted that state laws are preempted only if they are inconsistent with RESPA or
Regulation X. Congress had declared that no state law shall be determined
inconsistent if it provides greater
protection to the consumer.
Note: Because of the
huge amount of money involved, further appeals are likely if Washington Mutual
looses this class action suit.
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Webber v. Inland Empire
Investments Inc. (1999) 74 C.A.4th 884.
Hyatt Land Development
sold 4 properties to Forecast Mortgage Corporation carrying back a $754,000
second deed of trust which was later sold to Webber. Sanwa Bank made a
$3,653,650 first trust deed loan. Title was transferred to All Cities
Mini-Storage. Inland Empire Investments bought the Sanwa Bank note and first
trust deed. After default, Inland Empire Investments foreclosed, wiping out
Webber's second trust deed. Forecast Mortgage Corporation, All Cities
Mini-Storage and Inland were all owed or controlled by James Previti.
Webber sued all of the
companies and Previti for declaratory relief and conspiracy to intentionally
interfere with a contractual relationship.
The Riverside County
Superior Court awarded Webber $1,254,946 in compensatory damages and $50,000 punitive
damages.
The Court of Appeal
affirmed as to interference with contract.
Note: This case holds
that it is an intentional interference with a contractual relationship for a borrower
to use a corporate entity to acquire a senior lien, default on that lien and
foreclose in order to wipe out a junior lien. Since Priviti owned or controlled
all the corporations, the court had little difficulty in finding this to be a
sham foreclosure with the intent of eliminating a junior lien.
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The case of People v.
Lapcheske (1999) 73 C.A.4th 571 involved a defendant who was convicted by the
San Bernardino Superior Court of rent skimming, conspiracy to commit trespass
and grand theft. The defendant took over properties believed to be abandoned
and rented them. He claimed, that as an adverse possessor, he could not be
guilty of rent skimming.
The Court of Appeal
reversed the grand theft conviction but affirmed the other convictions. As an
adverse possessor he had a legal right to collect rents so no grand theft.
However, collecting rent without paying the existing mortgage is rent skimming.
Note: If Lapcheske had
personally occupied the premises, he would not have been guilty of rent skimming.
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