Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_12-cv-05449/USCOURTS-cand-4_12-cv-05449-2/pdf.json

Parties Involved:
American Brokers Conduit Corporation
Defendant
CB Equities, LLC
Plaintiff

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

CB EQUITIES, LLC,

Plaintiff,

v.

AMERICAN BROKERS CONDUIT 

CORPORATION,

Defendant.

Case No. 12-cv-05449-DMR 

ORDER TO SHOW CAUSE WHY THE 

COURT SHOULD NOT SET ASIDE 

JUDGMENT

Re: Dkt. No. 8

It has come to the attention of the undersigned that the Stipulated Judgment entered in this 

case on November 26, 2012 [Docket No. 8] may have been procured through fraud on the court. 

For this reason, the court issues an order directed to the parties and their counsel of record to show 

cause why the court should not set aside the Stipulated Judgment.

I. FACTS AND PROCEDURAL BACKGROUND

The pleadings show the following. On October 22, 2012, Plaintiff CB Equities, LLC filed 

suit against Defendant American Brokers Conduit Corporation. Complaint [Docket No. 1]. 

Plaintiff alleged that Defendant recorded a Deed of Trust originated by American Brokers Conduit 

regarding property located at 223 Verde Mesa, Danville, California (the “subject property”)

despite the fact that Defendant never made the loan that the Deed of Trust purported to secure. 

Compl. at ¶ 1. Plaintiff alleged that it was the owner of the subject property, that American 

Brokers Conduit never loaned any money to Plaintiff’s predecessor in interest, and that no money 

was owed to American Brokers Conduit with regard to any debt associated with the Deed of Trust. 

Id. at ¶¶ 9, 11-12. 

Plaintiff brought a single claim for relief for cancellation of instrument to void the Deed of 

Trust. Id. at ¶¶ 15-25. On November 13, 2012, Defendant filed an answer to the complaint. 

[Docket No. 4.] On November 19, 2012, the parties filed a Joint Settlement Stipulation and 

Case 4:12-cv-05449-DMR Document 11 Filed 08/16/16 Page 1 of 6
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Proposed Judgment that stated that the January 24, 2007 Deed of Trust designated Defendant 

American Brokers Conduit Corporation as the lender, that the Deed of Trust purported to secure a 

loan against the subject property, and that American Brokers Conduit Corporation never loaned 

money with respect to the Deed of Trust. [Docket No. 5 at 1-2.] The Stipulation requested that 

the court enter the parties’ Proposed Judgment expunging, cancelling, and nullifying the Deed of 

Trust. [Docket No. 5 at 2-5.] 

On November 26, 2012, the undersigned entered the Stipulated Judgment and the case was 

terminated.

1

 [Docket No. 8.] The November 26, 2012 Stipulated Judgment was recorded on 

November 29, 2012. 

The court did not learn that anything was amiss until a related lawsuit was filed nearly 

three years later. On August 20, 2015, Deutsche Bank National Trust Company, as Indenture 

Trustee for American Home Mortgage Investment Trust 2007-1 (“Deutsche Bank”) filed a suit 

against the parties in this lawsuit, CB Equities, LLC and American Brokers Conduit Corporation.

In that matter, Deutsche Bank seeks to cancel, extinguish or void the Stipulated Judgment entered 

by this court on November 26, 2012 in this case. See Complaint, Deutsche Bank v. CB Equities, 

LLC, No. 4:15-cv-03809 (N.D. Cal. Aug. 20, 2015) [Docket No. 1] (“Deutsche Bank Action”). 

Deutsche Bank alleges that CB Equities, LLC and American Brokers Conduit Corporation 

improperly and fraudulently extinguished the 2007 Deed of Trust on the Subject Property, and that 

American Brokers Conduit Corporation was not affiliated with American Brokers Conduit, the 

original lender on the loan. Deutsche Bank Action, First Am. Compl. (“FAC”) [Docket No. 32] at

¶¶ 12-15. Deutsche Bank alleges that the Stipulated Judgment was not executed by parties who 

had any right, title, claim or interest in the property to expunge or extinguish the 2007 Deed of 

Trust. Id. at ¶ 18. Deutsche Bank also alleges that in the instant lawsuit, CB Equities LLC did not 

name Deutsche Bank, the holder of the beneficial interest, or Mortgage Electronic Registration 

Systems, Inc., the nominee beneficiary. Id. at ¶¶ 8, 16. Furthermore, as has come to light in the 

 

1 CB Equities, LLC and American Brokers Conduit Corporation consented to magistrate judge 

jurisdiction pursuant to 28 U.S.C. § 636(c). [Docket Nos. 6, 7.] Therefore, the undersigned had 

full authority to enter judgment in this matter.

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Deutsche Bank Action, Deutsche Bank is in a dispute with subsequent purchasers of the subject 

property regarding the parties’ respective interests in the property. That dispute is pending before 

a California state court. 

II. LEGAL STANDARD

Courts have discretion pursuant to their “inherent equity power to vacate judgments 

obtained by fraud.” United States v. Estate of Stonehill, 660 F.3d 415, 443 (9th Cir. 2011) (citing 

Chambers v. NASCO, Inc., 501 U.S. 32, 44 (1991)). 

Federal Rule of Civil Procedure 60(d)(3) preserves this inherent power and recognizes that 

Rule 60, which governs relief from a judgment or order, does not limit a court’s power to “set 

aside a judgment for fraud on the court.” Appling v. State Farm Mut. Auto. Ins. Co., 340 F.3d 769, 

780 (9th Cir. 2003). A court must “exercise the power to vacate judgments for fraud on the court 

with restraint and discretion, and only when the fraud is established by clear and convincing 

evidence.” Estate of Stonehill, 660 F.3d at 443 (internal quotation marks and citations omitted). 

There is no time limit on the court’s power to set aside judgments based on a finding of fraud on 

the court. Id. The court may vacate a judgment sua sponte, but should give the affected parties 

notice and an opportunity to be heard. Kingvision Pay-Per-View Ltd. v. Lake Alice Bar, 168 F.3d 

347, 351 (9th Cir. 1999). 

“Fraud on the court” is read narrowly to mean “only that species of fraud which does or 

attempts to, defile the court itself, or is a fraud perpetrated by officers of the court so that the 

judicial machinery cannot perform in the usual manner its impartial task of adjudging cases that 

are presented for adjudication.” Appling, 340 F.3d at 780. “Fraud on the court requires a ‘grave 

miscarriage of justice,’ and a fraud that is aimed at the court.” Id. (quoting United States v. 

Beggerly, 524 U.S. 38, 47 (1998)). “A fraud on the court is an unconscionable plan or scheme 

which is designed to improperly influence the court in its decision.” Phoceene Sous-Marine, S.A. 

v. U.S. Phosmarine, Inc., 682 F.2d 802, 805 (9th Cir. 1982) (internal quotation marks and citation 

omitted). The relevant inquiry is not whether fraudulent conduct “prejudiced the opposing party,”

but whether it “harmed the integrity of the judicial process.” Estate of Stonehill, 660 F.3d at 444 

(citation and alterations omitted). 

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III. ANALYSIS

This case appears to present a textbook example of an “unconscionable plan or scheme”

designed to improperly influence the court that “harmed the integrity of the judicial process.”

Phoceene Sous-Marine, S.A., 682 F.2d at 805; Estate of Stonehill, 660 F.3d at 444. Normally, 

cases seeking relief from judgment for fraud on the court involve alleged fraudulent behavior by 

one party that causes another party to challenge the integrity of the judgment. See, e.g., Estate of 

Stonehill, 660 F.3d 415 (tax payers appealed denial of their Rule 60(b) motion to vacate a tax 

judgment against them, arguing that the government committed fraud on the court during a 

suppression hearing); Appling, 340 F.3d 769 (agents brought independent action to set aside a 

prior judgment for fraud on the court); In re Levander, 180 F.3d 1114 (9th Cir. 1999) (Chapter 11 

debtors moved to amend bankruptcy court order awarding the attorney fees, seeking to designate 

partnership to which judgment debtor’s assets had been conveyed as additional judgment debtor

based on fraud on the court). By contrast, in this case, it appears that Plaintiff and Defendant 

worked together to mislead the court and obtain a fraudulent stipulated judgment.

Specifically, the record reveals that the designated lender on the Deed of Trust in question 

was not Defendant American Brokers Conduit Corporation, but American Brokers Conduit. Deed 

of Trust [Docket No. 5-1] at 2-3. In the Joint Settlement Stipulation and Proposed Order

submitted to the court, Plaintiff CB Equities, LLC and Defendant American Brokers Conduit 

Corporation improperly stipulated that the Deed of Trust (Document Number 2007-0028086-00) 

designated American Brokers Conduit Corporation (rather than American Brokers Conduit) as the 

lender. Stipulation [Docket No. 5] at 1. 

In this way, both parties appear to have worked together to hide a key fact from the court—

namely that non-party American Brokers Conduit, and not Defendant American Brokers Conduit

Corporation, was the lender on the loan. The parties may well have done so in order to 

fraudulently obtain the court’s entry of a stipulated judgment. This resulted not only in harm to 

others such as Deutsche Bank, whose interests in the property have been muddied by the parties’

actions, but to the judicial system itself, which appears to have been duped into becoming a 

participant in the deceptive act. See Estate of Stonehill, 660 F.2d at 444 (fraud on court involves 

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“far more than an injury to a single litigant,” quoting Hazel–Atlas Glass Co. v. Hartford-Empire 

Co., 322 U.S. 238, 246 (1944)); Alexander v. Robertson, 882 F.2d 421, 424 (9th Cir. 1989) (in 

determining whether fraud constitutes fraud on the court, relevant inquiry is not whether 

fraudulent conduct “prejudiced the opposing party,” but whether it “harmed the integrity of the 

judicial process.”).

The deceptive actions in this case have resulted in a criminal indictment. United States v. 

Jacobsen, No. 15-cr-518, (N.D. Cal. Nov. 5, 2015), alleges a scheme in which Defendant Robert 

Jacobsen, who controlled American Brokers Conduit Corporation, initiated fraudulent lawsuits 

designed to give the appearance that the mortgage liens on the homes to which he had obtained 

title were invalid. Indictment at ¶¶ 3, 7-10 [Docket No. 1].2The indictment alleges that Jacobsen 

obtained title to homes secured mortgage loans that had been originated by American Brokers 

Conduit, including at least one home located in Danville, California.3 Id. ¶¶ 3, 8. He then placed 

title to these homes in the name of shell companies that he controlled. Id. ¶ 9. The indictment 

further alleges that Jacobsen initiated fraudulent lawsuits, and that to do so, “he hired an attorney, 

N.B., to sue ABC Corp., the company that he had created and controlled, and directly or through 

 

2

The court may consider facts properly subject to judicial notice including the existence of court 

dockets and filings in related proceedings. Porter v. Ollison, 620 F.3d 952, 954–55 (9th Cir.2010) 

(taking judicial notice of state court docket, filings, and disciplinary proceedings). The court 

therefore takes judicial notice of the Indictment only as to evidence of the crime charged, and not 

for the truth of any matter asserted therein. Princeton Strategic Inv. Fund, LLC v. United States, 

No. C 04-04310 JW, 2011 WL 6176221, at *6 n.31 (N.D. Cal. Dec. 7, 2011) (granting request for 

judicial notice of indictment); Tene v. City & Cty. of San Francisco, No. C00-03868WHA, 2001 

WL 1112174, at *2 (N.D. Cal. Aug. 29, 2001), rev'd on other grounds, 68 F. App'x 33 (9th Cir. 

2003) (taking judicial notice of grand jury indictment). 

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The subject property in this case is located at 223 Verde Mesa Drive, Danville, California. The 

Indictment alleges that Jacobsen transmitted a “Grant Deed” recorded by CeRTNA electronic 

recording system, conveying property in Danville, California from CB Equities to Windeler 

Development on December 27, 2012. Indictment at ¶ 16, United States v. Jacobsen, No. 15-cr518, (N.D. Cal. Nov. 5, 2015), [Docket No. 1]. The court takes judicial notice that a Grant Deed 

transferring the interest in the Subject Property from CB Equities LLC to Windeler Development 

Group, Inc. was recorded on December 27, 2012 in the Contra Costa County Recorder’s Office as 

Document Number 2012-0330796-00. Under Federal Rule of Evidence 201(b), publicly-recorded 

real estate instruments and notices, including deeds of trust and default and foreclosure notices, are 

the proper subject of judicial notice, unless their authenticity is subject to reasonable dispute. 

Disabled Rights Action Comm. v. Las Vegas Events, Inc., 375 F.3d 861, 866 n.1 (9th Cir. 2004); 

Petrovich v. Ocwen Loan Servicing, LLC, No. 15-CV-00033-EMC, 2016 WL 555959, at *3 (N.D. 

Cal. Feb. 12, 2016).

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N.B., falsely claimed that the mortgage liens on the homes were invalid. Jacobsen, directly or 

through an individual named P.T., hired attorneys to represent ABC Corp. in these lawsuits. At 

Jacobsen’s direction, ABC Corp. agreed to stipulated judgments purporting to invalidate the 

mortgage liens on these homes that had been originated by the real ABC.” Id. ¶ 10. “Jacobsen, 

directly or through the attorneys, fraudulently omitted to inform the courts that the ABC Corp. that 

was a party to the lawsuit had not actually originated the mortgages on the homes, nor did it own 

or have any legal interest in the mortgages on the homes. Jacobsen also fraudulently omitted to 

inform the courts that he controlled the entities on both sides of the lawsuit.” Id. 

The court notes that Plaintiff and Defendant have both been given notice that the stipulated 

judgment is under attack by Deutsche Bank, and were provided numerous opportunities to be 

heard. Both Plaintiff and Defendant were served with key documents from the Deutsche Bank 

Action, including the complaint, motion for default judgment which sought to cancel the stipulated 

judgment, and supplemental briefing. Deutsche Bank Action Proofs of Service [Docket Nos. 35, 

36 (First Am. Compl.), 37-1 (Mot. for Entry of Default), 40-2 (Mot. for Default J.), 70 (Order re: 

Suppl. Br.)]. Plaintiff and Defendant did not respond or otherwise participate in that action. On 

December 10, 2015 and May 12, 2016, the court held hearings on Deutsche Bank’s motion for 

default judgment seeking to cancel the stipulated judgment. Deutsche Bank Action [Docket Nos. 

27, 73]. Plaintiff and Defendant did not appear or request to be heard. Id.

Although the parties have had ample notice and opportunity to defend the validity of the 

stipulated judgment, in an excess of caution, the court now issues this order to show cause why the 

stipulated judgment should not be set aside for fraud on the court. The parties shall show cause in 

writing by no later than August 25, 2016. If a party does not show cause by that deadline, it will 

be deemed to have waived its right to object to an order to set aside the stipulated judgment. 

IT IS SO ORDERED.

Dated: August 16, 2016

______________________________________

Donna M. Ryu

United States Magistrate Judge

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