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Early Sullivan Obtains $4.85 Million Jury Verdict for Client in Wrongful Foreclosure Case
Category: News, Results, Results | Friday, March 31st, 2023 | Comments Off on Early Sullivan Obtains $4.85 Million Jury Verdict for Client in Wrongful Foreclosure Case
An Early Sullivan Wright Gizer & McRae trial team, comprised of Scott Gizer, Rebecca Claudat and Zachary Hansen obtained a $4.85 million jury verdict on behalf of their clients Cashera Plaza, LLC and Tony Khodadad regarding a wrongful foreclosure on vacant land in Hanford, CA.
Cashera Plaza had obtained a $1.13 million construction loan from Defendants to build a self-serve car wash and auto repair facility. The Defendants entrusted the construction funds to a fund control agent, but then secretly used those same funds for a gold refining venture without Plaintiffs’ knowledge or consent. When this gold venture failed, Defendants tried to hold Cashera Plaza responsible for the entire $1.13 million despite Cashera only receiving approximately $140,000, asserting that the fund control agent was under Cashera Plaza’s control and then trying to hide evidence of Defendants’ secret gold venture. Liability was found and the critical issue at trial became whether Plaintiffs could establish damages for lost profits since Plaintiffs’ car wash and auto repair facility was never built due to Defendants’ breaches and fraud.
The jury unanimously found that Plaintiffs had established lost profits with reasonable certainty and awarded Plaintiffs the entire amount of lost profits claimed as well as emotional distress damages for Defendants’ fraud.
Early Sullivan’s Coverage Determination On Behalf Of Old Republic Affirmed On Appeal
Category: News, Results | Thursday, March 11th, 2021 | Comments Off on Early Sullivan’s Coverage Determination On Behalf Of Old Republic Affirmed On Appeal
The United States Court of Appeals for the Fifth Circuit upheld Early Sullivan’s coverage determination, involving a complex mechanic’s lien dispute, on behalf of client Old Republic National Title Insurance Company (“Old Republic”). At the center of the dispute was the famed Cal-Neva Lodge & Casino that sits on the border of California and Nevada — a property Frank Sinatra once co-owned in the 1960s.
Hall filed suit against Old Republic for breach of contract, breach of the duty to defend, breach of the duty of good faith and fair dealing, and violations of Chapter 541 of the Texas Insurance Code, claiming that coverage was improperly denied, for which Hall sought over $5,000,000 in damages.
The coverage opinions, prepared by Scott Gizer, concerned whether Hall had coverage under the insuring provisions of the title policy that insured the lien priority of Hall’s deed of trust, and under certain mechanic’s lien endorsements, as well as whether Hall’s claims were excluded from coverage under Exclusions 3(a), excluding matters created by the Insured, and 3(d), post-policy events. Scott Gizer opined that, because all of the work covered by the mechanic’s liens was post-policy work, and arose due to Hall’s internal decision to discontinue funding its construction loan months prior to notifying any of the contractors, there was no coverage for the claim and was excluded from coverage.
Early last year, the U.S. District Court for the Northern District of Texas found that Scott Gizer’s and Old Republic’s coverage opinions were correct, Ordering that Hall take nothing by its claims against Old Republic, and that those claims be dismissed with prejudice. The United States Court of Appeals for the Fifth Circuit recently affirmed summary judgment.
Click “Download PDF” to read the 5th Circuit Opinion.
California Court Of Appeal Affirms Demurrer Victory Obtained By William Wright on Behalf of First American Title Insurance Company
Category: News, Results | Monday, December 14th, 2020 | Comments Off on California Court Of Appeal Affirms Demurrer Victory Obtained By William Wright on Behalf of First American Title Insurance Company
In Pak v. First American Title Insurance Company, the Court of Appeal has affirmed a demurrer ruling obtained by Early Sullivan for its client First American Title Insurance Company.
The Pak case concerned claims for breach of title policy and bad faith relating to an easement on commercial property in Los Angeles. The Superior Court sustained First American’s demurrers without leave to amend, agreeing that First American had no duty of defense or indemnification in light of the individual insureds’ prior conveyance of the property to their LLC, which conveyance terminated coverage under Condition 2 of their policy.
The Court of Appeal’s decision in Pak involves issues that are important to the title insurance industry and its insureds, because it interprets and provides clarity regarding a key policy provision, namely Condition 2. The language of Condition 2 – which provides that coverage under the policy shall continue in force in favor of an insured only so long as the insured “retains an estate or interest in the land” – is ubiquitous in title policies of all types issued in California and around the country.
The Pak decision is the first in California to specifically analyze and interpret the language “estate or interest in the land” in Condition 2, and is the first to find that an insured owner’s conveyance of its fee interest in property to a limited liability company (LLC) owned by the insured, terminates coverage under Condition 2. The opinion is also the first California appellate decision to find that rescission of a conveyance of land does not revive coverage in a title insurance policy that has been terminated under Condition 2.
Early Sullivan Prevails on Demurrer on Behalf of Stewart Title of California
Category: News, Results | Tuesday, July 28th, 2020 | Comments Off on Early Sullivan Prevails on Demurrer on Behalf of Stewart Title of California
Early Sullivan partners Billy Wright and Christopher Ritter recently prevailed on demurrer on behalf of client Stewart Title of California, Inc. (STCA). The demurrer to the complaint, largely based on Markowitz v. Fidelity Nat. Title Co., 142 Cal.App.4th 528 (2006), was sustained without leave to amend on the first attempt. The case involved a negligence claim in which the plaintiff was seeking $1.2 million in alleged damages, arguing that STCA’s alleged failure to record a reconveyance of a deed of trust in a refinance cost the property owner the opportunity to sell the property to a buyer for $4.17 million. The court found that STCA owed no duty to the plaintiff and entered judgment in favor of STCA.
Early Sullivan Prevails in Breach of Contract/Bad Faith Case for Client Stewart Title Guaranty Company
Category: News, Results | Monday, June 29th, 2020 | Comments Off on Early Sullivan Prevails in Breach of Contract/Bad Faith Case for Client Stewart Title Guaranty Company
Sophia Lau recently prevailed on appeal in Ifeoma Ukoha v. Provident Title Company, et al., a breach of contract/bad faith case, on behalf of client Stewart Title Guaranty Company (“STGC”). Plaintiff Ifeoma Ukoha purchased an apartment building that was later lost to foreclosure due to the seller’s misappropriation of Ukoha’s mortgage payments. In her first amended complaint, Ukoha asserted breach of contract, breach of the implied covenant of good faith and fair dealing, concealment, promissory fraud, and violation of California Business and Professions Code section 17200/unfair competition.
Ukoha alleged that STGC was effectively a long-time business partner of the seller, whose other properties were embroiled in civil and criminal litigation, and STGC should have informed Ukoha of the risk of purchasing the subject property because of the seller’s bad business practices. Ukoha sued both the underwritten title company, Provident Title Company, Inc. (“Provident”), and the title insurer, STGC, alleging collusion with the seller. The trial court sustained both STGC’s and Provident’s demurrers without leave to amend on the grounds that the post-policy foreclosure was not a title defect, and the title companies owed no duty of disclosure to Ukoha.
The California Court of Appeal agreed with the trial court and stated that a title insurance company does not owe the insured any duty of disclosure outside the policy. In affirming the judgment, the appellate court held that “[b]ecause Ukoha alleged no facts indicating she had any viable cause of action, defendants’ demurrers were properly sustained. Because she offers no alternate, cognizable theory on appeal, nor any indication that she could successfully amend, and none appearing from the record, leave to amend was properly denied.”
Early Sullivan Prevails in Breach of Policy/Bad Faith Case on Behalf of Fidelity National Title Insurance Company
Category: News, Results | Friday, April 10th, 2020 | Comments Off on Early Sullivan Prevails in Breach of Policy/Bad Faith Case on Behalf of Fidelity National Title Insurance Company
Christopher Ritter (with the involvement of William Wright) prevailed on summary judgment for the Firm’s client Fidelity National Title Insurance Company against PennyMac in the action entitled, PennyMac Mortgage Investment Trust Holding I, LLC v. Fidelity National Title Insurance Company.
The breach of contract/bad faith action before the American Arbitration Association was initiated by PennyMac and its firm Blank Rome. It arose from Fidelity’s denial of a defense in an underlying action brought by a homeowner against PennyMac alleging that PennyMac’s deed of trust was invalid.
Based on the Firm’s briefing and argument, the arbitrator relied on the California XWarehouse case stating: “The court points out the well-established principle that the title insurance policy insured only the validity of the deed of trust and not the note secured by that deed of trust, therefore it did not matter whether the [loan] funding was established at the time of the tender, because either way, the title insurer would have had no obligation to pay money.”
Still pending is the arbitrator’s tentative determination to award Fidelity its attorney’s fees and costs.
Early Sullivan’s Coverage Determination At Heart of Old Republic’s Summary Judgment Victory
Category: News, Results | Monday, February 24th, 2020 | Comments Off on Early Sullivan’s Coverage Determination At Heart of Old Republic’s Summary Judgment Victory
Early Sullivan client Old Republic National Title Insurance Company (“Old Republic”) retained the Firm to handle coverage on a complex mechanic’s lien dispute involving Old Republic’s insured Hall CA-NV, LLC (“Hall”) and the renovation of the famed Cal-Neva Lodge & Casino that sits on the border of California and Nevada — a property Frank Sinatra once co-owned in the 1960s.
Hall filed suit against Old Republic for breach of contract, breach of the duty to defend, breach of the duty of good faith and fair dealing, and violations of Chapter 541 of the Texas Insurance Code, claiming that coverage was improperly denied, for which Hall sought over $5,000,000 in damages.
At the center of the lawsuit were the coverage opinions prepared by Early Sullivan’s Scott Gizer. The coverage opinions concerned whether Hall had coverage under the insuring provisions of the title policy that insured the lien priority of Hall’s deed of trust, and under certain mechanic’s lien endorsements, as well as whether Hall’s claims were excluded from coverage under Exclusions 3(a), excluding matters created by the Insured, and 3(d), post-policy events. Scott opined that, because all of the work covered by the mechanic’s liens was post-policy work, and arose due to Hall’s internal decision to discontinue funding its construction loan months prior to notifying any of the contractors, there was no coverage for the claim and was excluded from coverage.
After both sides moved for summary judgment on the legal interpretation of the title insurance policy in-question, the U.S. District Court for the Northern District of Texas, found Scott’s and Old Republic’s coverage opinions to be correct, Ordering that Hall take nothing by its claims against Old Republic, and that those claims be dismissed with prejudice.
Click “Download PDF” to read the Final Order.
Early Sullivan Prevails on Behalf of Client My Instant Guru (“MIG”) Regarding Data Storage Master Service Agreement
Category: News, Press, Results | Friday, August 23rd, 2019 | Comments Off on Early Sullivan Prevails on Behalf of Client My Instant Guru (“MIG”) Regarding Data Storage Master Service Agreement
After a week-long arbitration, in Arya Group vs. My Instant Guru, the Hon. Richard A. Stone (Ret.) ruled in favor of Early Sullivan client, My Instant Guru (“MIG”), in its dispute with high-end architectural firm Arya Group, which was seeking damages just south of $50 million. Scott Gizer acted as lead counsel for MIG in the arbitration.
Arya claimed that MIG, which Arya hired for networking, backup, and disaster recovery services, set up a faulty computer network and failed to maintain sufficient backups for MIG’s files. As a result, when Arya’s server crashed, Arya claims to have lost all of its data, including architectural drawings (CAD files) that would cost tens of millions of dollars to recreate. Arya alleged five claims against MIG: (1) a breach of contract claim based on MIG’s alleged failure to maintain backups; (2) a negligence claim based on MIG’s purported duty; (3) breach of fiduciary duty; (4) negligent misrepresentation; and (5) fraud.
MIG argued that it fully performed as required and that the server crash and loss of data occurred because Arya failed to heed MIG’s warnings and follow MIG’s advice. Based upon the testimony of the parties and witnesses, the documentary evidence and the arguments of counsel, the Arbitrator ruled in favor of MIG regarding Arya’s claims against it. “Arya failed to heed MIG’s explicit and repeated advice regarding the server upgrade,” the ruling reads. The arbitrator found “there were simply too many opportunities for Ayra to protect itself, or allow MIG to protect it, to permit a finding for Arya in this matter.”
Early Sullivan Prevails for Client Sun West in Bench Trial Over Defective Loan
Category: News, Press, Results | Friday, August 2nd, 2019 | Comments Off on Early Sullivan Prevails for Client Sun West in Bench Trial Over Defective Loan
Following a bench trial before the Honorable Dennis J. Landin, a statement of decision was issued in favor of Early Sullivan client Sun West regarding a defective loan it was sold by First Alliance Home Mortgage LLC (“First Alliance”). First Alliance entered into a correspondent agreement with Sun West through which First Alliance would sell loans to Sun West that Sun West would then sell on the secondary market to certain governmental entities, including Fannie Mae and Ginnie Mae. Sun West was required to repurchase the loan in question from Fannie Mae because it did not meet certain regulations relating to borrower reserves. When Sun West demanded that First Alliance repurchase this loan from Sun West, First Alliance refused to do so claiming that Sun West should have caught the borrower reserve problem before purchasing the loan because Sun West had underwritten the loan.
At the trial, First Alliance again argued Sun West was the underwriter, but the evidence at trial showed that First Alliance was the final underwriter of the loan and that Sun West only performed a more limited underwriting review. Further, the evidence established that even if Sun West personnel were engaged in duties similar to those of an underwriter, they were not given the information about the borrower’s insufficient cash reserves until after the time of closing and, thus, could not have caught the issue. Therefore, the judge ruled that First Alliance was obligated under the parties’ contract to repurchase the loan.
First Alliance further argued that Sun West did not sufficiently attempt to mitigate the damages. The court found this unpersuasive as Sun West was not obliged to sell the loan on the open market, and it made efforts to convince Fannie Mae to keep the loan and sought further documentation from First Alliance to rectify the deficiency, which was never produced. Additionally, Sun West proposed a “lender credit” to Fannie Mae to reduce the risk. Due to the reasons listed above the court ruled in Sun West’s favor stating it “did all it was required to do under the law.”
Click “Download PDF” to read order.
Early Sullivan Prevails for Client Sun West in 11th Circuit Affirmation
Category: News, Results | Monday, April 15th, 2019 | Comments Off on Early Sullivan Prevails for Client Sun West in 11th Circuit Affirmation
Scott Gizer successfully prevailed in Iaffaldano v. Sun West Mortgage Company, Inc. after the United States Court of Appeals for the Eleventh Circuit affirmed a judgment by the District Court for the Southern District of Florida finding that Early Sullivan client, Sun West Mortgage Company, Inc., had not violated RESPA when it procured force placed flood insurance for its borrower Michelle Iaffaldano.
Iaffaldano had argued that Sun West had established an escrow account for her when it created a Repayment Plan pursuant to which Iaffaldano was to reimburse Sun West for the fees advanced for the force placed insurance. Iaffaldano further argued that establishing an escrow account precluded Sun West from obtaining force placed insurance and, instead, required Sun West to renew Iaffaldano’s voluntary insurance. The District Court disagreed that the Repayment Plan established an escrow account and found Sun West’s conduct to be proper and in compliance with RESPA.
The 11th Circuit affirmed finding that the District Court had been correct in its judgment that the plaintiff did not have an escrow account (as defined in 12 C.F.R. § 1024.17(b)) with Sun West, and was therefore not entitled to protections from force-placed insurance afforded under § 1024.17(k)(5).