summary judgment project gregory kent print

8/8/2019 Summary Judgment Project Gregory Kent Print

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KENTS MOTION FOR SUMMARY ADJUDICATION, MEMORANDUM OF POINTSAND AUTHORITIES, DECLARATIONS OF KENT AND LONGHOLME Page 1 of23

DASKEVICH LAW OFFICESJENNIFER A. DASKEVICH (SBN 075997)STUDENT NO.Michael E. Teplinsky9201 Oakdale Avenue, #201Chatsworth, CA 91311Telephone: (818) 380-6880Facsimile: (818) 784-1482

Attorneys for Defendant and Cross-ComplainantGregory Kent

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES, CENTRAL DIVISION

DANIEL TRAURIG, an individual,Plaintiff,

vs.

GREGORY KENT, an individual; andDOES 1 through 50, inclusive,

Defendants__________________________________

AND RELATED CROSS-ACTION_____________________________

)))))))))))))

))

Case No. ZX 654321[Complaint Filed on 1/27/10Honorable Felix FrankfurterDepartment 182

Hearing Date: April 29, 2010Time: 8:30 a.m.Courtroom: 901Department: 182

Trial Date: n/a

Time: n/aDept.: 182

GREGORY KENTS (1) NOTICE OF MOTION AND MOTION FOR SUMMARYADJUDICATION AND PARTIAL SUMMARY JUDGMENT,

(2) MEMORANDUM OF POINTS AND AUTHORITIES,(3) DECLARATION OF GREGORY KENT IN SUPPORT OF MOTION, AND(4) DECLARATION OF SUSAN LONGHOLME IN SUPPORT OF MOTION

TO: DANIEL TRAURIG, PLAINTIFF AND CROSS-DEFENDANT, AND ALL OTHERPARTIES IN INTEREST HEREIN:

NOTICE IS HEREBY GIVEN that, on Tuesday, April 29, 2010, at 8:30 a.m., or as soon

thereafter as the matter may be heard, in Department 182, Courtroom 901 of the Stanley Mosk


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Courthouse, Los Angeles Superior Court, located at 111 North Hill Street, Los Angeles, California

90012, Gregory Kent, Defendant and Cross-Complainant herein ("Kent"), will and hereby does

move this Court for an Order Granting Summary adjudication.

By this Motion, Kent seeks the following relief:

Defendant moves for summary adjudication that we are entitled to declaratory relief, quiet

title, and cancelation of the three trust deeds recorded in favor of Improvident Bank (I-Bank) as

a matter of law. We ask for relief on grounds that the conveyance was unduly recorded because I-

Bank failed to qualify as a good faith encumbrancer when their trust deeds were recorded to secure

$150K in additionally borrowed net refinance proceeds. I-Bank should be charged with

constructive notice of Gregorys beneficial interest where I-Bank had inquiry knowledge of the

existence of Gregorys unrecorded valid deeds at the time of their conveyance. Gregory is a bona

fide purchaser with superior beneficial and legal title who paid good consideration and who lacked

the requisite notice of Daniel Traurigs secretly borrowed net refinance proceeds.

In the alternative, we ask the court for equitable relief to impose a resulting trust as a

remedy to recover the secretly borrowed $150K in net refinance proceeds. The court should

conclude Gregory is the beneficial title holder based on the undisputed facts that it was the partys

intent for Gregory to retain beneficial interest. Gregory contributed 100% of the capitalinvestment on all three properties which were later encumbered without Gregorys consent or

knowledge. And the parties intended for the title deeds to remain in Daniels name solely for the

purpose of avoiding inheritance tax and probate.

This Motion is based upon this Notice; the following Memorandum of Points and

Authorities and Declarations of Gregory Kent and Susan Longholme; all of the files and records in

this action pending before this Court; the statements, arguments and representations of counsel to

be made at the hearing on the Motion, and all other evidence properly presented to the Court at or

prior to the hearing on the Motion.

/ / /

/ / /

/ / /


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/ / /

/ / /

/ / /

Dated: April 14, 2010 Respectfully submitted,

DASKEVICH LAW OFFICES

By: ___________________________Michael E. TeplinskyAttorneys for Defendant and Cross-Complainant Gregory Kent


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TABLE OF CONTENTS

I. INTRODUCTION ............................................................................................................... 5

II. SUMMARY JUDGMENT STANDARD ........................................................................... 6

III. ARGUMENT FOR CANCELING THE TRUST DEEDS AGAINSTIMPROVIDENT BANK (I-Bank) ................................................................................... 6

A. Overview ................................................................................................................. 6

B. An Agency Relationship Exists between Longholme and I-Bank .......................... 7

C. Agents Knowledge Imputed to the Principal, I-Bank. ........................................... 7

D. Improvident Bank is charged with Constructive Notice and a Dutyto Inquire ................................................................................................................. 8

1. Inquiry Notice is Triggered by Reasonable Warning Signs ........................ 9

2. Inquiry Notice is Triggered Where Apparent Possessiondiffers from Record Title ........................................................................... 10

E. Gregorys Unrecorded Deeds are Valid as to Notice ........................................... 10

F. Improvident Bank Is Not a Good Faith Encumbrancer ..................................... 11

G. Gregory Is A Bona Fide Purchaser With Valid Unrecorded Deeds ...................... 11

H. Improvident Banks Trust Deeds Are Void .......................................................... 13

IV. ARGUMENT FOR IMPOSING A RESULTING TRUST TO RECOVERTHE $150K NET PROCEEDS AGAINST DANIEL ....................................................... 13

A. Resulting Trust ...................................................................................................... 14

B. Beneficial Interest ................................................................................................. 14

C. Parties Only Intended Daniel to be a Future Interest Holder ................................ 15

D. Gregory Was Legal Title Holder ........................................................................... 16

V. CONCLUSION ................................................................................................................. 17

DECLARATION OF GREGORY KENT IN SUPPORT OF MOTION FORSUMMARY ADJUDICATION ........................................................................................ 19

DECLARATION OF SUSAN LONGHOLME IN SUPPORT OF MOTION FORSUMMARY ADJUDICATION ........................................................................................ 22


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MEMORANDUM OF POINTS AND AUTHORITIES

I. INTRODUCTIONIn June 2009, Gregory Kent (Gregory) and Daniel Traurig (Daniel) decided to

refinance three rental properties. Gregory was the sole capital investor on all three properties that

were purchased over a three year period from 2002 to 2004 (Larchmont, Beverly Hills, and

Beachwood). Both Gregory and Daniel agreed to use Susan Longholme (Longholme), a loan

broker, whom they both had a prior friendship. Unbeknownst to Gregory during the refinance,

Daniel borrowed an additional $150K from Improvident Bank (I-Bank) secured by three new

trust deeds on each aforementioned rental property (collectively I-Bank Mortgages). The

$150K, in secretly net refinance proceeds (NRP), was over and above the required refinance

amount, and the money remains unaccounted for. In short, Daniel and I-Bank effectively created

encumbrances on all three properties that Gregory held sole and legal title. The additional

encumbrances occurred without Gregorys knowledge or consent.

Gregory moves for summary adjudication that he is entitled to declaratory relief, quiet title

and cancelation of the three trust deeds recorded in favor of I-Bank as a matter of law. We ask for

relief on grounds that the conveyance was unduly recorded because I-Bank failed to qualify as agood faith encumbrancer. An encumbrance recorded in bad faith becomes void as against

subsequent bona fide purchasers. Gregory was a bona fide purchaser and legal title holder at the

time of the encumbrance. Gregory validated his interest in September 2009 when he recorded title

deeds to all three properties that Daniel has previously legally conveyed to him in 2007.

In the alternative, the court should impose a resulting trust as a remedy for Gregory to

recover the secretly borrowed NRP funds. The court should conclude Gregory is the beneficial

title holder based on the undisputed facts that it was the partys intent for Gregory to retain

beneficial interest. Gregory contributed 100% of the capital investment on all three properties

which were later encumbered without Gregorys consent or knowledge. The uncontroverted facts

show that the parties intended for the title deeds to remain in Daniels name solely for the purpose

of avoiding inheritance tax and probate.


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II. SUMMARY JUDGMENT STANDARDSummary judgment is appropriate when the pleadings, depositions, answers to

interrogatories, admissions on file, and affidavits or declarations show that there is no genuine

issue of material fact in dispute and that the moving party is entitled to judgment as a matter of

law. CAL.CIV.PROC.CODE 437c (2009); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

Only those facts that might affect the outcome of the suit under the governing law are material;

the Court should grant summary judgment if it finds that the evidence favoring the nonmoving

party is insufficient to enable a reasonable jury to return a verdict in her favor.Anderson v.

Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). But a nonmoving partys opposition must be

supported by competent evidence setting forth specific facts to show that there is a genuine issue

for trial; it cannot consist of mere unsupported allegations or denials. 437c, op.cit.; Celotex

Corp. v. Catrett, 477 U.S. 317, 324 (1986). A party may move for summary adjudication as to

one or more causes of action within an action . . . if that party contends that the cause of action has

no merit or that there is no affirmative defense thereto. . . 437c, id..

III.

ARGUMENT FOR CANCELING THE TRUST DEEDS AGAINST IMPROVIDENTBANK (I-Bank)

A. OverviewEvery conveyance of real property ... is void as against any subsequent purchaser or

mortgagee of the same property ... in good faith and for valuable consideration, unless the

conveyance shall have been duly recorded prior to the record of notice of action. CAL.CIV.CODE

1214 (2009). Daniel borrowed $150K in secretly net refinance proceeds (NRP) which caused

Improvident Bank (I-Bank) to create three deeds of trust securing Gregorys properties in June

2009. This transaction occurred without Gregorys knowledge or consent. (Kent Decl., 5, 10,

Longholme Decl. 6). Gregory is the beneficial and legal title holder who paid good

consideration for the three properties. (Kent, id.). Therefore, Gregory is entitled by law to have

the trust deeds canceled because they were not duly recorded by a good faith encumbrancer.


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B. An Agency Relationship Exists between Longholme and I-BankAn agency may be created, and an authority may be conferred, by a precedent

authorization or a subsequent ratification. CAL.CIV.CODE 2307 (2009). Susan Longholme

(Longholme) stipulates she represented I-Bank as their loan broker for this transaction.

(Longholme Decl., 3). The required elements for the existence of an implied agency include: (1)

Agency is the fiduciary relation which results from the manifestation of consent by one person to

another that the other shall act on his behalf and subject to his control, (2) The one for whom

action is to be taken is the principal, (3) The one who is to act is the agent. Restatement (Second)

of Agency 1 (1979). Longholme successfully brokered the loans in June 2009 on behalf of I-

Bank. (Longholme Decl., id.) The engagement of this act inherently represents the authority

granted by I-Bank to perform such duties and to act on behalf of the lender.

Furthermore, An agent may be authorized to carry forward any ordinary business

transaction, and the agent's act becomes the act of his principal. Whittaker v. Otto, 10 Cal. Rptr.

689 (Ct. App. 1961). Therefore, if Longholmes acts in procuring the loan from I-Bank and

securing interest in the properties are acts of the principal, then we may conclude that Longholme

was authorized to carry forward ordinary business as I-Banks representing and fiduciary agent.Therefore, Longholme and I-Bank entered into an agency relationship by express and implied

agreement.

C. Agents Knowledge Imputed to the Principal, I-Bank.If an agent acting within the course and scope of his or her agency duties acquires specific

material information pertinent to matters . . . that could have a substantial adverse effect on the

principal, such knowledge will be imputed to the principal.In re Marriage of Cloney, 110 Cal.

Rptr. 2d 615 (Ct. App. 2001). It is uncontroverted that Longholme had a friendship with both

Gregory and Daniel prior to brokering the three loans. (Longholme Decl., 9, Kent Decl., 8) In

addition, Longholme knew that Gregory had some interest in the three properties prior to securing

the loans for Daniel. (Longholme Decl., 5, 7). Regarding the three encumbered properties,


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Longholme knew that both had purchased the properties together and that they were going to

use the proceeds for remodeling on the same properties. (Longholme, id.).

Notice given to or possessed by an agent within the scope of his employment and in

connection with and during his agency, is notice to the principal. Cloney, op.cit.. The rule rests

on the assumption that the agent will communicate to his or her principal all information acquired

in the course of his or her agency, and when the knowledge of the agent is ascertained the

constructive notice to the principal is conclusive. Cloney, op. cit.. Regardless of the degree of

interest that Gregory did or did not possess in the properties, mere knowledge of such involvement

produces information which the principal may be charged with. I-Bank is presumed to have

obtained this knowledge through communication in the course of the agency relationship with

Longholme. Therefore as a matter of law, I-Bank is charged with notice of Gregorys interest

because Longholmes knowledge is imputed to the principal.

D. Improvident Bank is charged with Constructive Notice and a Duty to InquireMere knowledge of Gregorys existence is generally not enough to put I-Bank on actual

notice of a valid interest holder outside the chain of title. However, Longholmes actual

knowledge creates significant inferences. Every person who has actual notice of circumstancessufficient to put a prudent man upon inquiry as to a particular fact, has constructive notice of the

fact itself in all cases in which, by prosecuting such inquiry, he might have learned such fact.

CAL.CIV.CODE 19 (2009). Longholme had enough information regarding Gregory and Daniels

investment activity which would give a prudent person a reason to look further into what

Gregorys interest may entail. Were she to have properly prosecuted such inquiry with Gregory,

she would have learned that Gregory, in fact, had a material interest in the properties. This inquiry

is necessary in order for her to satisfy her fiduciary duty as I-Banks loan agent. The duty arises

by way of risk aversion; to protect the lender from engagements that might have a negative impact

on I-Banks future interests. Therefore, I-Bank is charged by law with constructive notice because

their agent, Longholme, had a duty to inquire further based on her prior knowledge that Gregory

had potential interest in the property.


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1. Inquiry Notice is Triggered by Reasonable Warning SignsA subsequent encumbrancer is not entitled to ignore reasonable warning signs appearing

in recorded documents or information coming from sources outside the recorded chain of title.

Triple A Mgt. Co. v. Frisone, 81 Cal. Rptr. 2d 669 (Ct. App. 1999). Longholmes knowledge of

Gregory and Daniels prior joint investment in the three properties raises enough of an inference to

establish the duty look further. While Longholme knew that Gregory and Daniel jointly invested

in the three properties, she also maintained a friendship with Gregory and Daniel. (Longholme

Decl., 5). Furthermore, she knew that Daniel was depositing the NRP funds into his own

separate bank account at Union Bank. (Longholme Decl., 8). As previously established,

Longholme was aware that only Daniels name appeared on recorded title. In addition, Longholme

gave the lending instructions to escrow. (Longholme, id.) Longholme possessed enough facts that

a reasonable loan broker would have known that Daniels name appeared solely on the recorded

title deeds.

Information that reasonably brings into question the state of the title triggers a limited

duty of inquiry. Triple A Mgt. Co., op.cit.. Moreover, a subsequent encumbrancer is charged

with constructive knowledge of what a reasonable investigation would have revealed. Triple A

Mgt. Co., op.cit.. Longholme knew that Daniel deposited the money into his own separate account

not a joint account. And Longholme admits to having had no prior conversation with Gregory

before executing the transaction. (Longholme Decl., 7). Further investigation with Gregory

would have quickly revealed that Gregory was the legal title holder in possession of valid

unrecorded deeds. This investigation is a reasonable one in light of the surrounding facts and

circumstances. Longholmes imputed constructive knowledge of Gregorys unrecorded title deeds

prior to I-Banks encumbrance, puts a cloud over the recorded deeds that are only in Daniels

name.


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2. Inquiry Notice is Triggered Where Apparent Possession differs from RecordTitle

Furthermore, In such instances when apparent possession is not consistent with title

appearing of record, an encumbrancer does have a duty to inquire as to unrecorded agreements

between joint owners. Caito v. United California Bank, 576 P.2d 466 (Cal. 1978). Longholmes

basic knowledge alone that Gregory and Daniel had previously purchased the properties together

is enough to trigger the duty to inquire as to the partys interest and intent. This is especially true

when the conveyance of the unrecorded deeds was granted and signed by Daniel, but where

recorded title only shows Daniel as the sole title holder. (Kent Decl. 11). A simple conversation

between Longholme and Gregory prior to close would have certainly caused Gregory to reveal the

existence of the unrecorded deeds, his interest in the properties, and his desire to halt the loan

transaction. Thus, Longholmes constructive knowledge of Gregory unrecorded title deeds and

joint interest runs in contradiction to the state of record title where only Daniels name appears.

As Longholmes principal, and because its agent failed to inquire, I-Bank is charged with inquiry

notice because there is sufficient knowledge of an unrecorded agreement between joint owners.

E.

Gregorys Unrecorded Deeds are Valid as to NoticeAn unrecorded instrument is valid if a subsequent encumbrancer has notice of it, i.e., if

that person has knowledge of circumstances that, upon reasonable inquiry, would lead to that

particular fact. First Fidelity Thrift & Loan Ass'n v. Alliance Bank, 71 Cal. Rptr. 2d 295 (Ct. App

1998). Furthermore, an unrecorded deed is effective as against a subsequent creditor who levies

on the property Casey v. Gray, 16 Cal. Rptr. 2d 538 (Ct. App. 1993). Gregory had unrecorded

deeds to all three properties sitting in his safe deposit box at the time of the NRP transaction in

June 2009. (Kent Decl., 11). Daniel voluntarily deeded the three properties back to Gregory in

2007. (Kent, id.) As a matter of law Gregorys deeds, while unrecorded, are still valid in regards

to whether their existence alone is sufficient to put I-Bank on notice of another bona fide interest

holder. There are no disputed facts as to the validity of the three deeds which Gregory

subsequently recorded in September 2009. (Kent Decl., 11) It has been established that


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reasonable inquiry would have led to the discovery of the unrecorded deeds. And since there are

no facts in dispute as to their validity, I-Bank is charged with constructive notice of Gregorys

valid unrecorded deeds.

F. Improvident Bank Is Not a Good Faith EncumbrancerA Good Faith Encumbrancer (GFE) within meaning of recording statutes, is one who

acts without knowledge or notice of competing liens on the subject property. CAL.CIV.CODE

1107 (2009). It has been established that I-Bank is imputed with constructive knowledge of

Gregorys unrecorded deeds prior to I-Banks execution of their three trust deeds securing interest

in Gregorys properties. It has also been established that Gregorys deeds are valid, though

unrecorded. I-Banks trust deeds therefore are said to be competing with Gregorys interest on the

subject property. As such, I-Bank did not act without knowledge of the competing interest.

Therefore, I-Bank cannot be classified as a good faith encumbrancer.

Furthermore, the elements to determine whether a party who takes or purchases a lien is a

bona fide encumbrancer are (1) payment of value, (2) in good faith, and (3) without actual or

constructive notice of another's rights.Melendrez v. D & I Investment, Inc., 26 Cal. Rptr. 3d 413

(Ct. App. 2005). I-Bank failed to act in good faith when they recorded liens on properties in whichthey had constructive notice of anothers rights. The properties belonged to someone other than

who they were lending the money to. It has already been established that Gregorys unrecorded

deeds are valid as to subsequent creditors. Therefore, since I-Bank is charged with prior

constructive notice of the existence of Gregorys unrecorded deeds when they levied on the

properties, I-Bank did not act in good faith. And since I-Bank did not act in good faith, then they

cannot be classified as a good faith encumbrancer within the meaning of the recording statutes.

G. Gregory Is A Bona Fide Purchaser With Valid Unrecorded DeedsThe test for determining whether a buyer of real property is a bona fide purchaser

(BFP) is whether the buyer (1) purchased the property for value, and (2) had no knowledge or

notice of the asserted rights of another. CAL.CIV.CODE 2924 (2009). Gregory had no


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knowledge of the transaction executed by Daniel and Longholme in June 2009. (Longholme

Decl., 6, and Kent Decl., 10). Gregory did not learn of the existence of the borrowed NRP

funds until Longholme made an unsolicited call to Gregory in September 2009. (Kent Decl., 11).

Gregory and Daniel deeded the three properties back into Gregorys name two years earlier, back

in 2007. (Kent, id.). I-Banks asserted rights began in June 2009 when the trust deeds were

recorded against Gregorys properties two years after Gregory obtained legal title. Therefore,

Gregorys interest in the properties preceded both the notice and the creation of the I-Bank trust

deeds.

An unrecorded instrument is valid as between the parties thereto and those who have

notice thereof. CAL.CIV.CODE 1217 (2009). Though Gregorys deeds were unrecorded at the

time I-Banks trust deeds were created, Daniel was a party to their execution and he was the

signatory. Therefore Daniel possessed actual notice, ab initio, at the time he voluntarily deeded the

properties back to Gregory regardless of whether Gregory later recorded the deeds.

A written instrument is presumptive evidence of a consideration. CAL.CIV.CODE 1614

(2009). A deed, as a written instrument, is presumptive evidence of a consideration; and under the

rule applicable to contracts generally, the burden of showing a want of consideration is on the

party seeking to invalidate or avoid the instrument. Nonetheless, Gregorys beneficial interest inthe properties began many years earlier when the properties were originally purchased by Gregory

and Daniel.

Extrinsic evidence may always be received to show the consideration of the instrument.

Hays v. Clark, 346 P.2d 448 (Cal. 1959). Thus, the existence of consideration not expressed in

the agreement may be shown by parol. Hays, id. Gregory supplied all the capital as down

payments for all three properties when they were originally purchased and without any financial

assistance from Daniel. (Kent Decl., 5). Evidence of Gregorys down payments include tracing

documentation such as: (1) bank statements showing the transfer of money, (2) canceled checks

evidencing the same, and (3) escrow documents evidencing the same. (Kent Decl., 13-15).

This documentation validates not only Gregorys prior beneficial interest in the three properties,

but also serve as validation of the good consideration paid in exchange for present legal title.


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Daniel, on the other hand provided no capital investment for the properties when purchased, yet

retained symbolic legal title. Daniels deeding of the properties back into Gregorys name merely

validated the consideration paid earlier and validated Gregorys existing beneficial interest.

Therefore, because the properties were purchased for value by Gregory, and that he had no

knowledge of the later encumbrance by I-Bank, Gregory is a bona fide purchaser within the

meaning of the recording statutes.

H. Improvident Banks Trust Deeds Are VoidIn conclusion of our argument, we return to the basic premise. Every conveyance of real

property ... is void as against any subsequent purchaser or mortgagee of the same property ... in

good faith and for valuable consideration, unless the conveyance shall have been duly recorded

prior to the record of notice of action. CAL.CIV.CODE 1214 (2009). It was previously

established that Gregory is a bona fide purchaser. It was also previously established that I-Bank

failed to qualify as a good faith encumbrancer because they are charged with prior constructive

notice of Gregorys unrecorded deeds.

A grant of an estate is inconclusive where an encumbrancer records its conveyance in bad

faith; the result is a conveyance that is not duly recorded. CAL.CIV.CODE 1107 (2009). Sincethe conveyance of the trust deeds was not performed in good faith, they cannot be said to be duly

recorded. As a result, I-Banks interest subordinates to the interest held by Gregory. I-Banks

trust deeds are therefore void because Gregory is a subsequent bona fide purchaser whose

recordation of his valid title deeds supersedes I-Banks prior unduly recorded trust deeds.

IV. ARGUMENT FOR IMPOSING A RESULTING TRUST TO RECOVER THE$150K NET PROCEEDS AGAINST DANIEL

In the alternative, we ask the court for equitable relief to impose a resulting trust as a

remedy to recover the secretly borrowed $150K in net refinance proceeds. The court should

conclude Gregory is the beneficial title holder based on the undisputed facts that the partys

intended for Gregory to retain beneficial interest. Gregory contributed 100% of the capital


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investment on all three properties which were later encumbered without Gregorys consent or

knowledge. And the parties intended for the title deeds to remain in Daniels name solely for the

purpose of avoiding inheritance tax, probate court and shielding the properties from potential

medical creditors.

A. Resulting TrustThe trust that is presumed to result when a transfer of real property is made to one person,

and the consideration therefore is paid by or for another, is termed a resulting trust; its purpose

is to enforce the intentions of the parties.In re Marriage of Ruelas, 64 Cal. Rptr. 3d 600 (Ct.

App. 2007). Furthermore, A resulting trust is . . . founded on the fact . . . one has advanced the

consideration wherewith to make a purchase in the name of the other. The trust arises because it is

the natural presumption in such a case that it was their intention that the ostensible purchaser

should acquire and hold the property for the one with whose means it was acquired.Majewsky v.

Empire Constr. Co., Ltd., 467 P.2d 547 (Cal. 1970). This natural presumption exists based on the

undisputed facts from our declarants. Gregory provided the means as down payments, while

Daniel was to hold title for Gregorys benefit.

B. Beneficial InterestAs previously mentioned, Gregory stipulates to having purchased all three properties by

providing all of the capital investment as down payments. (Kent Decl. 5). Gregory can prove

with undisputed documentation that the down payments came from his separate source of funds.

(Kent Decl., 13-15). In addition, it is also undisputed that Daniel made no capital investment

into these three properties. The source of capital investment supports the inference that it was the

partys original intent for Daniel to hold title merely for Gregorys beneficial interest.

In In Re Marriage of Ruelas, substantially similar circumstances supported the disposition

of a resulting trust. The court held:

Substantial evidence supported the finding that a resulting trust was created in

favor of parents with regard to condominium that was paid for by parents, while


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title was held in the name of parents' adult daughter; parents, daughter, and seller

of the condominium all testified that, at the time of the purchase, it was intended

that daughter would take title for the benefit of her parents in order to effect the

sale that would not otherwise have transpired because parents could not qualify

for mortgage financing.In re Marriage of Ruelas, 64 Cal. Rptr. 3d 600 (Ct. App.

2007).

In our case at bar, Gregory had similar reasons for not taking title to the properties. Gregory

feared he might be exposed to medical creditors which may later put the properties at risk. (Kent

Decl. 17). Additionally, Gregory believed he only had a short time to live. (Kent, id.) Gregory

and Daniel benefited from having avoided Gregorys name from appearing on any of the

properties or loans. This benefit mirrors Ruelas wherein both parties benefited from acquiring the

property based on the decision to place title solely in the daughters name. Ruelas establishes as a

matter of law, that the imposition of a resulting trust is an appropriate remedy where the parties

clearly intended Daniel to be merely a title holder for Gregorys beneficial interest.

C. Parties Only Intended Daniel to be a Future Interest HolderGregorys beneficial interest was that of present interest; the parties only intended Daniel

to be a future interest holder. Transfers are prompted by the thought of death when: (1) made with

the purpose of avoiding death taxes, (2) made as a substitute for a testamentary disposition of the

property, or (3) made for any other motive associated with death. 26 C.F.R. 20.2035-1 (2009).

When transfers are prompted by the thought of death, an inference is raised that the transfer was

only intended to become effective at death. This results in a present intent to transfer a future

interest. Such transfers are generally void unless the grantor intended to transfer a present interest

CAL.PROB.CODE 21114 (2009). Gregory and Daniel agreed that Daniels name would be used

instead of Gregorys in order to help shield the properties from Gregorys medical creditors. It

also made it easier to avoid probate court and inheritance tax if and when Gregory eventually died.

(Kent Decl., 17).


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Conversely, we may therefore presume Gregorys capital investments were never intended

to be intervivos gifts to Daniel. Property given {as a gift} by a transferor during his or her

lifetime to a person is treated as a satisfaction of an at-death transfer to that person in whole or in

part only if (1) the transferor declares in a contemporaneous writing that the gift is in satisfaction

of the at-death transfer, (2) the property given is the same property that is the subject of a specific

gift to that person. (3) the Grantor subsequently dies. Cal. Prob. Code 21135 (2009). There are

no facts in dispute to suggest the existence of any writings demonstrating that it was Gregorys

intent to make such a gift. Since the facts are clear regarding Gregorys down payments, Daniels

argument implies the assertion that Gregory must have gifted the properties to him despite clear

intention to the contrary. Lastly, Gregory is still alive and is no longer expected to die anytime

soon. Therefore, the purchase of three properties with Daniels name on title must have been

intended as testamentary transfers and not as intervivos gifts.

In 2001, Gregory and Daniel had wills drawn up to establish each other as a beneficiary of

their respective estates. (Kent Decl., 18). This further evidences the partys intent to establish

Daniels interest in the properties as future interest, not present interest. Additionally, Daniel later

deeded all the properties back to Gregory when they both learned Gregorys health was

improving. (Kent Decl., 11). The fact that Daniel voluntarily deeded the properties back toGregory further evidences Daniels intent with regard to his state of mind in 2007. It can be

inferred that Daniel had little concern with the nature of title because he knew that he was the

beneficiary of Gregorys estate, vis--vis the will. This time frame also coincides with the news

that Gregorys health was improving, and death was no longer imminent. (Kent Decl., 19).

From the totality of the circumstances, the facts clearly indicate that the parties only

intended for Daniel to be a future interest holder of the properties at Gregorys death.

D. Gregory Was Legal Title HolderDespite the favorable argument that Gregory had beneficial title from the time the

properties were purchased, the undisputed fact remains that Gregory was the legal title holder at

the time Daniel secretly borrowed the NRP funds. An unrecorded instrument is valid as between


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the parties thereto and those who have notice thereof. CAL.CIV.CODE 1217 (2009). Daniel

deeded the properties to Gregory in 2007 and the deeds were kept in Gregorys safe deposit box

for two years. There are no facts in dispute with regard to the validity of those deeds. The owner

of the legal title to property is presumed to be the owner of the full beneficial title. This

presumption may be rebutted only by clear and convincing proof. CAL.EVID.CODE 662

(2009). Therefore as a matter of law, a strong presumption exists that Daniel encumbered

properties to which he held no legal title, and knew that he held no legal title. Though the deeds

were unrecorded, Daniel had actual notice of them because he was the grantor and signatory.

Nonetheless, two years later he took out loans which were secured against properties in which he

had no legal interest, and without consent from Gregory, the legal title holder.

. Under this alternative theory, the result is the same. Gregory is entitled to a

reimbursement of the $150K in order to retire the trust deeds which were recorded on Gregorys

properties without his knowledge or consent. The court should alternative order a resulting trust

be created.

V. CONCLUSIONUnder either theory of recovery, Gregory is entitled to be unburdened by the three trust

deeds securing his property for a total of $150K. Gregory has always been the beneficial title

holder, and is now the legal title holder of the three properties. Gregory was the legal title holder

at the time the encumbrances were created. Gregory had no knowledge that these encumbrances

were being created by I-Bank or Daniel. We move for the court to invalidate I-Banks trust deeds

on the theory that I-Bank failed to qualify as a good faith encumbrancer, and therefore unduly

recorded their trust deeds in June 2009. I-Banks failure to qualify in good faith, results from

being charged with constructive notice of the existence of Gregorys unrecorded and undisputed

2007 grant deeds on all three properties. Therefore, the trust deeds are void as to Gregorys legal

title.

In the alternative, we move for the court to impose a resulting trust validating the partys

original intent for Gregory to retain beneficial interest and beneficial title. The trust should be


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imposed on grounds that title being placed in Daniels name was merely testamentary in nature,

and that the parties clearly intended for Daniel to only hold title for Gregorys benefit.

Furthermore, Gregorys actual status as legal title holder creates an overwhelming presumption in

lieu of the undisputed facts that Daniel borrowed money from properties which he knew he held

no interest at the time.

Dated: April 14, 2010 Respectfully submitted,

DASKEVICH LAW OFFICES

By: ___________________________Student No. 34569Attorneys for Defendant and Cross-Complainant Gregory Kent


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DECLARATION OF GREGORY KENT IN SUPPORT OF MOTION FOR SUMMARY

ADJUDICATION

I, GREGORY KENT, HEREBY DECLARE AS FOLLOWS:

1. I am above the age of 18 years, and am a resident of the City and County of LosAngeles, California. I am the Defendant and Cross-Complainant in the present action. Except as

stated herein, I have personal knowledge of the facts contained in this Declaration. If called upon

as a sworn witness, I could and would competently testify as to the veracity of the facts contained

herein.

2. I make this declaration in support of my Motion for Partial Summary Judgment, filedconcurrently herewith.

3. I am a licensed Realtor in the state of California. I opened my own Realtor firm in2001.

4. I met Daniel Traurig in 1992. In 1997, we began living together and remainedcohabitants until October 2008.

5. I made the down payments on all three properties which are secured by theImprovident Bank Trust deeds. Daniel did not invest any capital into these properties. Danielsname was used as the title holder only so that it would be easier for Daniel to inherit the properties

upon my death and to avoid inheritance tax and probate.

6. In August 2008, I confronted Daniel about $200k borrowed from our Hollywood Hillshome equity line in 2005. I was not aware of this at the time. Daniel assured me that the money

had been used properly, though he could not account for it. Daniel promised that he would not

borrow again without my permission.

7. In June 2009, we agreed to refinance some properties to lock in better interest rates;these are the same three properties which are secured by the Improvident Bank trust deeds.

Unbeknownst to me, Daniel arranged with Susan Longholme to borrow an additional 150K over

and above the amount required for refinancing. He had those funds transferred into his own


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separate account. Shortly thereafter, Daniel then took off on a personal vacation to Europe with

another friend. I do not presently know where the money is or whether it was all spent.

8. Susan Longholme was the loan broker whom we used for the refinancing. We bothknew Susan as friends prior to refinancing. Susan was aware of our social relationship, and she

knew that we had both worked together to invest in these properties before the refinance. Susan

was aware that I had made the down payments originally.

9. During Daniels European trip, I received a phone call from Susan. On this call, Susanrevealed to me that Daniel had borrowed the money. Susan had asked me, how are you enjoying

all of your newly-found money? This was when I first learned of the $150K in secretly borrowed

net refinance proceeds. On this call, I also learned that the money was dispersed into Daniels

personal account. I strongly believe that Daniel is using that money to finance his life apart from

mine. I believe he used this money to help finance his personal vacation. I had no knowledge that

Daniel was going to borrow this money, in fact, he specifically promised me that he would never

borrow from our business investments without first consulting with me.

10. I did not know that Daniel had arranged for an additional $150K during this refinance.11. On September 11, 2009, I went to my safe deposit box to retrieve grant deeds in my

name to be recorded. Two years earlier (in 2007), Daniel and I deeded the properties back into myname because we learned that I was no longer dying from AIDS. I was concerned what other

actions Daniel might take without my knowledge; therefore I had the deeds recorded the same day

12. In June 1999 I transferred $100k into Daniels account in order to help Daniel qualifyfor loans. Daniel never returned that money.

13. I have cancelled checks for the down payments of three properties purchased in 2004and 2005 from my individual account.

14. I have loan papers for three properties that correspond to the three checks for which Iprovided the down payment.

15. I have refinancing documents for three properties that correspond to the threeproperties for which I made the down payments.


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16. I have a bank statement corresponding to the close of the refinancing showing thedeposit of $150K into Daniels individual account.

17. Prior to the first purchase in 1999, Daniel and I agreed to deed properties in Danielsname based on three reasons: (1) We were concerned with how to protect my assets should my

medical expenses continue to mount and my physical condition continue to deteriorate, (2) We

assumed that I might not live all that much longer and we wanted Daniel to enjoy the properties

when death separated them, (3) Daniel would not have to deal with probate or inheritance tax upon

my death, and (4) my creditors could not pursue the equity in the house should Gregory die with

substantial unpaid medical bills.

18. In 2001, we had gone to a mutual friend, an attorney, and had wills drawn up to makeeach other a beneficiary of our respective estates. Under my will, I designated Daniel as the

primary devisee of his estate upon his death; Daniels will contained a comparable provision in my

favor.

19. By 2002, new medications were improving my life considerably, and I no longer fearedimminent demise.

I declare under penalty of perjury under the laws of the State of California that the

foregoing is true and correct. Executed this 14th day of April, 2010, at Los Angeles, California.

Dated: April 14, 2010.

___________________________

Gregory Kent


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DECLARATION OF SUSAN LONGHOLME IN SUPPORT OF MOTION FOR

SUMMARY ADJUDICATION

I, SUSAN LONGHOLME, HEREBY DECLARE AS FOLLOWS:

1. I am above the age of 18 years, and am a resident of the City and County of LosAngeles, California. I am not a party to the present action. Except as stated herein, I have

personal knowledge of the facts contained in this Declaration. If called upon as a sworn witness, I

could and would competently testify as to the veracity of the facts contained herein.

2. I make this declaration in support of the Motion for Partial Summary Judgment, filedconcurrently herewith by Defendant and Cross-Complainant Gregory Kent.

3. I obtain my license in California to act as a loan broker in 1995. I have beenperforming in this job since that time. In that period of time, I have brokered hundreds of loans

funded by Improvident Bank. Prior to 1998, I received an undergraduate bachelors degree in

finance from UCLA in 1994.

4. I was acting as agent for Improvident Bank in connection with the three loans whichwere created to borrow the $150K in dispute. I helped secure these loans from Improvident Bankat Daniels request only. These loans are secured by trust deeds which are in dispute.

5. Because of my prior friendship with Daniel and Gregory, I was aware that Daniel andGregory had bought the three properties together even though title stood only in Daniels name. I

did not share this information with Improvident Bank.

6. I had no discussion with Gregory about the loans prior to the close of escrow.7. I understood from Daniel that he and Gregory were going to use the $150K to do some

remodeling on the three properties in question, as well as to do some traveling together. I did not

confirm this with Gregory prior to close of escrow.

8. Daniel directed me to have the escrow company deposit the $150K net proceeds into anaccount, in his name alone, at Union Bank. I provided those instructions to the escrow company.

9. I knew Gregory and Daniel as friends prior to securing the trust deeds.


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KENTS MOTION FOR SUMMARY ADJUDICATION MEMORANDUM OF POINTS

I declare under penalty of perjury under the laws of the State of California that the

foregoing is true and correct. Executed this 14th day of April, 2010, at Los Angeles, California.

Dated: April 14, 2010 ___________________________

Susan Longholme

summary judgment project gregory kent print

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