nguyen chase motions rule 60(b) and 55 re default judgment

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,

1

MOTION FOR RELIEF FROM DEFAULT JUDGMENT

1152634.2

Case 2:09-cv-04589-AHM-AJW Document 131 Filed 10/05/10 Page 1 of 57 Page ID #:1188


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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


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

1152634.2



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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

5

MOTION FOR RELIEF FROM

DEFAULT JUDGMENT

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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

9


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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


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.

4


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EXHIBIT



23/57

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

Page 1 of 1

Printed on 8/11/2010 12:56:22 PM



24/57

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

Page 1 of 1

Printed on 811112010 12:56:22 PM



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XHI IT



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XHI IT



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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

[email protected]

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

7

8

9

10

UNITED STATES

DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

1 1

i'

12 PAUL NGUYEN, an individual; and

LAURA NGUYEN, an individual,

13

14

15

Plaintiffs,

v.

16

Chase Bank USA, N.A.; Chase Home

finance, LLC; First American Loanstar

17

Trustee Services; Joseph SonCao Tran,

18 an Individual; and DOES 1 through 50,

inclusive,

19

DEMAND FOR JURY TRIAL

· Defendants

20'

21

22

COMES NOW, Plaintiffs PAUL NGUYEN AND LAURA NGUYEN

23

(hereinafter Plaintiffs or NGUYEN ) file this civil action alleging that their

24

II

ii

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28

II

SECOND VERIFIED AMENDED COMPLAINT



31/57

Ca e 2:09-cv-04589-Ahl ;-AJW Document 96 Filed 1112..;¡i009 Page 2 of 21

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:

23

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2




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Ca e 2:09-cv-04589-AhlV1-AJW Document 96 Filed 11/2 J/2009 Page 3 of 21

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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).

3

SECOl\TJ VERIFIED AMENDED COMPLAINT



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Ca v 2:09-cv-04589-Ähivl-ÄJW Document 96 Filed 11/2.)12009 Page 4 of 21

PARTIES

2

3

8.

4

5

6

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9.

8

9

10

1 1

.l.l

Plaintiff

12

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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Ca e 2:09 cv 04589 Ahiv1 AJW Document 96 Filed 11/2.:12009 Page 6 of 21

Mortgage Loan and were affixed on said documents by Defendants.

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.30.;-A-&-a-fesult.Gf.the.~f.ailure-of.Cha£e-tQ-pm:v:ide-alLoLthedisclüsllIes.r.equired hy_

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

6




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C e 2:09-cv-04589-Ah v1-AJW Document 96 Filed 11/¿0í2009 Page 7 of 21

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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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C e 2:09-cv-04589-Ahiv1-AJW Document 96 Filed 11/¿()l2009 Page 8 of 21

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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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C e 2:09-cv-04589-Ahlvl-AJW Document 96 Filed 11/L,)J2009 Page 9 of 21

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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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Ca 2:09-cv-04589-Ahlvl-AJW Document 96 Filed 11/2.JI¿009 Page 10 of 21

48. In conspiring and acting in concert as herein alleged, Chase, either directly or

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... . ... ..throughth€-GGnduct,authoriz;ation~or~ratification..y_a Chase~QfficeL~din:~ctQi'9I.

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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Ca 2:09-cv-04589-Ahlv1-AJW Document 96 Filed 11/2..I¿009 Page 11 of 21

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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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Ca ß 2:09-cv-04589-Ahlv -AJW Document 96 Filed 11/2JI¿009 Page 12 of 21

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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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SECOND VERIFIED AMNDED COMPLAINT



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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,

nguyen chase motions rule 60(b) and 55 re default judgment

Documents