Monday, April 21, 2014
State Supreme Court to Decide Whether Mediation Stay Tolled Five-Year Period
By a MetNews Staff Writer
The California Supreme Court has agreed to decide whether a Los Angeles Superior Court judge properly dismissed a lawsuit under the five-year period, or should have allowed the action to remain pending due to a previous stay for mediation.
The justices, at their weekly conference in San Francisco Wednesday, voted 5-1 to grant review in Gaines v. Fidelity National Title Insurance Company (2013) 222 Cal. App. 4th 25. Only Justice Marvin Baxter was opposed to hearing the case, in which this district’s Div. Eight upheld Los Angeles Superior Court Judge Rolf Treu’s order of dismissal in a 2-1 decision.
The Court of Appeal majority said the months-long stay did not toll the five-year period because the action was not fully stayed, the parties being allowed to respond to outstanding discovery during that time.
The lawsuit was begun by Fannie Marie Gaines, who in November 2006 filed a complaint against numerous defendants, including Fidelity National Title Insurance Company.
Gaines alleged fraud and violations of statutes relating to home equity sales contracts, in connection with the loss of her Los Angeles home after she fell behind on her payments. By January 2008, Gaines had filed three amended complaints that had included other mortgage and real estate companies as defendants, including Aurora Loan Services, LLC.
In April 2008, at Gaines’s request in order allow for a mediation attempt, the court stayed the action except to allow for responses to outstanding discovery requests. The mediation proved unsuccessful and the case was assigned to a new judge who terminated the stay in November 2008 and set a trial date for August 2009.
The trial date was vacated after Aurora indicated that it did not hold any legal title to Gaines’ property nor have any legal rights to an outstanding loan connected with it. Aurora alleged that the loan was actually owned by Lehman Brothers Holdings, Inc., which had declared bankruptcy in 2008 and was not a named defendant in the action.
Another delay occurred in November 2009 when the original plaintiff died. By January 2010, the court had granted an application allowing her son, Milton Gaines, to succeed her as plaintiff and file a fifth amended complaint.
Trial had been rescheduled for the end of August of that year, but further delays ensued as the parties disputed who was the proper holder of the loan at issue.
Milton Gaines informed the court that he did not wish to add Lehman Brothers as a defendant or seek relief from its bankruptcy stay since he had no proof that the company was a titleholder to the loan.
Treu, expressing frustration, delayed the trial again and issued a series of continuances in order to allow the parties to resolve the issue concerning Lehman Brothers and the ownership of the loan so that it could be determined if Lehman Brothers should be added as a named defendant.
By November 2011, after acknowledging that it held a deed of trust against the property, Lehman Brothers was added as a defendant and a bankruptcy judge agreed to lift a stay as to the plaintiff’s claims after a five-month process of court motions in that separate forum.
Trial was then set for August 2012.
Three months before that, however, Fidelity moved to dismiss the complaint under Code of Civil Procedure §§ 583.310 and 583.360, arguing that neither the bankruptcy stay nor Fannie Marie Gaines’ death tolled the five-year deadline period that had expired in November 2011.
Treu granted the motion, dismissing the complaint against all defendants. The judge said that even though Fidelity had been the only defendant to move for dismissal and the five-year deadline had not yet run as to Lehman Brothers, the whole case had to be dismissed since the five-year dismissal requirement was “jurisdictional.”
Treu reasoned that the five-year period had been effectively tolled for 185 days to account for the delay after Fannie Gaines’ death as well as the efforts to obtain relief from the Lehman Brothers bankruptcy stay. However, he determined that the months-long stay for mediation efforts in 2008 did not toll the deadline since it was only a partial stay and not a stay within the meaning of §583.340(b).
The Court of Appeal held that the trial court erred in dismissing Lehman Brothers from the case, but affirmed in all other respects.
Writing for the majority, Presiding Justice Tricia Bigelow held that the trial court’s calendar calculations were correct. She was joined in her opinion by Justice Elizabeth Grimes.
Bigelow said the fact that the court’s stay order allowed some discovery to take place meant that it was a partial stay, so there was no tolling, regardless of whether any discovery actually took place in that time.
Bigelow also said that the trial court did not abuse its discretion in concluding the partial stay did not make it impossible, impractical, or futile for plaintiff to bring the action to trial.
In dissent, Justice Laurence Rubin said he would not have allowed dismissal of the other defendants and that the deadline should have been tolled under §583.340(c) since bringing the action to trial was “impossible, impracticable, or futile” in light of the original plaintiff’s death and the confusion over the true owner of the house loan.
“In my view,” he wrote, “the dismissal of this lawsuit under the circumstances described defeats the substantial ends of justice.”
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