CHARTER-SMITH, et al v MALLERY, et al

On July 26, 2024, Mid Valley Title filed a Disclaimer of Interest and agreed to be “bound by whatever non-monetary order or judgment this Court issues regarding” the Deed of Trust. (RJN 1.)

On October 10, 2024, Plaintiff served discovery on Mid Valley Title and received discovery responses on November 21, 2024. (Declaration of Nelson Goodell (“Goodell Decl.”) ¶ 5.) The production revealed that without Plaintiffs’ knowledge or consent, a Rescission of Full Reconveyance was recorded on November 29, 2022, by Mid Valley Title which stated the full reconveyance of Deed of Trust Document No. 2028-000695 “was executed in error and is hereby withdrawn, canceled and declared of no force or effect, and that the lien on the property covered thereby shall be in no way affected by such erroneous instrument” (“Rescission of Full Reconveyance”). (RJN 9).

A Deed of Full Reconveyance was recorded on November 22, 2022, by Mid Valley which stated that the document “does hereby reconvey to the [Plaintiffs], without warranty, all of the estate, title and interest acquired” under the original Deed of Trust Document No. 2018- 000695 (the “Deed of Full Reconveyance”). (RJN 8).

Mid Valley Title failed to produce the Deed of Full Reconveyance in their November 2024 document production. According to Plaintiffs’ counsel, he did not receive this document until August 13, 2025, from the county recorder’s office (Goodell Decl. ¶ 9.)

Due to this new information, Plaintiffs filed a Motion Seeking Leave to File their First Amended Complaint on September 25, 2025. An Amended Notice of Motion was filed and served on counsel for Mid Valley, Christina Yu, on October 17, 2025. (Goodell Decl. ¶ 11, RJN 2.) In the Motion to Amend, Plaintiffs requested Mid Valley’s non-monetary status be revoked, as Mid Valley failed to provide the Deed of Full Reconveyance in their document production, despite having already produced the Rescission of Full Reconveyance.

As stated throughout the operative Second Amended Complaint (“SAC”), “the preparation, execution, notarization, issuance and recordation of the Rescission of Full Reconveyance by Mid Valley was done without any basis in law authorizing it to do so. No statute, no case law, no regulation nor any other source of law provides to Mid Valley as substitute trustee the power and authority to unilaterally rescind the Deed of Full Reconveyance, restore the lien on the property and/or revive the forgiven and extinguished modified Loan.” (Id. ¶ 12; RJN 6 ¶30-31).

Mid Valley Title did not oppose this motion. (Id. ¶13.)

The Court granted the Motion on November 14, 2025. On November 25, 2025, Plaintiffs’ counsel emailed all counsel (including Ms. Yu) the proposed order granting the Motion for Leave to Amend and requesting any opposition by November 30, 2025. (Goodell Decl. ¶ 15.) Mid Valley did not advise whether they approved or not and on December 4, 2025, plaintiff filed a Notice of Entry of Order including a provision:

Plaintiffs also seek to add additional factual allegations about Defendant Mid Valley Title and Escrow’s filing of a Deed of Full Reconveyance in favor of Plaintiffs in November 2022 and a subsequent rescission of such reconveyance seven days later. No defendant has filed any opposition to the motion to amend. (Goodell Decl. ¶ 14; RJN 3.)

Plaintiffs filed their FAC but erroneously forgot to include verifications. (Goodell Decl. ¶ 19.) Accordingly, with stipulation from Defendant Pacific Premier, a second amended complaint (“SAC”) was filed on January 23, 2026 (RJN 6) and was electronically served on Ms. Yu the same day. (RJN 7.) Mid Valley Title was served the SAC by messenger on February 17, 2026. (Goodell Decl. ¶ 21, 22, Ex. 4.)

On April 1, 2026, Plaintiffs’ counsel emailed Ms. Yu stating that the SAC had been served on her clients, but Mid Valley Title had still not appeared and accordingly, Plaintiffs would be seeking default within one week. (Goodell Decl. ¶ 23.)

Mid Valley Title and others argued thereafter that neither the amended complaint, nor the order granting the motion for leave to amend, specifically revoked the non-monetary status.

Accordingly, the instant motion followed.

II. Legal Standard and Discussion

Civil Code section 2924l(a) provides:

In the event that a trustee under a deed of trust is named in an action or proceeding in which that deed of trust is the subject, and in the event that the trustee maintains a reasonable belief that it has been named in the action or proceeding solely in its capacity as trustee, and not arising out of any wrongful acts or omissions on its part in the performance of its duties as trustee, then, at any time, the trustee may file a declaration of nonmonetary status. (Civil Code, § 2924l, subd. (a).)

Mid Valley Title filed such a declaration in this action on July 26, 2024 (“DNS”). The statute further states “In the event of a timely objection to the declaration of nonmonetary status, the trustee shall thereafter be required to participate in the action or proceeding. (Id., § 2924l, subd. (e).) No objection was made at the time the DNS was filed. However, the statute further provides:

Additionally, in the event that the parties elect not to, or fail to, timely object to the declaration of nonmonetary status, but later through discovery, or otherwise, determine that the trustee should participate in the action because of the performance of its duties as a trustee, the parties may file and serve on all parties and the trustee a motion pursuant to Section 473 of the Code of Civil Procedure that specifies the factual basis for the demand. Upon the court’s granting of the motion, the trustee shall thereafter be required to participate in the action or proceeding, and the court shall provide sufficient time prior to trial for the trustee to be able to respond to the complaint, to conduct discovery, and to bring other pretrial motions in accordance with the Code of Civil Procedure. (Ibid.)

Code Civil Procedure section 473 provides, that the Court, “may, in furtherance of justice, and on any terms as may be proper, allow a party to amend any pleading or proceeding by adding or striking out the name of any party.” (Code Civ. Proc., § 473, subd. (a)(1).)

Here, Plaintiffs assert that they determined through discovery that Mid Valley Title should participate in the instant action because of the improper/illegal performance of its duties, and accordingly brings the instant Motion, specifying in detail the factual bases for their demand. (See, e.g., Goodell Decl., ¶¶ 7-35.) Since no trial date has been set, Mid Valley Title if required to participate, clearly will be provided sufficient time to do so.

Mid Valley Title’s opposition essentially sounds in demurrer, arguing that Plaintiffs cannot state a claim against them because they are immune under Civil Code section 2924(d) and Civil Code section 47. However, while trustees are given some immunity, the type and application of that immunity are not appropriate for resolution here. Here, the Court is asked to determine whether the addition of Mid Valley Title as an active party is in the furtherance of justice and whether it would be unjust to require Mid Valley Title to participate in the litigation if it were utterly clear that it could have no liability.

Plaintiffs are asserting, in their SAC, that Mid Valley Title acted outside the scope of duties that would make it immune because it acted without any legal authority and outside its duties as a trustee. (SAC ¶ 77) and did so with malice or fraudulently (Id. ¶ 80.) As Mid Valley Title’s immunity is not utterly clear under these circumstances, the Court cannot conclude it is improper to remove Mid Valley Title’s status as a nonmonetary defendant.

Accordingly, the motion to revoke non-monetary status as to Mid Valley Title is GRANTED.

The clerk shall provide notice of this ruling to the parties forthwith. Plaintiffs to submit a formal Order and Judgment complying with Rule 3.1312 in conformity with this Ruling.