Filed 10 / 16 / 23 Aguila v. Pico River a Fi r st Mortgage Investors CA6

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b) . This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

HENRY AGUILA

,
Plaintiff and Appellant,

v.

PICO R IVERA FIRST MORTGAGE INVESTORS , LP et al

.,

Defendant s and Respondent s

. 2d Civ. No. B323391 (Super. Ct. No. 22CV00464) (Santa Barbara County)

This is an appeal from the grant of a special motion to strike pursuant to Code of Civil Procedure sectio n 425. 16 1 (anti

SLAPP [strategic lawsuit against public participation] motion). An underlying action arose from a foreclosure by defendant Pico Rivera First Mortgage Investors, LP (First Mortgage) on property owned by plaintiff Henry Aguil a

. That action ended
with a settlement. In the instant action

, Aguila’s complaint

1 All statutory references are to the Code of Civil Procedure unless otherwise indicated

.2

alleges defendants First Mortgage, and others, breached a release and covenant not to sue in the settlement agreement by making a motion in a bankruptcy proceeding. The bankruptcy proceed ing is not related to the causes of action settled by agreement in the underlying lawsuit. Moreover, the damages alleged in the complaint arose from the claimed loss of a 50

- year lease that Aguila granted to himself years after he lost the property to Fir st Mortgage’s foreclosure. First Mortgage responded to the complaint with an anti

- SLAPP motion. The trial court granted
the motion. Aguila’s appeal , like his complaint, is an exercise in delusional thinking. We affirm.
FACTS Thee Aguila, Inc. (TAI) ow ned real property in Pico Rivera,
California (the Pico Rivera property). Aguila is the sole owner of
TAI. The Pico Rivera property had been leased for use as a nightclub and restaurant. In 2015
, the Drug Enforcement Agency seized the liquor license beca use the tenant was using the
Pico Rivera property to launder money for a Mexican drug cartel.
The business’ s conditional use permit (CUP) was revoked and the
business was shut down. The Department of A lcoholic Beverage
Control refused to issue a new liqu or license until the city issued a new CUP. Aguila began work to obtain a new CUP.
Loan and Foreclosure In July 2015, TAI obtained a loan of $5.7 million from First Mortgage. The loan was secured by a trust deed that
encumbered the Pico Rivera property

. Aguila personally guaranteed the loan in writing.
Guinevere Malley i s an attorney who represented TAI and Aguila from time to time on various matters. In May 2017, Aguila

, as president of TAI

, executed a note for $2 million made3

payable to Malley. The note was secured by a trust deed (Malley

trust deed) that also encumbered the Pico Rivera property. The Malley trust deed was made returnable to TAI, not Malley, after it was recorded. Aguila claimed that the note was to compensate Malley for past legal services and legal services to be rendered in
the future. At the time the note and Malley trust deed were made, Malley was in bankruptcy proceedings under Chapter 13 of the Bankruptcy Code

. (11 U.S.C. § 1301 et seq .) TAI failed to make payments on the First Mortgage loan, and First Mortgage began foreclosure proceedings in August 2017. Aguila obtained a new liquor license on December 4, 2017.
On December 6, 2017, a non

- judicial foreclosure sale was conducted, and First Mortgage became the Pico Rivera property’s owner. Aguila attended the sale, but did not mention Malley’s bankruptcy, although he was aware of the bankruptcy at the
time. Underlying Litigation In October 2018, First Mortgage filed an action against Aguila for breach of his personal gua rantee of the loan. Aguila , a former attorney, answered and filed a cross

- complaint against First Mortgage, its principal Carl Lindros, and numerous others.
The cross

- complaint was based on an alleged oral contract between First Mortgage and Aguila to al low Aguila a reasonable
time period to fulfill his financial obligations, arrange for the sale
of the Pico Rivera property
, and keep the net proceeds. Malley represented TAI in portions of the underlying litigation. Aguila Claims First Mortgage ’s Foreclos ure i s Void
In February 2 020
, the parties settled the lawsuit, but Aguila initially refused to enter into a formal settlement agreement. As the parties were attempting to finalize the4

agreement, Aguila suggested that First Mortgage ’s foreclosure on the Pi co Rivera property may have been invalid. Aguila posited that the foreclosure violated the automatic stay in Malley’s bankruptcy because the foreclosure extinguished the Malley trust deed. The Malley trust deed had not been listed on any schedule
in her bankruptcy , no accounts receivable were listed, and Fi r st Mortgage had no notice of Malley’s bankruptcy. Aguila claim ed in a declaration that on June 1, 2020, years after the foreclosure sale, he entered into a lease with TAI giving him the right to posses sion of the Pico Rivera property for 50

years. Motion for Retroactive Relief
In October 2020, First Mortgage filed a motion in bankruptcy court for retroactive annulment of the bankruptcy stay. The annulment would retroactively validate the foreclosure
of the First Mortgage trust deed encumbering the Pico Rivera property . The motion was based on First Mortgage’s lack of
notice of Malley’s bankruptcy. First Mortgage had sent notice of the foreclosure to Malley as the junior lienholder, but she did not
adv ise First Mortgage of the bankruptcy or raise an objection to the foreclosure. In addition, there was no evidence of any consideration given for the note. Aguila claimed that the note was for attorney fees owed but the bankruptcy schedules
reflected no s uch receivables. It was unclear whether Malley
even knew the note and Malley trust deed existed at the time the
trust deed was recorded

. Settlement Agreement In November 2020, w hile First Mortgage’s bankruptcy

court motion was pending, the parties execute d a formal settlement agreement regarding the underlying action . Under5

the agreement, a judgment would be entered against Aguila in the amount of $ 3, 867,113. 84. The complaint and cross

- complaint
would be dismissed. The settlement agreement also contained mutual releases
and covenants not to sue as follows:

“ General Release of Known and Unknown Claims. [¶] .

. . With the exception of the obligations imposed under this Agreement, [ First Mortgage ] , Mortgage Co. of Santa Barbara

, Inc., .

. . and Henry Aqui la , [TAI], .

. . individually and collectively, for themselves and their respective officers,

. . . hereby mutually release each other, individually and collectively, and each other's respective officers, .

. . attorneys,

. . . , from any and all claims, c auses of action, rights, obligations, debts, liabilities, accounts, liens, damages, losses and expenses of any kind and nature w hatsoever, whether known or unknown [¶]

. . . [¶]

“ Covenant Not to Sue

. [¶] The Mortgage Parties and the Aguila Parties, indivi dually and collectively, for themselves and their respective officers,

. . . attorneys,

. . . agree that they will
not make

, assert or maintain against the other or the other ’ s respective officers,

. . . attorneys,

. . . any claim, demand, action,
suit or proceeding arising out of or in connection with the matters respectively released herein

. ” (Italics added.)

Motion for Retroactive Relief Resumed After the parties executed the settlement agreement, First Mortgage resumed its motion to retroactively annu l the stay in Malley’s bankruptcy. Aguila, TAI

, and Malley did not object. The bankruptcy court granted the motion, finding that Malley’s bankruptcy petition was part of a scheme to hinder, delay

, or6

defraud creditors. The court ruled that First Mortgag e’s foreclosure did not violate the automatic stay. In December 2020, TAI moved for reconsideration . In support of TAI’s motion, Malley declared that she was aware of
the execution of the note and Malley trust deed at around the time Aguila created them but had not received any payments
under the note. The bankruptcy court denied TAI’s motion on the ground that TAI lacked standing because it had no interest in the bankruptcy estate that would benefit if the annulment order
were reversed. The court also f ound that even if TAI had standing, it failed to show that the court erred in granting First Mortgage’s annulment motion. TAI also failed to show that First Mortgage had notice of Malley’s bankruptcy. Finally, the court found that Aguila’s testimony was not credible. TAI appealed the denial of its motion for reconsideration to the bankruptcy panel of the Ninth Circuit Court of Appeals. The Ninth Circuit concluded TAI had no standing because, among
other reaso ns, TAI is a nonparty to the bankruptcy that s ought to use the debtor’s automatic stay as a shield against the foreclosure
of the Pico Rivera property

. Instant Action
In March 2021

, Aguil a brought the instant action against First Mortgage, Mortgage Co. of Santa Barbara , Inc., and Andrew Fuller ( hereaf

ter collectively First Mortgage), in propria persona. 2

2 Mortgage Co. of Santa Barbara, Inc . is the g eneral

p artner of First Mortgage. Andrew Fuller is the president and chief executive officer of Mortgage Co. of Santa Bar bara

, and executor of the estate of Carl Lindros, a principal in First Mortgage

, who died in 2019

.7

The gravamen of the complaint is that First Mortgage breached
the covenant not to sue in the settlement agreement by its motion
for retroactive annulment of the bankruptcy stay in Malley’s bankruptcy. Aguila’s theory of liability is that the covenant not to sue in the settlement agreement covered officers and attorneys of the parties, and Malley was an officer and attorney of TAI. The complaint stated causes of action for breach of contract,
breach o f the covenant of good faith and fair dealing, interference with prospective economic advantage based on the termination of Aguila’s 50

- year lease

, and inte n tional infliction of emotional
distress.
Anti

- SLAPP Motion First Mortgage responded to the complai nt with an anti

SLAPP motion. First Mortgage alleged that Aguila’s action arose
from the exercise o f his right to petition under the United States
and California Constitutions. First Mortgage also alleged that Aguila cannot demonstrate that he has a reas onable probability of prevailing. Malley’s bankruptcy is unrelated to any cause of action encompassed by the settlement agreement. Opposition Aguila submitted an affidavit in opposition to the motion. Aguila declared in part: “ In negotiating and executi ng the Settlement Agreement, which included my stipulation to have a $3,867,113.84 judgment entered against me personally, it was vitally important to me to have the release provisions of Section 2 and the covenant not to sue provisions of Section 3 includ ed therein, as written, because, as a former attorney, I was mindful and knowledgeable that the purported 2017 non

- judicial
foreclosure sale of the [Pico Rivera] Property by Defendant [First Mortgage] was void because it violated the automatic stay8

provisi ons of the Bankruptcy Code, which was automatically
instituted when Ms. Malley filed for Chapter 13 bankruptcy in 2015 and remained in place through the 2017 purported trustee’s sale and through the date of the execution of the Settlement Agreement. I was aware that the Settlement Agreement provisions, as written, would prohibit Defendants from maintaining their motion for retroactive relief from bankruptcy stay that they had filed in the bankruptcy case of Ms. Malley on November 10, 2020 in order to attem pt to retroactively validate
the sale.” Malley also resubmitted an affidavit in opposition to the
motion. She declared that : she was employed as legal counsel for TAI and had been an officer of TAI; TAI owed her a substantial
amount of fees at the time of the foreclosure sale and still owes
her a substantial amount of fees; she was aware of the note and Malley trust deed “around the time they were undertaken” ; TAI has not made any payments under the note and still owes her $ 2
million ; and her bankruptcy was filed in good faith to cure
arrears in secured debt on a property in Downey, property
disti n ct from the Pico Rivera property
, which was subject to
foreclosure. Aguila submitted a supplemental affidavit in which he
recounted his claim of an oral agree ment with First Mortgage. According to Aguila, First Mortgage orally agreed to give him at least 12 months after First Mortgage obtained title to the Pico
Rivera property by foreclosure to either cure the debt or find a buyer. Aguila attached a copy of h is deposition given prior to the execution of the settlement agreement in which he claimed to be the present owner of the Pico Rivera property because the9

foreclosure sale is void due to the violation of the automatic stay in Malley’s b a n kruptcy. Ruling
T he trial court granted First Mortgage’s anti

- SLAPP
motion. In its statement of decision the court summarized Aguila’s plan: “ Aguila apparently believed he could either (a) ultimately unwind the foreclosure sale because it had been
conducted in violation of Malley’s bankruptcy stay, reacquire the [Pico Rivera] property , and operate it as a nightclub for the 50

- year lease term, or, alternatively (b) permit [ First Mortgage ] to obtain retroactive relief from the stay, thereby validating the nonjudicial forecl osure sale, and thereafter sue [ First Mortgage ] for everything he believed he had lost in not being able to unwind
the foreclosure sale and reacquire the [Pico Rivera] property. ” The trial court concluded that Aguila failed to show a reasonable probabil ity of prevailing. In making the settlement agreement
, the parties did not mutually intend the release and covenant not to sue clauses to encompass the motion in Malley’s bankruptcy. The evidence shows only Aguila’s unilateral
undisclosed intention. In addition, the court concluded that Aguila cannot show damages because he has no standing to challenge the bankruptcy court’s order approving the
foreclosure. 3
DISCUSSION
I. Anti

- SLAPP Motion
S ection 425 .16, subdivision (b)(1), the anti

- SLAPP statute,

prov ides: “A cause of action against a person arising from any act of that person in furtherance of the person’s right of petition or free speech under the United States Constitution or the

3 Aguila was declared a v exatious litigant on July 5, 2023.10

California Constitution in connection with a public issue shall be

su bject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.”
To resolve an anti

- SLAPP motion, the trial court engages in

a two

- step inquiry. First, the court decides whether the
defendant has made a threshold showing that the challenged cause of action arises from a protected activity. ( City of Santa
Monica v. Stewart (2005) 126 Cal.App.4th 43, 71.) The moving party has the burden of showing that the challenged cause of action arises from a protected activity. ( Ibid .) Second, if the moving party has carried that burden, the court must decide whether the opposing party has demonstrated a probability of prevailing on the challenged cause of a ction. ( Ibid .) In reviewing the opposing party’s evidence, the court does not weigh it; instead, the court determines whether the opposing party has made a prima facia showing of facts necessary to establish its claim. ( Paulus v. Bob Lynch Ford, Inc. (2 006) 139 Cal.App.4th 659, 673.) “The trial court’s ruling on both issues are reviewed de novo.” ( City of Santa Monica , at p. 71.)
I I. Protected Activity Section 425.16, subdivision (e), provides that a protected activity includes “any written or oral st atement or writing made
before a .

. . judicial proceedi ng , or any other official proceeding authorized by law.” First Mortgage’s motion in bankruptcy court qualifies as a protected activity. (See Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1056 [conduct su ch as filing, fundin g , and prosecution of a civil action is litigation activity protected for purpose of anti

- SLAPP motion].)11 I I I. Probability of Prevailing (a) Contract Cause of Action
The release and covenant not to sue clauses in the settlement agreeme nt are very similar to standard clauses of their type. The question here is whether they encompass First Mortgage’s motion in Malley’s bankruptcy case. The answer is

no. Aguila relies on the broad language of the release in the settlement agreement cove ring claims “of any kind and nature whatsoever, whether known or unknown .” But the broad language in a settlement agreement is not by itself determinative of its scope. A settlement agreement may be explained by reference to
the circumstances under which it was made, and the matter to
which it relates . ( Olson v. Doe (2022) 12 Cal.5th 669, 682.) However broad the terms of the agreement may be , it extends only to those things concerning which it appears the parties
intended to contract. ( Ibid

. [clause in which parties agreed not to disparage each other interpreted not to apply to lawsuit brought by one of the parties against the other].) Here the settlement agreement was made to settle a number of cases relating to an alleged oral agreement to allow
TAI at least 12 months after First Mortgage’s foreclosure on the
Pico Rivera property to either cure the debt or find a buyer. The settlement had nothing to do with Malley’s bankruptcy. Malley declared she filed for bankruptcy to cure arrears in debts secure d by her property in Downey. The matters to which the settlement relates are the cases being settled therein. It would be absurd to interpret the settlement agreement as encomp assing an12

unrelated bankruptcy proceeding conce rning a property in Downey.
Mo reover, Aguila’s interpretation of the settlement agreement is based on deception. Aguila manufactured a note and trust deed in favor of Malley. Nowhere is that asset reflected in Malley’s bankruptcy filings. Although Aguila attended the
foreclosure sal e and Malley had notice, neither advised First Mortgage of Malley’s bankruptcy prior to the foreclosure. The only reasonable conclusion is that Aguila intentionally created
the circumstance that allowed him to claim the foreclosure

– although conducted by First Mortgage in good faith

– was void. Aguila then, by his own admission, entered into the settlement agreement with the undisclosed intention of holding First Mortgage liable if it attempted to remedy the problem that Aguila himself maliciously create d. Aguila now wants us to interpret the settlement agreement in ways that assist his bad faith. We decline to do so. According to Aguila, the settlement agreement leaves First Mortgage either with a void deed or liable to Aguila for breach of the settle ment agreement. No reasonable person in First Mortgage’s position
would intend to enter into such an agreement. I n light of all the
circumstances

, Aguila’s interpretation of the settlement agreement is quite simply bizarre. Aguila’s reliance on Belasco v. Wells (2015) 234 Cal.App.4th
409 ( Belasco ) is misplaced. There plaintiff purchased a newly constructed home directly fr om the builder . Thereafter plaintiff complained of construction defects. In 2006
, the parties entered into a written settlement ag reement in which plaintiff agreed to
release all known and unknown construction defects in the home in exchange for $25,000. In 2012
, plaintiff brought an action13

against the builder alleging defects in the home’s roof. The trial court granted the builder summary judgment based on the 2006
settlement agreement which contained the release of known and unknown claims. In affirming the judgment, the Court of Appeal rejected the plaintiff’s contention that the 20 06 settlement agreement does not include a defe ctive roof because that defect was not specifically mentioned in the agreement . The court held that waivers of unknown claims are enforceable. ( Id . at p. 423.)
In Belasco

, supra , 234 Cal.App.4th 409, the settlement agreement released claims for unknown construction defects in a particular house. Plaintiff’s claim was for an unknown
construction defect in that particular house. Belasco is easily distinguishable. The defendant in Belasco did not claim construction defects in a particular house also enco mpassed a motion in an unrelated bankruptcy. Nor were there any facts in
Belasco showing that the release in the settlement agreement was the product of deception and bad faith. Aguila claims that in determining that he failed to show a probability of pr evailing

, the trial court improperly weighed the
evidence

. But the evidence leads to only one reasonable
conclusion: A g uila has no possibility of prevailing ; t here is no need to weigh the evidence. Moreover, Aguila’s entire claim for damages is based on the theory that he has standing to assert the automatic stay in Malley’s bankruptcy. Both the bankruptcy court and the Ninth Circuit bankruptcy panel concluded that Aguila had no such standing. Aguila claims without citation to authority that he
could su cceed in a quiet title action in superior court. The claim is pure fantasy. Quite apart from the problem of res judicata, no superior court would conclude Aguila has standing in the face of14

the bankruptcy court and the Ninth Circuit bankruptcy panel’s
de termination

. (b) Remaining Causes of Action Aguila’s cause of action against First Mortgage for breach of the covenant of good faith and fair dealing demonstrates that irony is not dead. Although there is no evidence of bad faith on the part of First M ortgage, there is overwhelming evidence of bad faith on Aguila’s part. In any event
, a cause of action for breach
of the covenant of good faith and fair dealing requires a showing of breach of contract. ( Habitat Trust for Wildlife, Inc. v. City of
Rancho Cucamonga (2009) 175 Cal.App.4th 1306, 1344.) Here
there was no breach of contract. Aguila’s cause of action for loss of prospective economic advantage is based on the 50

- year lease he granted to himself long after First Mortgage foreclosed on the Pico Rivera property

. Aguila can derive from the lease no economic advantage because the bankruptcy court retroactively approved the foreclosure. The bankruptcy court and the Ninth Circuit bankruptcy panel ruled
that Aguila has no standing to challenge the ap proval. Aguila’s assertion that he could prevail in a superior court action to quiet
title in spite of the bankruptcy court’s and the Ninth Circuit bankruptcy panel ’s rulings is baseless. Finally, Aguila’s cause of action for intentional infliction of

em otional distress is also based on the loss of his 50

- year lease. The cause of action requires a showing that the defendant’s conduct was so outrageous as to exceed all bounds of decency. ( Potter v. Firestone Tire & Rubber Co. (1993) 6 Cal.4th 965, 1001.) Aguila has failed to show First Mortgage did anything wrong.15 DISPOSITION The judgment is affirmed. Costs are awarded to respondents.
NOT TO BE PUBLISHED.

GILBERT, P. J.

We concur:

YEGAN, J.

CODY, J.Colleen K. Sterne, Judge

Superior C ourt County of Santa Barbara

______________________________
The Tym Firm and Ronald D. Tym for Plaintiff and Appellant. Law Office of Eric A. Woosley and Eric A. Woosley for Defendants and Respondents Pico Rivera First Mortgage Investors, LP and Mortgage Co. of Santa Barbara, Inc. Reicker, Pfau, Pyle & Mcroy and Robert B. Forouzandeh for Defendant and Respondent Andrew Fuller.