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In re Macera

United States District Court, C.D. California

September 6, 2017

In re PETER FRANCIS MACERA, JR., Debtor,
v.
ROBERT S. WHITMORE, EL DRAG, INC., Appellees. WELLS FARGO BANK, N.A., Appellant, Bankruptcy No. 6:14-bk-18815-WJ Adversary Proceeding No. 6:15-ap-1047-WJ

          OPINION ON APPEAL FROM BANKRUPTCY COURT

          PERCY ANDERSON UNITED STATES DISTRICT JUDGE

         Before the Court is an appeal filed by appellant Wells Fargo Bank, N.A. (“Wells Fargo” or “Appellant”) stemming from an adversary proceeding filed by bankruptcy trustee and appellee Robert S. Whitmore (“Trustee”) in the course of debtor Peter Francis Macera, Jr.'s (“Debtor”) Chapter 7 bankruptcy. Wells Fargo challenges the decisions by the United States Bankruptcy Court for the Central District of California to grant partial summary judgment in the adversary proceeding in favor of the Trustee, enter an order dismissing the adversary proceeding, and denying Wells Fargo's Emergency Motion for Leave to File a Counterclaim. Pursuant to Rule 78 of the Federal Rules of Civil Procedure and Local Rule 7-15, the Court finds that this matter is appropriate for decision without oral argument.

         I. Background

         The dispute in this case centers around a series of grant deeds encumbering the real property located at 13533 2nd Ave, Victorville, CA (the “Victorville Property”). (Docket Nos. 18-22, Excerpt of Records (“ER”), 3.) Debtor is the President of both Goldstone Financial Inc. (“Goldstone”) and El Drag, Inc. (“El Drag”). (ER, 2-3.) On June 9, 2003, Debtor, in his capacity as President of Goldstone, executed a grant deed transferring the Victorville Property to El Drag. (ER, 2-3, 101.)

         On November 11, 2003, Debtor, in his individual capacity, executed a deed of trust (“Defective DOT”) in favor of World Savings Bank, FSB, purporting to encumber the Victorville Property. (ER, 103-117.) However, on November 11, 2003, title to the Victorville Property belonged to El Drag rather than Debtor. (See ER, 101, 103-118.)

         Appellant Wells Fargo acquired World Savings Bank, FSB's interest under the Defective DOT, and attempted to initiate foreclosure proceedings when payments owed pursuant to the Defective DOT became in arrears. (ER, 125-128.) Wells Fargo realized the defect in title, and on March 19, 2014, filed a lawsuit in San Bernardino County Superior Court, Case No. CIVDS 1403039, naming both Debtor and El Drag as defendants. (ER, 90-95.) In its Complaint, Wells Fargo alleged that after attempting to foreclose against the Victorville Property, it “discovered that the [Defective DOT] was made and executed by [Debtor] as an individual as the borrower/trustor instead as the principal of the Property's vested fee simple owner, El Drag.” (ER, 93.) The lawsuit sought to either quiet title in favor of Wells Fargo, or to reform the Defective DOT to “reflect the true intent of the parties” by substituting El Drag as the borrower/trustor to the deed of trust, and amending the document to reflect that Debtor executed the deed of trust in his capacity as El Drag's principal. (ER, 90-95.) In connection with its lawsuit, Wells Fargo recorded a Notice of Pendency of Action against the Victorville Property. (ER, 131-33.)

         A little over a month later, on April 30, 2014, Debtor, in his capacity as President of El Drag, executed a “Corrective Deed of Trust.” (ER, 138-143.) In pertinent part, the Corrective Deed of Trust provides:

This Agreement is made by and between Wells Fargo . . . herein after called Beneficiary, and El Drag, Inc., a California corporation, hereinafter called Borrower.
WHEREAS, on November 11, 2003, Borrower's principal Peter F. Macera, Jr. did make, execute, and deliver to World Savings Bank, FSB, as Beneficiary . . . [a] Deed of Trust secur[ing] a promissory note dated October 30, 2003, in the amount of $75, 000.00.
WHEREAS, said Deed of Trust incorrectly identified Peter F. Macera, Jr. as the Borrower and Trustor, instead of Borrower, who was the vested owner of the [Victorville Property], contrary to the true intent of the parties of said Deed of Trust; . . .
WHEREAS, the parties hereto desire to correct said Deed of Trust to confonn to the true intent of the parties.
NOW THEREFORE, in consideration of the foregoing, the parties hereto do hereby correct said Deed of Trust to name El Drag, Inc., a California corporation as Borrower and Truster to the Deed of Trust.

(ER, 139.) After the Corrective Deed of Trust was executed and recorded, Wells Fargo withdrew its Notice of Pendency of Action on June 19, 2014, and dismissed its lawsuit on July 18, 2014. (ER, 145-48, 152-53.)

         Debtor filed his Chapter 7 bankruptcy petition on July 8, 2014. On February 10, 2015, Trustee filed an adversary proceeding against Wells Fargo seeking a determination that the Corrective Deed of Trust was void. (ER, 2-9.) On July 23, 2015, with leave of the ...


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