Order to show cause why order for sale of dwelling should not issue
Given the file in this matter is sealed, the court’s posted tentative ruling will not go into any further detail as to the basis for the foregoing, but is happy to discuss the matter further petitioner at the hearing.
2. In RE: Martinez 2025-01511372 Before the court is the hearing on the order to show cause as to why the court should not reconsider its February 26, 2026 ruling granting the first amended verified petition for approval for transfer of structured settlement payment rights by and between payee and real party in interest Luis Martinez (Payee) and petitioner CBC Settlement Fundings, LLC (Petitioner).
The court set this order to show cause because, in connection with Petitioner submitting a proposed order granting the first amended petition, it came to light that Petitioner served the incorrect annuity owner and incorrect annuity issuer. The court has reviewed the declaration of counsel (ROA 43) Petitioner submitted in response to the order to show cause as well as the notice of hearing. The court continues to have concerns regarding this matter and is inclined to vacate its prior ruling without prejudice to Petitioner filing and serving another amended petition that provides current information and is properly served on all necessary parties.
First, since discovering the error, Petitioner represents it has served all documents on the proper annuity owner and issuer—i.e., Pacific Life & Annuity Services, Inc. and Pacific Life & Annuity Company. Petitioner, however, has not served any of the documents on Payee and Payee has not been given notice of today’s hearing.
Second, although Petitioner represents the proper annuity owner and issuer have no objection, that representation is hearsay.
Finally, nearly a year has elapsed since Payee signed the contract, and it is not clear interest rates and the related calculations have not changed during that period due to changes in the market. Similarly, nothing is presented to show Payee’s circumstances have not changed. The first amended petition and the court’s decision to grant it was based in part on Payee’s dire need to bring his rent current. Given several months have elapsed since then, it is not clear the name need and justification exist.
3. VFS, LLC vs. AM Bakersfield, LLC Before the court is the order to show cause why an order for sale of dwelling should not issue relating to property located at 3111 Gardenia Lane, Yorba Linda, California 92886 and owned by judgment debtor Arpit Patel (Debtor) 2025-01487067 and his spouse, Yesha Patel, as husband and wife and joint tenants.
The order to show cause was entered on June 4, 2026, based on the application of judgment creditors VFS, LLC and VFSOX, LLC (collectively, Creditors). The court previously found Creditor’s application satisfied the statutory requirements, and therefore the court issued the order to show cause. (
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In connection with the order to show cause the court must determine whether the dwelling is a homestead entitled to the homestead exemption, the amount of any homestead exemption, the dwelling’s fair market value, the existence of any liens senior to Creditor’s judgment lien, the amount of any such liens, and whether the sale of the dwelling is likely to produce a bid high enough to satisfy any part of Creditor’s judgment. (Meyer v. Sheh (2022) 74 Cal.App.5th 830, 838-839.) There is no statutory requirement the bid be sufficient to cover any costs of the sale. (See In re Hyman (9th Cir. 1992) 967 f.2d 1316, 1321.)
Here, Debtor has shown the dwelling is a homestead and he is entitled to the homestead exemption. Debtor also has shown the exemption is in the amount of $722,150, based on the amount of the exemption at the time Creditor’s judgment lien attached. (Berhanu v. Metzger (1992) 12 Cal.App.4th 445.) Creditors do not dispute either Debtor’s entitlement to a homestead exemption or its amount.
The parties, however, do have disputes as to the amount of the two liens on the dwelling senior to Creditor’s judgment lien as well as the fair market value of the dwelling. Creditors submit an independent appraisal report for the dwelling based on comparable sales and property characteristics. The appraisal is dated as of March 23, 2026, and values the dwelling at $4,275,000.
Debtor offers his own opinion the dwelling is worth approximately $4 million. He offers no basis for that opinion other than the property was listed for sale at $4.6 million, and the price was then reduced to $4.3 million, and it still has not sold. A property owner may offer an opinion as to the value of their own property, and then the justification offered for that opinion goes to its weight. (Evid. Code, § 813, subd. (a).) Here, Debtor offers nothing more than his belief and the fact the dwelling has not sold. Creditors offer a professional appraisal based on six separate comparable sales that occurred in 2025.
The court finds Creditor’s valuation to be more credible, but updated information would be helpful.
As to the first lien on the property held by Change Lending, LLC, the parties do not dispute its existence. Rather, their only disagreement is the outstanding balance on the lien. Creditor concedes the balance is $3,064,745.43, which is the accelerated outstanding balance based on the most recent mortgage statement Debtor provided. Debtor contends the amount is $3,152,937, but fails to include any credible evidence or explanation for that figure. He states he added the next mortgage payment to the balance reflected in the most recent statement, but that amount is included in the accelerated balance and nonetheless adding the next payment to the amount identified in the statement does not total the amount Debtor argues. The court finds the appropriate amount is $3,064,745.43.
The second lien or deed of trust is held by Jiten Gandhi, as trustee of the Gandhi Family Trust. Such a lien is recorded on the dwelling, but it is unclear how much the outstanding balance is. The recorded deed of trust refers to two promissory notes—one for $300,000, dated December 28, 2021, and a second one for $200,000, dated the same date as the second deed of trust (i.e., June 19, 2022). Debtor contends the amount of this deed of trust was originally $300,000, but he borrowed an additional sum in April 2026 to bring the total principal to $375,000. He contends the total amount due is currently $395,000 based on an alleged, handwritten payout demand from Mr. Gandhi.
Creditor asserts a number of challenges to this lien and the amount suggested by Debtor. The evidence offered is highly questionable and there are significant admissibility issues. The court lacks sufficient evidence to determine the amount of the lien. The court, however, notes it lacks the authority to evaluate the validity of any recorded lien in connection with these proceedings. Even an apparently fraudulent lien must be provided for in the order of sale if it is superior to the judgment creditor’s lien. The creditor’s recourse is to file a fraudulent conveyance action for a determination the lien in void. (See Kahn v. Berman (1988) 198 Cal.App.3d 1499, 1509.)
Debtor and Mr. Gandhi must present much greater, admissible evidence to establish the amount of the recorded lien. The recorded second deed of trust refers to two separate promissory notes, but neither note is provided. Moreover, no specifics are provided regarding any funds actually received by Debtor under either note, the terms of the note, the amount of interest, the amount of any payments, how the amount allegedly due is calculated, etc. Much more detailed and admissible evidence is necessary.
Mr. Gandh must be cautioned if he fails to provide sufficient evidence to support the amount he is allegedly due under the second deed of trust, he may lose some or all the priority to which he may otherwise be entitled. In making an order for sale of a dwelling, the court is required to fix the amount of all senior liens and it cannot do so if the lienholder fails to provide sufficient evidence.
The court further notes there is no information about the current amount or status of the real property taxes. The bill attached is for the installments due in November 2025 and February 2026. No information is provided as to whether those were paid or resulted in a lien.
Finally, Creditors note a notice of default has been recorded by the senior lienholder to start the foreclosure process because Debtor has missed a number of payments. According to Creditors, the earliest a foreclosure sale could be noticed is 20 days after August 17, 2026. Creditor acknowledges any sale pursuant to this order to show cause should be delayed for approximately 30 days to see what happens with the foreclosure.
Based on the foregoing, the court continues the hearing to THURSDAY, SEPTEMBER 17, 2026, AT 2:00 P.M., IN DEPARTMENT C23, to determine the status of the foreclosure, to receive updated information about the fair market value of the property, to receive further evidence regarding the amount of the second deed of trust held by Mr. Gandhi, and to receive information about any real property tax liens on the dwelling.
At least 9 court days before the continued hearing date both Creditors and Debtor are ordered to file and serve a declaration(s) updating the court on the status of the foreclosure on the dwelling, providing any further information regarding the dwelling’s fair market value, providing admissible evidence about the amount due on the second deed of trust as described above, and notifying the court about the existence and amount of any lien for real property taxes. Counsel for Creditors is ordered to give notice of this ruling.
4. Michael Basso, Trustee of the Basso Family Before the court is the continued hearing on the petition to compel arbitration filed by petitioners Michael Basso, Donna Basso, and Joseph Michael Basso, trustees of the Basso Family Trust (collectively, Petitioners) seeking to compel