SACRAMENTO – An appeals court has reversed a trial court’s order centered on monetary sanctions in a lawsuit involving a home foreclosure.
On March 13, the California Court of Appeal for the 3rd Appellate District reversed a judgment by the Superior Court of Yolo County that found the plaintiffs' complaint "was presented primarily for an improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation."
“On appeal, (the plaintiffs) argue that the claims asserted in their complaint were not frivolous and therefore, could not have been asserted for an improper purpose. We agree,” the opinion stated.
According to the opinion, plaintiffs and appellants Antonio and Imelda Aranda and their son-in-law, Heriberto Ponce, purchased a home in Woodland using a $280,000 loan they borrowed from Wells Fargo Bank on Feb. 14, 2008.
In 2009, the opinion states the plaintiffs applied for and were granted a loan modification via the Home Affordable Modification Program after a trial period was complete. However, the agreement allegedly had errors that included a failure to name Ponce as a party and higher, unaffordable payments. The plaintiffs attempted to fix the problems with Wells Fargo but were unable to and defaulted on the loan in June 2010, the opinion states.
Amid ongoing negotiations to find a resolution between the Arandas, Ponce and Wells Fargo, the bank transferred the note and deed of trust to Consumer Solutions 3 LLC in November 2010 and Specialized Loan Services LLC serviced the loan for them, according to the opinion. Wells Fargo had allegedly ensured the plaintiffs that their property would not be sold while a resolution was ongoing since their loan modification had been approved. However, the property’s title was sold in a trustee’s sale on Jan. 18, 2011, to Residential Investments LLC and a deed upon sales was signed on March 8, 2011.
A lawsuit was filed on April 1, 2011, by Residential Investments citing unlawful detainer against the plaintiffs in the Superior Court, the opinion states. Ponce and the Arandas then filed their own lawsuit in Superior Court.
In February 2013, Ponce and his wife, Alma, filed a pro se adversary proceeding against Wells Fargo, Specialized, Residential Investments and others.
On March 13, 2013, Ponce and his wife initiated another lawsuit, also pro se, in the U.S. District Court for the Eastern District of California.
“On March 29, 2013, plaintiffs, represented by John S. Sargetis of the United Law Center, signed a stipulation to hold writ in exchange for $10,000 and the right to remain in possession of the property through May 2013,” the opinion states. “The stipulation was also signed by Alma, who lived at the property and was the most fluent English speaker in the group.”
Ponce and Aranda sued Wells Fargo and Specialized on Oct. 3, 2013, in a second amended complaint, or Ponce IV, the opinion stated. Ponce and the Arandas were asked to dismiss Ponce IV amid the stipulation, but the plaintiffs did not respond.
In the current case, Ponce and the Arandas filed an “appeal from the trial court’s entry of a judgment of dismissal following an order imposing both terminating and monetary sanctions against them and their attorneys under Code of Civil Procedure section 128.7,” the opinion stated, and the court reversed the decision.
"We therefore reverse the trial court’s entry of judgment based on terminating sanctions against Ponce and Aranda and entry of monetary sanctions against Ponce and Aranda and their attorneys."