Kibby Road, LLC v. Northern Trust Company

Filing 17

ORDER REQUIRING SUPPLEMENTAL BRIEFING AND CONTINUING HEARING. Set/Reset Deadlines as to 8 MOTION to Dismiss . Supplemental Briefs of 7 pages filed by 4/22/2015. Motion Hearing set for 4/21/15 is CONTINUED to Tuesday, 4/28/2015 02:00 PM in Courtroom 1, 4th Floor, Oakland before Hon. Yvonne Gonzalez Rogers. Signed by Judge Yvonne Gonzalez Rogers on 4/17/15. (fs, COURT STAFF) (Filed on 4/17/2015)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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KIBBY ROAD, LLC,

Case No. 15-cv-00795-YGR

Plaintiff,
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v.
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NORTHERN TRUST COMPANY,

ORDER REQUIRING SUPPLEMENTAL
BRIEFING AND CONTINUING HEARING
Re: Dkt. No. 8

Defendant.

United States District Court
Northern District of California

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The Court has considered the papers submitted in connection with the defendant’s motion

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to dismiss. (Dkt. No. 8.) Having reviewed the arguments and authorities presented, the Court

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hereby ORDERS the parties to provide supplemental briefs (including relevant legal authority) on

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the following issues:

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1. Whether the parties agree that in the context of this case, where the defendant was

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the beneficiary as to both liens in question, the defendant could unilaterally modify

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the respective priorities of those liens?

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a. If so, what were the proper mechanisms for doing so in the absence of a
relevant third party to serve as counterparty to a subordination agreement?

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2. Assuming for the sake of argument that the line of credit lien (and/or modifications

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thereto) was junior to the foreclosed lien at the time of initial recordation (or that

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the two liens had simultaneous priority):

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a. Did the defendant’s April 1, 2014 notice of default (Dkt. No. 9-1 at 17)

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and/or December 31, 2014 notice of sale (Dkt. No. 9-1 at 24)—stating the

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line of credit lien was senior to the foreclosed lien—serve to (1) effectively

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modify the priority of the liens in the manner described above in Section

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1(a), and (2) provide adequate notice thereof to plaintiff?

i. If so, did the change in priority encompass the two recorded

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modifications to the line of credit lien even if those modifications

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were not specifically referenced in the notice of default and/or notice

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of sale?

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3. As to plaintiffs’ asserted causes of action, address the following issues:
a. A claim for “equitable subordination” is alleged. Is this cause of action

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appropriate under California law, or was a claim for “equitable subrogation”

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intended? The Court notes that the former is typically found in the

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bankruptcy context. If “equitable subordination” is the intended cause of
action, is it merely a remedy or a standalone cause of action?

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United States District Court
Northern District of California

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b. Whether “wrongful conduct” is in fact a necessary element in an action to

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quiet title. (The Court notes the defendant has cited a single case which

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addresses this issue in one sentence, but lacks any substantive discussion.)
i. If it is, whether a complaint alleging a defendant is wrongly

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asserting a lien that was extinguished by virtue of the foreclosure of

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a senior lien has pled sufficient wrongful conduct to state a claim.

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c. Whether “Cancellation of Deed of Trust” pursuant to California Civil Code

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§ 3412 is a standalone cause of action or merely a remedy in an action to

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quiet title or for declaratory relief such that the claim would be redundant.

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Each party’s supplemental brief shall not exceed seven (7) pages and shall be filed by

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April 22, 2015. The hearing set for April 21, 2015 is CONTINUED to April 28, 2015 at 2 p.m.

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IT IS SO ORDERED.
Dated: April 17, 2015
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YVONNE GONZALEZ ROGERS
UNITED STATES DISTRICT COURT JUDGE

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