Tyron Street Acquisition Trust v. Moshe CA2/4

Filed 10/21/26 Tyron Street Acquisition Trust v. Moshe CA2/4 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(a). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115(a). IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION FOUR TYRON STREET ACQUISITION B351583 TRUST I, A DELAWARE STATUTORY TRUST, (Los Angeles County Super. Ct. No. Plaintiff and Respondent, 24STCV10832) v. YAIR BEN MOSHE, Defendant and Appellant. APPEAL from a judgment of the Superior Court of Los Angeles County, Gary D. Roberts, Judge. Affirmed. Law Offices of Jacob Reich, Jacob Reich for Defendant and Appellant. Donahue Fitzgerald, Mark D. Epstein and Garrett Burton; Snell & Wilmer, Andrew B. Still and Eric S. Pezold for Plaintiff and Respondent.  This appeal arises from cross-motions for summary judgment regarding lien priority over two adjacent parcels of real property. Tyron Street Acquisition Trust I (Tyron) contends it is entitled to lien priority under the doctrine of equitable subrogation. Yair Ben Moshe counters that equitable subrogation does not apply because it would elevate Tyron’s deed of trust to a superior position and would directly prejudice Moshe’s deed of trust. The trial court granted Tyron’s motion and denied Moshe’s, concluding that equitable subrogation applies in this case as a matter of law. We affirm. BACKGROUND I. Facts A. The Properties and the 1968 Covenant This case concerns lien priority over two adjacent parcels of real property commonly known as 1303 and 1305 Laveta Terrace in Los Angeles (the property). On May 29, 1968, a covenant was recorded against the property (the 1968 covenant). The 1968 covenant provides that the two lots “shall be held as one parcel and no portion shall be sold separately.” On December 3, 2014, Reposition Laveta, LLC (Reposition) acquired title to both lots by a single grant deed. Thereafter, Reposition borrowed money against the property as detailed below. B. The Easy Financial Deeds of Trust On June 10, 2021, two separate deeds of trust in favor of Easy Financial LLC (Easy Financial) were recorded in the Los Angeles County’s Recorder’s Office, each encumbering one of the 2 two adjacent properties.1 One deed of trust secured a loan of $1,725,000 and encumbered the property known as 1305 Laveta Terrace. The other deed of trust secured a loan of $862,500 and encumbered the adjacent property commonly known as 1303 Laveta Terrace. C. Moshe’s Deed of Trust On September 30, 2022, Moshe made an $800,000 loan to Reposition, secured by a deed of trust which encumbered both Laveta Terrace properties. D. The Churchill Loan and Payoff of the Easy Financial Loans On or about March 2, 2023, Churchill Funding LLC (Churchill) made a loan to Reposition in the amount of $2,793,750.00, secured by a deed of trust recorded on March 7, 2023. The single deed of trust encumbered both Laveta Terrace properties. As an express condition of funding, Churchill required that its deed of trust record in first position and that all senior liens be cleared or paid through escrow. It specifically conditioned funding on issuance of a lender’s title policy insuring first priority. The preliminary report of title that Churchill received from Stewart Title Guaranty Company (Stewart Title) while underwriting the loan disclosed the Easy Financial deeds of trust, 1 Tyron claims that on October 10, 2019, before the Easy Financial deeds of trust were recorded, a deed of trust in favor of Maxim Commercial Capital, securing a loan of $1,800,000, was recorded. Moshe asserts the record does not establish that the Maxim deed of trust remained an outstanding encumbrance when Moshe recorded his deed of trust. But as Moshe concedes, we need not decide this dispute because it has no bearing on the dispositive issues on appeal. 3 but did not disclose Moshe’s deed of trust. The lender’s title policy issued by Stewart Title also did not disclose Moshe’s deed of trust and insured Churchill’s deed of trust as first priority. Following the payoffs of the Easy Financial loans— $1,777,635.28 for the first Easy Financial loan and $903,059.16 for the second Easy Financial loan—both Easy Financial deeds of trust were reconveyed and released from the property of record. On January 26, 2024, Churchill assigned its deed of trust to Tyron by recorded Assignment of Security Instruments. The assignment included the same legal description applicable to the two Laveta Terrace properties. II. Procedural Background and the Trial Court’s Rulings On April 30, 2024, Tyron filed a complaint against Moshe for (1) equitable subrogation, (2) injunctive relief, (3) quiet title to a mortgage lien, and (4) declaratory relief. Tyron alleged that the purpose of the Churchill loan was to refinance and pay off the full balances the borrower owed on pre-existing mortgage loans that encumbered the property and that “both the Borrower and Churchill Funding, and by extension Tyron Street as the assignee and successor-in-interest to Churchill Funding, intended for, and expected that the full balance of the Loan funds would be used to pay off and retire the Borrower’s pre-existing secured debt on the Property in its entirety, and that the new Tyron Street Deed of Trust that secured the Loan would constitute a first priority position lien on the Property.” Tyron moved for summary adjudication of its first, third, and fourth causes of action. It argued that the undisputed evidence demonstrated the Churchill loan funds were used to satisfy senior encumbrances and that Churchill and Tyron 4 reasonably believed the loan was secured in first position. Thus, according to Tyron, its deed of trust—recorded after Moshe’s— has priority under the doctrine of equitable subrogation. In support of its motion, Tyron submitted the declaration of Matthew Dameron, Director of Asset Management for Churchill Funding I, LLC (the master servicer and attorney-in-fact for Tyron), which attached the loan file records and the escrow disbursements paying off the Easy Financial loans. Moshe opposed the motion and filed evidentiary objections to Dameron’s declaration. Moshe argued Tyron is not entitled to summary adjudication because the Easy Financial loans were void or defective, equitable subrogation is not applicable because it would prejudice Moshe, there is no admissible evidence supporting the essential elements of equitable subrogation, and material issues of fact exist regarding whether Churchill had knowledge of Moshe’s deed of trust. Moshe also filed his own motion for summary judgment or, in the alternative, for summary adjudication on the ground that equitable subrogation does not apply as a matter of law because, according to Moshe, “granting subrogation will not just put [Tyron] in the shoes in which the preexisting lien holder was, rather it will elevate [Tyron] giving him a position far superior to that previously held by the prior lien holder whose debt was paid off and it will put [Moshe] in a position, substantially inferior to the position he would have been in, had the preexisting loans not been replaced by the Churchill Loan.” After a hearing, the trial court issued a 21-page written ruling granting Tyron’s motion and denying Moshe’s motion. The court concluded no material issues of fact exist as to whether equitable subrogation is applicable. Thus, the court granted 5 summary adjudication of Tyron’s claim for equitable subrogation, as well as Tyron’s derivative claims for quiet title and declaratory relief. The clerk then entered dismissal, at Tyron’s request, of the only remaining claim for injunctive relief. The trial court entered judgment establishing two equitable liens in favor of Tyron as follows: (1) Tyron’s “Deed of Trust is equitably subrogated to the priority position against 1305 Laveta Terrace, Los Angeles, California 90026 that was held by the Deed of Trust in favor of Easy Financial LLC recorded . . . on June 10, 2021 . . . for the principal amount of $1,777,635.28 plus accrued interest thereon” and (2) Tyron’s “Deed of Trust is equitably subrogated to the lien priority position against 1303 Laveta Terrace, Los Angeles, California 90026 that was held by the Deed of Trust in favor of Easy Financial LLC recorded . . . on June 10, 2021 . . . for the principal amount of $903,059.16 plus accrued interest thereon.” Moshe timely appealed. DISCUSSION I. Standard of Review A party is entitled to summary judgment only if there is no triable issue of material fact and the party is entitled to judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c).) A triable issue of fact exists if the evidence would allow a reasonable trier of fact to find the fact in favor of the party opposing summary judgment. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.) We review the trial court’s ruling on a summary judgment motion de novo, liberally construe the evidence in favor of the party opposing the motion, and resolve all doubts concerning the evidence in favor of the opponent. (Miller v. Department of 6 Corrections (2005) 36 Cal.4th 446, 460.) “We must affirm a summary judgment if it is correct on any of the grounds asserted in the trial court, regardless of the trial court’s stated reasons.” (Grebing v. 24 Hour Fitness USA, Inc. (2015) 234 Cal.App.4th 631, 636—637.) We generally review a trial court’s ruling on evidentiary objections for an abuse of discretion. As to evidentiary rulings made in connection with a motion for summary judgment, however, there is a split of authority. Some courts have held such evidentiary rulings are reviewed for abuse of discretion (Martin v. Trustees of California State University (2023) 97 Cal.App.5th 149, 161; Butte Fire Cases (2018) 24 Cal.App.5th 1150, 1169), while other courts have held that some or all written objections should be reviewed de novo (Pipitone v. Williams (2016) 244 Cal.App.4th 1437, 1450—1451; Strobel v. Johnson & Johnson (2021) 70 Cal.App.5th 796, 816—817.) “We will follow the weight of authority and apply the abuse of discretion standard.” (Schmidt v. Citibank, N.A. (2018) 28 Cal.App.5th 1109, 1118.) II. The Trial Court Did Not Err by Applying the Doctrine of Equitable Subrogation California law generally follows the “first in time, first in right” system of lien priorities. (See Civ. Code, § 2897 [“Other things being equal, different liens upon the same property have priority according to the time of their creation”].) However, the “doctrine of equitable subrogation is an exception to the first in time, first in right rule and applies in those situations where equity requires a different result.” (JP Morgan Chase Bank, N.A. v. Banc of America Practice Solutions, Inc. (2012) 209 Cal.App.4th 855, 860 (Chase).) 7  Nearly a century ago, our Supreme Court stated the general rule applicable to a lender’s entitlement to equitable subrogation: “ ‘One who advances money to pay off an encumbrance on realty at the instance of either the owner of the property or the holder of the incumbrance, either on the express understanding, or under circumstances from which an understanding will be implied, that the advance made is to be secured by a first lien on the property, is not a mere volunteer; and in the event the new security is for any reason not a first lien on the property, the holder of such security, if not chargeable with culpable and inexcusable neglect, will be subrogated to the rights of the prior encumbrancer under the security held by him, unless the superior or equal equities of others would be prejudiced thereby, and to this end equity will set aside a cancellation of such security, and revive the same for his benefit.’ ” (Simon Newman Co. v. Fink (1928) 206 Cal. 143, 146 (Simon Newman).) “Because courts look with favor on equitable liens [citation], equity will generally ‘give a lender the security for which he bargained in the situation where there is mistake or fraud with respect to an intervening right which cuts off a preexisting encumbrance which has been satisfied by the loan proceeds.’ ” (Branscomb v. JPMorgan Chase Bank, N.A. (2014) 223 Cal.App.4th 801, 806—807 (Branscomb).) A. The Undisputed Facts Demonstrate No Prejudice to Moshe Tyron contends the undisputed evidence demonstrates the Churchill loan proceeds were used to pay off the Easy Financial loans secured by deeds of trust, both of which were recorded well before Moshe’s deed of trust, and neither Churchill nor Tyron had 8 knowledge of Moshe’s deed of trust. It follows, according to Tyron, that its deed of trust, recorded after Moshe’s, should be equitably subrogated to the priority position of the Easy Financial deeds of trust so that Tyron receives the security for which it bargained. Moshe counters that the undisputed facts establish material prejudice to Moshe if equitable subrogation is applied and, thus, Moshe is entitled to summary judgment, not Tyron. We agree with Tyron. Tyron sought—and the trial court granted—subrogation limited to the priority positions held by each of the two separate Easy Financial deeds of trust and only in the payoff amounts of those loans (i.e., $1,777,635.28 for the first Easy Financial loan and $903,059.16 for the second Easy Financial loan).2 Moshe nonetheless argues that the trial court’s application of equitable subrogation “elevated” Tyron to a position superior to that previously held by Easy Financial. Moshe claims that the court’s ruling put him in a worse position in three ways. First, he contends “the combination of the 1968 Covenant and the structure of the Easy [Financial] loans created a materially different security arrangement than the one later created by [the] Churchill [loan].” Moshe next argues “Churchill eliminated the very limitation that previously constrained the Easy [Financial] liens and obtained a security position materially different from, and superior to, the one previously held by Easy [Financial].” Finally, Moshe contends that, apart from the 1968 covenant, the refinance prejudiced him 2 After the payoff of the two Easy Financial loans, over $100,000 of the $2,793,750.00 Churchill loan remained. That approximately $100,000 is not equitably subrogated, but rather remains in a junior position to Moshe’s loan. 9 by replacing two separate obligations secured by different properties with one unified obligation secured by both properties, thereby eliminating Moshe’s purported ability to cure one default and preserve his security interest in one property. Contrary to Moshe’s assertions, the record demonstrates that Tyron neither sought, nor was it awarded, superior rights to those of Easy Financial. By focusing solely on the single- instrument structure of the Churchill loan, Moshe misses what the judgment here actually provides. The judgment subrogates Tyron to the priority positions held by each of the two separate Easy Financial deeds of trust, and only to the extent of those encumbrances. Thus, under the doctrine of equitable subrogation, Tyron steps into Easy Financial’s shoes and takes those interests subject to any of the same limitations that burdened Easy Financial. In other words, even assuming Moshe is correct that the 1968 covenant would have prevented Easy Financial from foreclosing on the property in the event the borrower defaulted on one of the Easy Financial loans “because each parcel could not be sold separately under the 1968 [c]ovenant,” Tyron would face the exact same hurdle. Tyron is only equitably subrogated to “the lien priority positions . . . that were previously held by the Deeds of Trust in favor of Easy Financial” irrespective of the fact that Tyron’s deed of trust encumbers both properties. Moshe is, therefore, in the same position he would have been if Reposition had not refinanced with Churchill. “Equitable subrogation looks to the intentions of the parties” (Branscomb, supra, 223 Cal.App.4th at p. 810) and its application here gives both Tyron and Moshe what they expected. As explained, Churchill required, as an express condition of 10 funding, that its deed of trust record in first position and all senior liens be cleared or paid through escrow. Equitable subrogation gives Tyron what it bargained for, and Moshe’s lien still occupies the junior position he obtained when he made his loan. Thus, application of equitable subrogation does not prejudice Moshe, but rather provides the parties what they had intended when making their respective loans. III. Moshe’s Additional Arguments Moshe advances several other arguments in support of his position that Tyron was not entitled to summary adjudication, none of which have merit. Moshe first argues Tyron failed to present admissible evidence establishing the Churchill loan proceeds paid off the Easy Financial loans—a necessary element of Tyron’s claim for equitable subrogation. Tyron submitted the declaration of Dameron, the Director of Asset Management for Churchill—the master servicer and attorney-in-fact for Tyron. He declared to have personal knowledge of Tyron’s mortgage loan purchasing business practices and business records keeping practices, and further stated that he reviewed the documents and information in Tyron’s loan files “pertaining to the mortgage loan that is the subject of this lawsuit.” Dameron then explained the details of the refinancing transaction “based upon [his] review of the documents in the loan files for the subject mortgage loan.” Moshe objected to Dameron’s declaration on the grounds of lack of personal knowledge and proper authentication, which the trial court overruled. On appeal, Moshe does not explain how the court purportedly abused its discretion in making its evidentiary rulings. Instead, he simply argues the court “should have sustained [his] objections” because Dameron provided no 11 explanation as to how his title qualifies him to testify to the specific facts stated, and he “did not specifically state what documents he reviewed and which part of his declaration is based on such review.” But Moshe cites no authority for the proposition that such specificity is required. Dameron declared he reviewed the loan file, and he attached the relevant documents to his declaration on which his statements in his declaration are based.3 We discern no abuse of discretion. Moshe alternatively argues that even if the exhibits attached to Dameron’s declaration were admissible, the documents do not show the Churchill loan proceeds were used to pay off the Easy Financial loans. He relies on the escrow settlement statement, which reflects the Churchill loan proceeds were made to “FCI Lender Services” rather than to Easy Financial, and contends there was “no evidence whatsoever” connecting FCI Lender Services to Easy Financial. But the publicly recorded instruments show both Easy Financial deeds of trust were reconveyed after the Churchill loan closed. Thus, the only reasonable inference is that the Easy Financial loans were paid in full because, as Tyron points out, no secured creditor would release liens securing more than $2.5 million in principal for no consideration. (See Code Civ. Proc., § 437c, subd. (c) [in determining if the papers show that there is no triable issue of any material fact, the court shall consider all inferences reasonably deducible from the evidence, and summary judgment shall not be granted only if those reasonable inferences are 3 The trial court also took judicial notice of the certified copies of Official Los Angeles County records that were attached to Dameron’s declaration. Moshe does not argue that taking judicial notice of those documents was improper. 12 contradicted by other inferences or evidence].) Moshe provides no explanation to the contrary for why Easy Financial would have reconveyed its deeds of trust after the Churchill loan closed if it was not paid in full, or any evidence that the funds were not applied to the Easy Financial obligations. Moshe next contends Tyron failed to present admissible evidence establishing Churchill lacked knowledge of Moshe’s deed—another requirement for a lender to be entitled to equitable subrogation. (Smith v. State Savings & Loan Assn. (1985) 175 Cal.App.3d 1092, 1098.) Moshe argues that even if the Title Report, which omitted Moshe’s deed of trust, is admissible,4 Churchill “may have obtained knowledge from sources other than the Title Report.” Moshe relies on the declaration of his attorney, Jacob Reich, who opined that it is “extremely unlikely that in this age, with the very sophisticated technology, that a title company when issuing a preliminary title report” would miss Moshe’s deed of trust. This is pure speculation that is insufficient to raise a triable issue of fact. (See Menges v. Department of Transportation (2020) 59 Cal.App.5th 13, 23 [“A party ‘cannot avoid summary judgment by asserting facts based on mere speculation and conjecture, but instead must produce admissible evidence raising a triable issue of fact.’ ”].) And, in any event, even if taken as true, it does not demonstrate that either Churchill or Tyron had actual knowledge of Moshe’s deed of trust. Moshe further contends that Easy Financial was not a legitimate creditor as of March 2, 2023—the date Churchill 4 Moshe argues there “was a justified objection” to the Title Report, but does not argue how the trial court purportedly abused its discretion by overruling that objection. 13 loaned Reposition the proceeds to pay off the two Easy Financial loans. Moshe relies on a document titled “Assignment of Security Instruments” indicating that on February 15, 2023, Easy Financial already assigned the loan in the amount of $1,725,000 to Churchill. But the assignment does not defeat entitlement to equitable subrogation. Whether Churchill paid Easy Financial in cash at closing or had earlier acquired one of the Easy Financial notes for value, the relevant facts remain the same: the Easy Financial obligations were satisfied and released, Churchill advanced the funds that paid the notes, and both Easy Financial deeds of trust were reconveyed. Moshe always remained in a junior position. Thus, whether the transaction was a purchase, refinance, or payoff is not a material issue of fact. Finally, Moshe argues issues of fact exist regarding whether Churchill’s true intent was to refinance or whether its intent was to cure deficiencies in the Easy Financial loans. But again, this type of “intent” is not a material fact. Rather, in determining whether a party is entitled to equitable subrogation, we look at the equities and give a lender the security for which he bargained unless the lender is chargeable with culpable and inexcusable neglect, or superior or equal equities of others would be prejudiced by application of the doctrine. (Chase, supra, 209 Cal.App.4th at p. 861.) As the undisputed evidence demonstrates Tyron had no knowledge of Moshe’s deed of trust, Moshe is not prejudiced by the application of equitable subrogation in this matter. 14  DISPOSITION The judgment is affirmed. Respondent Tyron Street Acquisition Trust I is awarded its costs on appeal. NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS TAMZARIAN, J. We concur: ZUKIN, P. J. DAUM, J. 15