Brief Closing Argument Brief of Defendant Jose OntiverosBriefCal. Super. - 2nd Dist.March 2, 2016Electronically FILED by Superior Court of California, County of Los Angeles on 06/22/2020 06:47 PM Sherri R. Carter, Executive Officer/Clerk of Court, by M. Gonzalez,Deputy Clerk Curtis W Herron (SBN 228397) 1 | LAW OFFICE OF CURTIS W HERRON 212 Main St Ste A2 2 | Seal Beach, CA 90740 3 Tel. (714) 794-8001 Attorneys for Defendant. 4 | JOSE ONTIVEROS 5 6 7 8 SUPERIOR COURT OF THE STATE OF CALIFORNIA 9 COUNTY OF LOS ANGELES - CENTRAL DISTRICT 10 ROSA HERRERA, an individual, ) Case No. BC612422 11 ) Assigned for all purposes to: Plaintiff, ) Judge: Hon. Robert Broadbelt 12 ) Dept: 53 VS. ) 13 ) FRANCISCO VIELMA, et al., ) CLOSING ARGUMENT BRIEF OF 14 ) DEFENDANT JOSE ONTIVEROS Defendants. ) 15 ) ) 16 ) ) 17 ) ) 18 ) 19 |\\ 20 [I\\ 21 [[\\ 22 [[\\ 23 [I\\ 24 [\\ 25 [I\\ 26 [|\\ 27 [\\ 28 1 ors CLOSING BRIEF OF JOSE ONTIVEROS 3000 © 00 4 O N hn B= W N = ND N N N ND N N N N D E Em E m e m e m m E e l e m co NN O N nn R A W I N D = D OO 0 0 N D B R A W N = O IL. II. ARE NOT BEFORE THIS COURT F. TABLE OF CONTENTS SUMMARY ...uuiiiiiiinnnnnnnnsensaissansssnsssssssnsssssssssssssssssssssssssssssssssssssssssasssssssasssassssssss -1- ALL NECESSARY PARTIES FOR CANCELLATION/RESCISSION RELIEF THE FRAUD ON CHASE DIRECTLY RELATES TO THIS CASE................. G. THE COURTHOUSE DOORS SHOULD BE CLOSED TO PLAINTIFF......... IV. RECISSION REQUIRES RESTITUTION OF ALL BENEFITS................... V. CONCLUSION -- PLAINTIFF HAS NOT PROVEN HER CASE................. 501-018 3000 11 CLOSING BRIEF OF JOSE ONTIVEROS © 00 4 O N hn B= W N = N N N N N N N N N E E e m e m e m e m e m e m e d co NN O N nn R A W I N D = D OO 0 0 N D B R A W N = O I. SUMMARY The causes of action! against Jose Ontiveros are unsupported and paper-thin. They appear to be built entirely out of conjecture and speculation. No evidence supports that Ontiveros was aware of a “deal” between Herrera and Vielma, or of any fraud or tort committed by Vielma. No evidence exists that he conspired to defraud Herrera or assist Vielma in stealing any of her assets. Ontiveros’ involvement was that he wanted to help son and daughter purchase the Property, and he thought it was a good investment. His son (Jose Ontiveros, Jr.) had recently received an inheritance and he wanted his son and daughter Cynthia (from a previous marriage) to come together in an investment in real property to help the family become closer. (Jose Ontiveros had rarely seen his daughter through the years due to a divorce. (2/18/20, 104:23-28)) It is undisputed that in March 2016, Cynthia Ontiveros purchased the Anzac Property from Vielma. (Transcript, 2/18/20, 90:6-8) Vielma testified that at the time, he was unaware of anything illegal or improper about that sale. (Transcript 2/14/20, 62:11-18) Vielma also testified that he never told anyone that anything was improper about his sale of the Property to Cynthia, or that anyone had committed short sale fraud. (Transcript, 2/14/20, 22:2-18) Vielma never told Cynthia anything was wrong with the sale of the Property, either, and he himself did not believe that anything was wrong, legally or morally, by selling the property. (Transcript 2/14/2020, 23:2-10) There is absolutely no evidence that Vielma ever sought Ontiveros’ assistance to defraud Herrera, or that Ontiveros ever took steps to do so. At trial, Herrera testified that she did not know if Ontiveros had agreed with Vielma to hide the 2016 sale of the Property from her. (Transcript 2/24/2020 90:9-90:16) Jose Ontiveros received no money from Mr. Vielma’s sale to Cynthia (Transcript, 2/14/20, 23:11-20) and, indeed, has only suffered detriment as a result of this four-year protracted litigation. Specifically, he stepped up to ! Conspiracy, Conversion, and Civil Larceny - see Joint Report filed 3/17/2020. 21 - CLOSING BRIEF OF JOSE ONTIVEROS 501-018 3000 © 00 4 O N hn B= W N = N N N N N N N N N E E e m e m e m e m e m e m e d co NN O N nn R A W I N D = D OO 0 0 N D B R A W N = O the plate and paid mortgage payments, mortgage penalties, taxes, and insurance payments for Cynthia to avoid severe damage to her credit and to avoid his son losing his down payment funds. (Transcript, 2/19/20, 53:4-10) Herrera’s claims of a conspiracy are pure speculation and are alleged because she needs subsequent purchasers to also be guilty of wrongful conduct. The evidence, however, is just not there to support a conspiracy.? Rosa Herrera’s hands are unclean. The outcome sought by Herrera would result in unfair and extreme hardship to the other parties (and non-parties) and would allow her to reap a huge unjust windfall based on her own fraud on Chase bank. If she prevails, the Court will be blessing the 2011 fraud that induced Chase to reduce its mortgage on the property by over $268,000.00. (See Stipulated fact No. 10) To make matters worse, although Cynthia Ontiveros (“Cynthia”) purchased the Property in March 2016, Herrera and her family have continued to live there all the while to the present day, expense free. Unfortunately, the Ontiveros family has had to pay for all the mortgage, insurance, and property taxes - to avoid damage to their credit and loss of the down payment -- all while receiving absolutely no rent or other compensation from Herrera. If the Court awards the rescissionary relief, cancellation of instrument, and restitution that Plaintiff seeks, she will end up much better off than if the alleged tort had not occurred. She would not be returned to the status quo ante (before the alleged fraud, she was in foreclosure with Chase and owed it over $464,000 secured by the property). She would receive a great profit. Also, the rescission of the Herrera-Vielma deed would cause the toppling of several other later transactions, deeds, deeds of trust, with the property. In the unlikely event that rescission is granted, the Court should require the restoration to Chase bank of its original Deed of Trust amount. This is not practicable nor is it warranted under these circumstances, and Jose Ontiveros strongly requests that no deeds be rescinded or cancelled. 2 The only conspiracy that was clearly proven at trial was the one between herself and her real estate agent to defraud Chase out of $268,000. 2D. CLOSING BRIEF OF JOSE ONTIVEROS 501-018 3000 © 00 4 O N hn B= W N = N N N N N N N N N E E e m e m e m e m e m e m e d co NN O N nn R A W I N D = D OO 0 0 N D B R A W N = O Herrera wants to profit as follows: (1) She wants to retain the benefit of the $268,796.85 reduction of her mortgage that Chase granted in reliance on her false statements; that reduction effectively added value to the property, making it into a thing worth fighting over; (2) Herrera wants Vielma to pay her $67,340 (which is her estimate of mortgage payments she paid on Vielma’s Wells Fargo loan); (3) She wants Vielma to disgorge the $60,100 that she secretly provided to him to deposit into escrow in order to consummate her fraudulent short sale; (4) She wants to pay nothing for having had the full use and occupancy of the Property since March 2016 -- completely free of any mortgage, rent, property taxes, or insurance expenses (all of which were paid by the Ontiveros family - Jose Ontiveros testified that he has personally paid almost $200,000 during this period for those. (Transcript 2/19/2020 53:28 - 54:16); and, (5) Finally, she also wants to be reimbursed $40,100 for improvements she claims she were done to the Property, although there is no documentary evidence to support any of those alleged improvements. In sum, Herrera gets her mortgage drastically reduced from $464,000+to $195,538, she gets a great deal of money in her pocket, and she walks away with legal title to the Property. The Court should not countenance such unjust enrichment and it should deny out of hand the relief sought, since Herrera seeks to enforce the benefits from her admitted “fraudulent short sale” (Fifth Amended Complaint, p. 2, line 1). II. ALL NECESSARY PARTIES FOR CANCELLATION/RESCISSION RELIEF ARE NOT BEFORE THIS COURT Plaintiff named Ontiveros’s son, Jose Ontiveros, Jr., as a defendant in this action by way of a DOE amendment filed on June 5, 2018. Plaintiff, however, never served Jose Ontiveros, Jr. Then, Jose Ontiveros, Jr., purchased the Property from Cynthia Ontiveros in August 2019. The Court is asked to take Judicial Notice of the fact that, although Jose Ontiveros Jr. was a party to this case, he was dismissed before trial since Plaintiff claimed to be unable to serve him with summons. Jose Ontiveros, Jr., however, currently holds legal title to the property since he purchased it from Cynthia Ontiveros. (See Trial Transcript, 2/6/20 41:10-11). Instead of pursuing Jose Ontiveros, Jr., in this case, Plaintiff -8 CLOSING BRIEF OF JOSE ONTIVEROS 501-018 3000 © 00 4 O N hn B= W N = N N N N N N N N N E E e m e m e m e m e m e m e d co NN O N nn R A W I N D = D OO 0 0 N D B R A W N = O chose file a new case. The Court is asked to take Judicial Notice of the Notice of Related Case filed by Plaintiff on 1/13/2020, referring to a new action against Jose Ontiveros, Jr., and his lender MOR Financial, in connection with this property.> All parties whose presence is necessary to the availability of complete relief must be joined in the action. CCP §389; Lake v Dowd (1929) 207 Cal. 290. In an action to cancel a deed, the grantee is a necessary party even when the complaint alleges that he or she is a “dummy” for the real party in interest. Palmer v Lantz (1932) 215 Cal. 320. Here, Jose Ontiveros, Jr., is a grantee of the property, and thus, he should be considered a necessary party in order for cancellation of a deed that would severely affect his interest. As mentioned, there are other parties who are not now before this Court but whose interests would be obliterated or severely damaged by such an order.* III. PLAINTIFF'S UNCLEAN HANDS SHOULD BAR ANY RELIEF On 2/6/2020, the parties filed their stipulated facts for the purpose of trial. Stipulated fact No. 8 recites that Plaintiff Herrera signed the Affidavit of Arm’s Length Transaction document, at Exhibit 119. This Affidavit of Arm’s Length Transaction is perhaps the single most significant document in this action, apart from the pleadings. The Affidavit is a notarized document, signed by the Parties to the sale transaction (Herrera and Vielma) and their licensed real estate professionals (Eva Correa & Tony Reynoso). The Affidavit memorializes several significant factual representations made to Chase by Herrera, Vielma, and their agents in order to facilitate the 2011 short sale’. 3 Plaintiff Herrera attempted to get her new action against Jose Ontiveros, Jr. (Case No. 20STCV00961) deemed related to this case. In her Notice of Related Cases, Herrera admits that her new action involves “...claims against, title to, possession of or damages to the same property.” * The new action (Case No. 20STCV00961) also names MOR Financial Services as a secured lender and Herrera seeks to set aside its lien interest in the property in that action, and to declare that it has no right, title or interest. > By way of background, a “short sale” is a sale of property for a price that is less than the amount of debt on the property, resulting in a shortfall of sales proceeds to pay off the existing loans. (5 Miller & Starr, Cal. Real Estate (4th ed. 2018) § 13:120.) A lender 4 CLOSING BRIEF OF JOSE ONTIVEROS 501-018 3000 © 00 4 O N hn B= W N = N N N N N N N N N E E e m e m e m e m e m e m e d co NN O N nn R A W I N D = D OO 0 0 N D B R A W N = O All signatories to that document agreed therein that Chase was relying upon these statements in approving the short sale and drastically reducing the balance on the loan. The Affidavit states that “in consideration of the representations” made therein, Chase “agrees to accept the amount of $195,538.70 to resolve its Loan.” (Exhibit 119, 2" full paragraph) At that point in time, the loan balance was a little over $464,000. In reliance, Chase then cancelled $268,796.84 of Herrera’s debt on the mortgage. (see Stipulated fact # 10) Chase obviously relied upon the statements made in the Affidavit in cancelling the $268,796.84 of Herrera’s debt (see item # 8 on Exhibit 119 - “Each signatory to this Affidavit expressly acknowledges that Lender is relying upon the representations made herein as consideration for discounting the payoff on the Loan”). A. HERRERA CLEARLY COMMITTED SHORT SALE FRAUD The testimony at trial and the verified allegations in the operative pleadings make it indisputable that following statements contained in the Affidavit of Arm’s Length Transaction (Exhibit 119) were actually false when made, and the evidence makes it obvious that Herrera knew those statements were false when she notarized the document: “l. The purchase and sale transaction reflected in the Agreement is an "Arm's Length Transaction," meaning that the transaction has been negotiated by unrelated parties, each of whom is acting in his or her own self-interest, and that the sale price 1s based on fair market value of the Property. With respect to those persons signing this Affidavit as an agent for either the Seller, the Buyer, or both, those agents are acting in the best interests of their respective principal(s). 2. No Buyer or agent of the Buyer is a family member or business associate of the Seller, the borrower, or the mortgagor. 3. No Buyer or agent of the Buyer shares a business interest with the Seller, the borrower, or the mortgagor. 4. There are no hidden terms or hidden agreements or special understandings between the Seller and the Buyer or among their respective agents that are not that approves a short sale may not pursue a deficiency judgment against the borrower. (Code Civ. Proc., § 580e; 5 Miller & Starr, Cal. Real Estate, supra, § 13:259.) ® The amount of the cancelled debt: $268,796.85 plus the amount that Chase agreed to accept in full payment of the loan: $195,538.70, equals $464,335.54. _5.- CLOSING BRIEF OF JOSE ONTIVEROS 501-018 3000 © 00 4 O N hn B= W N = N N N N N N N N N E E e m e m e m e m e m e m e d co NN O N nn R A W I N D = D OO 0 0 N D B R A W N = O reflected in the Agreement or the escrow instructions associated with this transaction. 5. There is no agreement whether oral, written, or implied, between the Seller and the Buyer and/or their respective agents that allows the Seller to remain in the Property as a tenant or to regain ownership of the Property at any time after the consummation of this sale transaction.” (Exhibit 119, page 1, items 1 through 5) The Affidavit was signed under penalty of perjury by both Rosa Herrera and Eva Correa, her real estate agent and transmitted to Chase. The documen states: “I/We declare under penalty of perjury under the laws of the State of California that all statements made in this Affidavit are true and correct.” (Exhibit 119, p 1, 2" {from bottom) The document also states the parties agree they understand that making “false statements concerning any of above facts” is a federal crime under 18 USC 1001, et seq. All the above-enumerated statements in the Affidavit were false statements. Herrera made these statements to Chase for her own gain, and based thereon, Chase was induced to accept over $268,000 less money than it was owed. Herrera’s self-serving testimony that she simply “did not know” the transaction with Vielma was in violation of the Affidavit of Arm’s Length Transaction should be disbelieved as not credible. Indeed, Plaintiff’s now-defrocked real estate agent, Eva Correa, testified that she knew that a seller in a short sale may not keep the property (2/10/2020 Transcript 70:27 - 71:2), and, she knew that the parties to this particular short-sale had a side agreement not in escrow (2/10/2020 Transcript 84:28 - 85:8); and, that she knew that she was actually assisting Herrera in committing this short sale fraud. (2/10/2020 Transcript 95:2-25) Even if the Court finds Herrera did not knowingly make false statements (which is highly doubtful), a principal is still liable for the acts of her agent and the knowledge of the agent is imputed to the principal.” A principal cannot benefit from the fraud of an agent acting 7 As against a principal, both the principal and the agent are deemed to have notice of whatever either has notice of, and ought, in good faith and the exercise of ordinary care and diligence, to communicate to each other. Civ. Code, § 2332. Thus, so long as an agent is under a duty to disclose certain information, the principal is bound by the agent's knowledge of that information whether or not the agent communicated it to the principal. 6 - CLOSING BRIEF OF JOSE ONTIVEROS 501-018 3000 © 00 4 O N hn B= W N = N N N N N N N N N E E e m e m e m e m e m e m e d co NN O N nn R A W I N D = D OO 0 0 N D B R A W N = O within the scope of his or her agency. Magnecomp Corp. v. Athene Co. (1989) 209 Cal.App.3d 526; Powell v. Goldsmith (1984) 152 Cal.App.3d 746. Restatement Second of Agency declares in section 261: “A principal who puts a servant or other agent in a position which enables the agent, while apparently acting within his authority, to commit a fraud upon third persons is subject to liability to such third persons for the fraud.” The Restatement language has been held by the California Supreme Court to express accurately the law of this state. ( Rutherford v. Rideout Bank (1938) 11 Cal.2d 479, 483-484 [ 80 P.2d 978, 117 A.L.R. 383].) The Restatement rule has been applied in many recent cases. Kahn v. Gordon, 249 Cal.App.2d 722, 724 (Cal. Ct. App. 1967) This liability is based on the fact that the agent's position facilitates the consummation of the fraud in the sense that, from the point of view of the third person (Chase), the transaction seems regular on its face and the agent appears to be acting in the ordinary course of the business assigned to him or her. See Reusche v. California Pacific Title Ins. Co. (1965) 231 Cal.App.2d 731, at 736; Blackburn v. Witter (1962) 201 Cal.App.2d 518, at 521. As stated above, Eva Correa admitted to knowing the nature and significance of short sales and the requirements for short sales. She admitted that she signed the Affidavit at Exhibit 119 (Transcript, 2/10/2020, 95:27 - 96:2). When Ms. Correa placed her signature on the Affidavit of Arm’s Length Transaction (Exhibit 119), it functioned to also bind Herrera (her principal) to all those terms, since she was signing the document in the course and scope of her agency. It is a settled rule of the law of agency that a principal is responsible to third persons for the ordinary contracts and obligations of the agent with third persons made in the course of the business of the agency and within the scope of the agent's powers. Pacific Ready-Cut Homes v. Seeber (1928) 205 Cal. 690; Geary St., P. & O.R. Co. v. Rolph (1922) 189 Cal. 59; New v. New (1959) 148 Cal. App. Santillan v. Roman Catholic Bishop of Fresno (2008) 163 Cal.App.4th 4. An agent has a duty to disclose material matters to his or her principal, and the actual knowledge of the agent is imputed to the principal. In re Marriage of Cloney (2001) 91 Cal. App.4th 429. It is assumed that the agent will communicate to his or her principal all information acquired in the course of the agency, and when the knowledge of the agent is ascertained, the constructive notice to the principal is conclusive. In re Marriage of Cloney, supra at 439. -7- CLOSING BRIEF OF JOSE ONTIVEROS 501-018 3000 © 00 4 O N hn B= W N = N N N N N N N N N E E e m e m e m e m e m e m e d co NN O N nn R A W I N D = D OO 0 0 N D B R A W N = O 2d 372. Accordingly, it is crystal clear that Herrera is guilty of fraud on Chase with respect to the short sale. B. THE CLAIMED FAILURE TO READ THE AFFIDAVIT IS NO DEFENSE Herrera claimed that she did not read the Affidavit (Exhibit 119) and that nobody explained it to her. (Transcript 2/24/2020, 92:8-14) There are two problems with this: First, it is not believable that Herrera did not read or attempt to understand a document which was so significant that it had to be notarized. She testified that she can read dollar figures (Transcript, 2/24/20, 91:25-27). The second paragraph of Exhibit 119 bears the figure $195,538.70. It is incomprehensible that she would not have asked her agent about the meaning and significance of that document (Exhibit 119) which bears the Chase logo, and expressly lists the amount they are willing to accept to pay off her then $464,000+ loan. In deciding who to believe, the Court may recall how careful Plaintiff Herrera behaved during trial while listening to all the testimony, while reviewing the documents put before her, and in crafting her answers during examination. She is nobody’s fool. Second, Herrera’s alleged failure to read or understand the document before she signed and notarized it is not a legal defense to responsibility for the representations she made therein. To hold otherwise would be rewarding her for her inexcusable negligence. She is deemed to have agreed to be bound by its terms. “[O]rdinarily one who signs an instrument which on its face is a contract is deemed to assent to all its terms.” Marin Storage & Trucking, Inc. v Benco Contracting & Eng'g, Inc. (2001) 89 Cal.App.4th 1042, 1049. In general, a party cannot avoid the terms of a contract on the grounds that he or she failed to read it before signing it. In Marin Storage, a document entitled “Work Authorization and Contract” contained the phrase “This is a contract which includes all terms and conditions stated on the reverse side.” The defendant company was deemed to have assented to an indemnification provision set forth on the reverse side even though its agent did not read the provision before signing. See also Desert Outdoor Adver. v Superior Court (2011) 196 Cal. App.4th 866, 872 (failure to read contract no defense to contract enforcement); Mission Viejo Emergency Med. Assocs. _8- CLOSING BRIEF OF JOSE ONTIVEROS 501-018 3000 © 00 4 O N hn B= W N = N N N N N N N N N E E e m e m e m e m e m e m e d co NN O N nn R A W I N D = D OO 0 0 N D B R A W N = O v Beta Healthcare Group (2011) 197 Cal. App.4th 1146, 1156 (failure to read insurance policy does not mean an insured is not bound by its terms). “It is well established, in the absence of fraud, overreaching or excusable neglect, that one who signs an instrument may not avoid the impact of its terms on the ground that he failed to read the instrument before signing it.” Hulsey v. Elsinore Parachute Center (1985) 168 Cal.App.3d 333, 339; see also Madden v. Kaiser Foundation Hospitals (1976) 17 Cal.3d 699, 710. Here, there is no evidence (or allegation) that Chase tried to defraud Herrera into signing the affidavit. In fact, Rosa Herrera was represented at all times in the transaction by an experienced real estate agent (Eva Correa) who had a duty to explain its contents to her. The truth is probably that Ms. Correa almost certainly did explain the contents of the Affidavit to Ms. Herrera, despite her initial lack of memory at trial. Eva Correa was asked at trial if it was her normal practice to tell her clients the conditions that lenders place on short sales. She waffled and stated that she did not know. (Transcript, 2/10/2020, 93:12-93:21). Then, she was impeached from her deposition wherein she had testified that it was her normal practice to tell her clients of the conditions lenders have for short sales, and that she does not remember deviating from that normal practice in Herrera’s case. (Transcript, 2/10/2020, 94:7-94:24) Obviously, Ms. Correa almost certainly explained the conditions imposed by Chase to Plaintiff Herrera, despite her tailored testimony. Eva Correa then testified she sent the signed Affidavit to Chase, and that she knew that Chase was agreeing to take less money than what was owed on Herrera’s Mortgage. (Transcript, 2/10/2020, 97:8-14) C. HERRERA’S CONCEALMENT OF THE MONEY TRAIL SHOWS PLAINTIFF KNEW HER ACTIONS WERE WRONG The methods Herrera used to transfer funds to Vielma for his down payment on the Property shows that she knew what she was doing was wrong and in violation of the short sale requirements. She took affirmative steps to hide the money trail. She knew her fingerprints could not be anywhere near the down payment money. She testified she met Vielma at an offsite location and gave him “around $12,000” in cash (2/20/2020 Transcript _9. CLOSING BRIEF OF JOSE ONTIVEROS 501-018 3000 © 00 4 O N hn B= W N = N N N N N N N N N E E e m e m e m e m e m e m e d co NN O N nn R A W I N D = D OO 0 0 N D B R A W N = O 9:28 - 10:12). Then, she subsequently provided the remaining funds in large cashier checks drawn on the names of other people (i.e., Maria Chaidez & Omar Ruvalcaba). There was nothing in writing concerning all that money. As a result, one should conclude that Herrera knew that her name could not be associated with any of that down payment money, because that would evidence an agreement between her and the buyer that she knew was not permitted. Otherwise, why did she not simply deposit the money herself directly into escrow to protect her interests? This connivance on Herrera’s part shows she was consciously aware of her fraud and she took affirmative steps to conceal it. D. PLAINTIFF'S COMPLAINT ADMITS THE SALE WAS FRAUDULENT Plaintiff’s operative complaint even alleges facts proving the Affidavit of Arm’s Length Transaction was a fraud. The Fifth Amended Complaint (Exhibit 161) actually admits that the short sale was fraudulent (5 Amended Complaint, page 2, line 1). It alleges an oral agreement with Vielma to buy the property from her and that she would retain the right to repurchase the property at a later date for a fee of $10,000 to Vielma. (Fifth Amended Complaint, page 2 lines 10-11) It also makes it clear that Vielma was family member. Based on her Complaint alone, every single representation in the Affidavit of Arm’s Length Transaction document listed above (1 through 5) was violated. (It was all Vielma’s fault, though, she claims.) To summarize the true facts using the same paragraph numbers as in the Affidavit: (1) This was not an “Arm's Length Transaction,” - the transaction had not been negotiated by unrelated parties, each of whom was acting in his or her own self-interest; (2) The Buyer was a family member; (3) The Buyer had a business interest with the Seller (the $10,000 service fee that Vielma is alleged to have charged); (4) There were several hidden terms or hidden agreements or special understandings between the Seller and the Buyer that were not reflected in the Agreement or the escrow instructions associated with this transaction; and, (5) There was an agreement (Herrera alleges) between the herself and Vielma allowing her to remain in the Property as a tenant and to later regain title -10 - CLOSING BRIEF OF JOSE ONTIVEROS 501-018 3000 © 00 4 O N hn B= W N = N N N N N N N N N E E e m e m e m e m e m e m e d co NN O N nn R A W I N D = D OO 0 0 N D B R A W N = O ownership of the Property. In sum, each material representation in the Affidavit of Arm’s Length Transaction was a blatant falsehood. E. HERRERA’S FRAUD VIOLATED FEDERAL CRIMINAL STATUTES Apart from the fact that this situation represents a common law fraud on Chase bank, it was also a violation of 18 USC 1014, which criminalizes the making of false statements to a federally insured lender. 18 USC 1014, provides, in pertinent part: “Whoever knowingly makes any false statement or report, ... for the purpose of influencing in any way the action of ... any institution the accounts of which are insured by the Federal Deposit Insurance Corporation, ... upon any application, advance, discount, purchase, purchase agreement, repurchase agreement, commitment, loan, or insurance agreement or application for insurance or a guarantee, or any change or extension of any of the same, by renewal, deferment of action or otherwise, or the acceptance, release, or substitution of security therefor, pal be fined not more than $1,000,000 or imprisoned not more than 30 years, or oth.” Section 3293 of Title 18, United States Code, provides for a ten (10) year statute of limitations for certain financial institution offenses which involve violations of, or conspiracy to violate 18 U.S.C. 1014, among other statutes, if the offense affects a financial institution. Here, that is clearly applicable. Not only should Rosa Herrera be barred from using this court to countenance and complete her fraud, she should be criminally prosecuted. F. THE FRAUD ON CHASE DIRECTLY RELATES TO THIS CASE The very agreement that Herrera alleges she had with Vielma (and which she now seeks to vindicate by this action) was fraudulent, according to her own version of what happened. The fraud infects the cause of action that she is now bringing to this court. Specifically, the main reason the Anzac Property is now worth anything is because it now has much more equity than before since Chase was induced to release $268,000 of the approximately $464,000 secured debt that Herrera owed against it. In other words, Chase basically dropped a large bag of money ($268k+) onto the property (in reliance on false statements), which value Herrera is now trying to finally secure for herself by way of this litigation. According to her own testimony, she basically had a deal with another criminal “11 - CLOSING BRIEF OF JOSE ONTIVEROS 501-018 3000 © 00 4 O N hn B= W N = N N N N N N N N N E E e m e m e m e m e m e m e d co NN O N nn R A W I N D = D OO 0 0 N D B R A W N = O and now he won’t give her back the property. That stolen value went directly back into the Property by having an encumbrance lifted off of it. This was not just some past, improper, and unrelated conduct that we are dredging up from Plaintiff’s past. This conduct has prejudiced all the defendants because this very litigation would not be happening without the fraud on Chase having first taken place. And, she is essentially accusing Ontiveros of helping Vielma steal those ill-gotten proceeds from her. Although this was not a strong-arm bank robbery, it was equally felonious, and will be much more profitable if this litigation is successful for Herrera. The object of the contract Herrera says she had with Vielma was, in large part, to defraud the lender of the amount of money that it cancelled from her debt ($268,000+4). It is obvious that Herrera never intended to abide by the terms that Chase required and relied upon. She simply blames it all on Vielma and claims that she did not know because she did not understand it or read the document. That is simply not credible. She was the main beneficiary. This fraud was also contrary to good morals. (Civ. Code, § 1667, subd. (3).) While a short sale has advantages for all parties involved, nothing in the mechanism authorizes the borrower to conceal benefits promised by the buyer in exchange for the sale of the subject property. G. THE COURTHOUSE DOORS SHOULD BE CLOSED TO PLAINTIFF The rule is settled in California that whenever a party who, as actor, seeks to set judicial machinery in motion and obtain some remedy, has violated conscience, good faith or other equitable principle in his prior conduct, then the doors of the court will be shut against her in limine; the court will refuse to interfere on her behalf to acknowledge her right, or to afford her any remedy.’ 8 Lynn v. Duckel (1956) 46 Cal.2d 845, 850 (1956), followed in Moriarty v. Carlson (1960) 184 Cal.App.2d 51, 55; accord, Stockton v. Ortiz (1975) 47 Cal. App.3d 183, 200, (unclean hands doctrine, “in general, prescribes, at law and in equity, that the courts will not aid either party to a transaction which is illegal or contrary to public policy where the parties are equally at fault, but will leave the parties where it finds them”). -12- CLOSING BRIEF OF JOSE ONTIVEROS 501-018 3000 © 00 4 O N hn B= W N = N N N N N N N N N E E e m e m e m e m e m e m e d co NN O N nn R A W I N D = D OO 0 0 N D B R A W N = O A court’s decision to apply the unclean hands doctrine is reviewed for an abuse of discretion. See Health Maintenance Network v. Blue Cross of Southern California (1988) 202 Cal.App.3d 1043, 1061. The issue of the application of unclean hands is best left to the trial court sitting as chancellor in equity unless manifest abuse is shown in the decision. (See Bennett v. Lew (1984) 151 Cal.App.3d 1177, 1187 [199 Cal .Rptr. 241]; 7 Witkin, Summary of Cal. Law (8th ed. 1974) § 8, p. 5234.) California courts have stated that an illegal contract “may not serve as the foundation of any action, either in law or in equity” (Tiedje v. Aluminum Taper Milling Co. (1956) 46 Cal.2d 450, 453-454), and that when the illegality of the contract renders the bargain unenforceable, “’[t]he court will leave them [the parties] where they were when the action was begun’ ( Wells v. Comstock (1956) 46 Cal.2d 528, 532. It is obvious here that Rosa Herrera knew that she was obtaining a great benefit from her short sale to Vielma. And she also knew that she had intended to violate almost all the terms of the Short Sale when she signed and notarized the “Affidavit of Arm’s Length Transaction” document (Exhibit 119), setting forth all the things a seller may not do in connection with the short sale. By signing this notarized document, Herrera clearly agreed to be bound by the terms contained therein. The fact the document was required to be notarized told her it was a particularly important document. Her testimony that she claims she did not understand its terms or that a side-agreement with Vielma was prohibited, is simply not credible. Especially since she provided him with $12,000 in cash and over $48,000 in cashier checks drawn on other people’s accounts. Those things demonstrate her knowledge of wrongfulness and that she knew she had to conceal the source of those funds. Rosa Herrera’s unclean hands should preclude her from obtaining any relief from this court, both to protect this court’s judicial integrity, and to prevent an unjust result. IV. RECISSION REQUIRES RESTITUTION OF ALL BENEFITS It appears that Plaintiff seeks rescission of the 2011 short sale to Vielma. (Plaintiff’s Brief, p. 15, lines 5-7) However, for that remedy to be available, Plaintiff would be -13- CLOSING BRIEF OF JOSE ONTIVEROS 501-018 3000 © 00 4 O N hn B= W N = N N N N N N N N N E E e m e m e m e m e m e m e d co NN O N nn R A W I N D = D OO 0 0 N D B R A W N = O required to restore all benefits that she has received thus far. Rescission restores the parties to their original positions by requiring the return of the consideration each has received (Tippett v Terich (1995) 37 Cal.App.4th 1517, disapproved on other grounds in Cortez v Purolator Air Filtration Prods. Co. (2000) 23 Cal.4th 163, 171, 177; Sanborn v Ballanfonte (1929) 98 Cal.App. 482). Because the goal of rescission is to restore the parties to their pre-transaction status, Civil Code § 1692 grants the courts broad discretion to fashion relief by awarding compensation to either party to adjust the equities.” Under the court's power to adjust the equities, the party entitled to rescission may even be required to reimburse the other party. See, e.g., Utemark v Samuel (1953) 118 Cal.App.2d 313. The broad scope of judicial power to fashion a remedy was illustrated in Snelson v Ondulando Highlands Corp. (1970) 5 Cal. App.3d 243, in which the court ordered the guilty sellers to assume payments on an existing obligation incurred by the defrauded buyer and to hold the buyer harmless for any future defaults on the obligation as additional protection. An accounting process in which the benefits received by each party are offset may be used to establish the award of damages. Paularena v Superior Court (1965) 231 Cal.App.2d 906. If the action is for rescission and specific restitution of an item other than cash, such as the transfer of land, the judgment directing restitution should make transfer conditional on return by the plaintiff of any consideration received. See CC §1693; Alder v Drudis (1947) 30 C2d 372, 384. Here, Plaintiff and her family have lived in the Anzac Property mortgage free, tax free, insurance free, and rent free since March 2016. Since then, various members of the Ontiveros family have paid all those expenses. Jose Ontiveros argues that no rescission should be granted, especially since Jose Ontiveros, Jr. (who now holds title) is not a party If in an action or proceeding a party seeks relief based upon rescission, the court may require the party to whom such relief is granted to make any compensation to the other which justice may require and may otherwise in its judgment adjust the equities between the parties. (Civ. Code, § 1692.) -14 - CLOSING BRIEF OF JOSE ONTIVEROS 501-018 3000 © 00 4 O N hn B= W N = N N N N N N N N N E E e m e m e m e m e m e m e d co NN O N nn R A W I N D = D OO 0 0 N D B R A W N = O to this action and is not present to defend his title. However, if the court is so inclined, as a condition to any rescission relief granted, Rosa Herrera should be required to restore the value of all benefits that she has received from the persons who have paid those mortgage, tax and insurance expenses in connection with the Property. Additionally, and as a condition precedent, she should be required to pay back Chase bank the $268,796.84 of debt that it cancelled as a result of her fraudulent representations in the 2011 short sale. V. CONCLUSION -- PLAINTIFF HAS NOT PROVEN HER CASE While it is apparent that Vielma and Herrera had some sort of arrangement between them, the evidence does not clearly show what the understandings were. Plaintiffs testimony was carefully tailored. But, she sold the property to Vielma and, in so doing, she transferred legal title to him. Evidence Code section 662 provides “[t]he owner of the legal title to property is presumed to be the owner of the full beneficial title. This presumption may be rebutted only by clear and convincing proof.” Thus, to the extent Herrera has attempted to prove at trial that she actually retained any beneficial interest in the Property after the 2011 transfer to Vielma, that issue was required to be proven by clear and convincing evidence. She has not done so. Accordingly, the Court is respectfully requested not to upset any title interests in the property. That drastic remedy should be avoided, especially in light of the unjust enrichment that would occur, and the hardship to other parties not before the Court who have record-title interests. Jose Ontiveros respectfully requests that the Court find in favor of defendants and award Plaintiff no relief in this action. If the Court is, however, inclined to grant relief, it is requested to allocate the money Vielma received on his sale to Cynthia ($168,000) and leave the deeds in place. This is appropriate since the court is aware that Cynthia was dismissed, with prejudice, and Jose Ontiveros, Jr. was never served. The court can address the $60,100 down payment, the $10,000 that Herrera promised to pay Vielma, and allocate the rest of the sales proceeds between them. Respectfully submitted, LAW OEFICE OF CURTIS W HERRON June 22, 2020 - 15 - CLOSING BRIEF OF JOSE ONTI VEROS 501-018 3000 POS-050/EFS-050 ATTORNEY OR PARTY WITHOUT ATTORNEY: STATE BAR N0: 228397 FOR COURT USE ONLY name Curtis W. Herron rirm name: LAW OFFICE OF CURTIS W. HERRON STREET ADDRESS: 212 Main St Ste A2 cry: Seal Beach state: CA zip cone:90740 TeLepHone No. (714) 794-8001 Fax No. (562) 684-4647 E-MAIL ADDRESS: CUrtis@ cwhlegal.com ATTORNEY FOR (name): J 0S€ Ontiveros SUPERIOR COURT OF CALIFORNIA, COUNTY OF LOS ANGELES street aporess: 111 N Hill St MAILING ADDRESS: (Same) CITY AND ZIP copE: LOS Angeles, CA 90012 ranch name: Stanley Mosk Courthouse SSE HER: PLAINTIFF/PETITIONER: Rosa Herrera BC612422 DEFENDANT/RESPONDENT: Francisco Vielma, etal. J UDICIAL OFFICER: Ronald Broadbelt PROOF OF ELECTRONIC SERVICE ag on 1. lam atleast 18 years old. a. My residence or business address is (specify): 212 Main StSte A2, Seal Beach, CA 90740 b. My electronic service address is (specify): curtis@ cwhlegal.com 2. | electronically served the following documents (exact titles): CLOSING BRIEF OF DEFENDANT JOSE ONTIVEROS [J] The documents served are listed in an attachment. (Form POS-050(D)/EFS-050(D) may be used for this purpose.) 3. l electronically served the documents listed in 2 as follows: a. Name of person served: On behalf of (name or names of parties represented, if person served is an attorney): b. Electronic service address of person served : c. On (date): XI The documents listed in item 2 were served electronically on the persons and in the manner described in an attachment. (Form POS-050(P)/EFS-050(P) may be used for this purpose.) Date: 06/22/2020 | declare under penalty of perjury under the laws of the State of California that the foregajng is true and correct. Curtis W. Herron > (TYPE OR PRINT NAME OF DECLARANT) Ne-- CG iGNATURE OF DECLARANT) Page 1 of 1 Form Approved for Optional Use PROOF OF ELECTRONIC SERVICE Judicial Council of California Cal. Rules of Court, rule 2.251 P0S-050/EFS-050 [Rev. February 1, 2017] (Proof of Service/Electronic Filing and Service) www.courts.ca.gov American LegalNet, Inc. www.FormsWorkFlow.com POS-050(P)/EFS-050(P) SHORT TITLE: Herrera v. Vielma CASE NUMBER: BC612422 ATTACHMENT TO PROOF OF ELECTRONIC SERVICE (PERSONS SERVED) (This attachment is for use with form POS-050/EFS-050.) NAMES, ADDRESSES, AND OTHER APPLICABLE INFORMATION ABOUT PERSONS SERVED: Name of Person Served (If the person served is an attorney, the party or parties represented should also be stated.) Electronic Service Address Date of Electronic Service Jacob Mojarro, attorney for D ate: 6/22/2020 Plaintiff Herrera jacob@ mojarrolaw.com Date: Date: 6/22/2020 Paul Orloff, attorney for defendant a Francisco Vielma paul@ orlofflitigation.com Date: Date: Date: Date: Date: Date: Date: Date: Date: Form Approved for Optional Use Judicial Council of California ATTACHMENT TO PROOF OF ELECTRONIC SERVICE (PERSONS SERVED) P0OS-050(P)/EFS-050(P) [Rev. February 1, 2017] (Proof of Service/Electronic Filing and Service); Page 2 of 2
