United States District Court, C.D. California
OPINION ON APPEAL FROM BANKRUPTCY COURT
ANDERSON UNITED STATES DISTRICT JUDGE
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.
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,
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.)
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,
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.)
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 ...