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The Chase / FDIC Argument Regarding 118-Page PAA Survives!

From the Jolley Appeal Ruling in CA:

2. The P&A Agreement: Judicial Notice, the Law, and Thorne’s Testimony

As noted, Chase requested judicial notice of the P&A Agreement attached to the declaration of its counsel who represented that it was a copy of the agreement found on the FDIC website. The declarant was not a custodian of records, was not a party to the Agreement, gave no indication she was involved in negotiating or drafting it, and provided no background as to how she acquired knowledge of the document. Indeed, she did not even aver it was a true and complete copy.

We also note that the request was for judicial notice of the fact that on September 25, 2008, ―Chase acquired certain of the assets of WaMu, including all loans and loan commitments of WaMu. The papers did not request judicial notice that Chase did not assume liabilities based on borrower claims. Unquestionably, the trial court below used the Agreement for a much broader purpose, namely to prove that Chase did not assume liability for WaMu‘s alleged misdeeds with respect to Jolley‘s loan.

We conclude this was error, and that the content and legal effect of the P & A Agreement could not properly be determined on judicial notice under California law. And certainly not here.

Judicial notice, of course, may be utilized on a motion for summary judgment. (Code Civ. Proc., § 437c, subd. (b)(1);

Herrera v. Deutsche Bank National Trust Co. (2011) 196 Cal.App.4th 1366, 1374.) But only to the extent authorized by our state statutes. (Evid. Code, § 450.)

As noted above, Chase‘s request for judicial notice requested it, however unhelpfully, ―pursuant to . . . Evidence Code sections 450-460. As also noted, the order granting summary judgment ended with the ruling that Chase‘s request for judicial notice was also granted, citing Evidence Code section 452, subdivisions (c) & (d).

The Evidence Code section cited by the trial court allow for permissive judicial notice respectively of ―(c) Official acts of the legislative, executive, and judicial departments of the United States and of any state of the United States‖ and ―(d) Records of (1) any court of this state or (2) any court of record of the United States or of any state of the United States. (Evid. Code, § 452, subds. (c) & (d).)

Certainly the P&A Agreement does not come within subdivision (d), as it is not a record of any court. And while it is true that subdivision (c) ―enables courts in California to take notice of a wide variety of official acts. . . . [and] an expansive reading must be provided to certain of its phrases [and] included in ‗executive‘ acts are those performed by administrative agencies. . . . (Simons, California Evidence Manual (2012) Judicial Notice § 7:11, p. 544), we do not understand a contract with a private bank to come within that subdivision.

Apparently satisfied itself that the two subdivisions cited in the trial court‘s order are unsupportive, Chase‘s brief cites two different subdivisions, and asserts that ―judicial notice may be taken of the following:

―(g) Facts and propositions that are of such common knowledge within the territorial jurisdiction of the court that they cannot reasonably be the subject of dispute.

―(h) Facts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.

In claimed support, Chase first cites some cases clearly inapposite, such as cases dealing with State Bar records (In re White (2004) 121 Cal.App.4th 1453) and the ―definition of ‗mass transportation.‘ (Shaw v. People ex rel. Chiang (2009) 175 Cal.App.4th 577). Chase then goes on: ―[s]imilarly, under federal law the information on government agency websites has often been treated as a proper subject for judicial notice by numerous circuits (See, e.g., Paralyzed Veterans of Am. v. McPherson, No. C 06-4670 SBA, 2008 WL 4183981, at p. *5 (N.D. Cal. Sept. 9, 2008) (and cases cited therein).) [¶] Here, the P&A Agreement is available on a public Web site maintained by the FDIC. It is not reasonably subject to dispute and is capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy. The taking of judicial notice of the terms of the P&A Agreement was not in error.10 (Fn. omitted.) Chase then concludes as follows: ―Chase and CRC sought the taking of judicial notice of a document which is not hearsay, but which itself contains admissible evidence.

Maybe some federal cases might allow this. California law does not. (Searles Valley Minerals Operations, Inc. v. State Bd. Of Equalization (2008) 160 Cal.App.4th 514, 519 [taxpayers who produced and sold electricity to California requested judicial notice of materials contained on website pages of American Coal Foundation and United States Department of Energy under Evidence Code section 452, subdivision (h). Held: request was properly denied, as though ―it might be appropriate to take judicial notice of the existence of the Web sites, the same is not true of their factual content‖].)

Chase makes much of the fact that the P&A Agreement is posted on the FDIC Web site, which it calls an ―official governmental agency,‖ apparently believing this fact alone makes the legal significance of the Agreement subject to judicial notice. While there may be federal cases that adopt this approach, frequently without analysis (see fn. 10, ante), we know of no ―official Web site‖ provision for judicial notice in California. (See L.B. Research & Education Foundation v. UCLA Foundation (2005) 30 Cal.App.4th 171, 180, fn. 2.) ―Simply because information is on the Internet does not mean that it is not reasonably subject to dispute. (Huitt v. Southern California Gas Co. (2010) 188 Cal.App.4th 1586, 1605, fn. 10.)

In typically scholarly fashion, Witkin has an elaborate exposition of the law of judicial notice in 1 California Evidence (5th ed. 2012), Judicial Notice, ch. 2, beginning 16 at page 109. Beginning at section 32, the author discusses ―matters commonly known or readily determinable, and goes on for several sections with descriptions of cases and ―illustrations‖ of such facts. One looks in vain for any case remotely supporting Chase‘s position here. In sum, we hold that judicial notice was not properly taken of the content of the P&A Agreement even if there was no dispute about its authenticity. A fortiori here, where the very authenticity of the Agreement was in dispute.

As described above, Jolley‘s opposition included a declaration from Thorne, who had been a ―senior construction loan consultant‖ with WaMu until July of 2006, having been in charge of construction lending in 38 states since May 2005. He was an ―asset manager for the FDIC‖ at the time he signed the declaration (October 2011), and was ―intimately familiar with the procedures for taking over a failed bank.‖ And he testified: ―Pursuant to the public part of the agreement with the FDIC, of which were approximately 36 pages, the balance of the contract and the complete agreement with the FDIC and Chase bank is 118 pages long which has not been made public. I am familiar with this agreement, I read it.‖ Though somewhat ungrammatical, the declaration fairly clearly recites the existence of a nonpublic agreement (or portion of an agreement) that could affect the outcome of this case. In short, Thorne testified that the P&A Agreement submitted by Chase was not the full agreement entered between Chase and the FDIC, but rather a longer version exists, the terms of which are different from the version of which the court below took judicial notice.

Thorne also made certain representations about the content of the missing pages, claiming the FDIC guaranteed 80 percent of any failed WaMu loans, while Chase assumed only 20 percent of potential losses on the loans by receiving an 80 percent discount on WaMu‘s assets. In his deposition Thorne not only referred to the P&A Agreement being 118 pages long, but also testified that it obligated Chase ―to work directly with the customers to do as much as possible to modify any loans . . . so that no foreclosures are made and borrowers are kept in their homes.‖ The missing part of the document ―spells out an agreement between the purchasing institution and the FDIC as to how they are to handle the customers upon the purchase of the bank; i.e., how the foreclosures are to be handled, work out agreements that they‘re supposed to make. . . . They just can‘t go in and just start foreclosing on everybody that‘s not paying.

Chase filed 62 objections to Jolley‘s evidence, including 33 objections to particular aspects of Thorne‘s declaration and seven objections to particular statements in his deposition. We are concerned primarily with Objections 5 and 60, objecting to Thorne‘s statements that a 118-page purchase and assumption agreement exists, objections based on the best evidence rule, lack of foundation, and lack of competency.11

As noted, the trial court did not rule on these, or any other, evidentiary objections, and Jolley preliminarily contends that the objections cannot be maintained here. He is wrong, as specifically held in Reid v. Google, Inc. (2010) 50 Cal.4th 512, 534, a case involving objections made in a summary judgment proceeding. The Supreme Court held that if the objections were not ruled upon in the trial court, the objections are presumed overruled and are preserved for appeal. We thus turn to the merits of Chase‘s objections, and find there is none.

Chase questions the competency of Thorne‘s declaration because he is not a lawyer, was not employed at WaMu at the time of the P&A Agreement, and was never employed by Chase. This, the argument runs, fails to establish personal knowledge or expertise sufficient to opine about the contents of the purported nonpublic agreement. Chase also points out that while his declaration says Thorne was an independent contractor at the FDIC at the time he signed the declaration, it fails to show he worked there at the time of the WaMu receivership.

But that is no basis for rejecting Thorne‘s testimony on the narrow point that a 118-page agreement exists, one that he had personally read. We view his testimony on this point as that of a percipient witness, not an expert.

We may agree with Chase for purposes of argument that Thorne‘s statements about the contents of the longer agreement were not admissible. But we need not credit 18

those statements in order to conclude that a factual issue has been raised. The judgment in this case rests squarely on the terms of a much shorter, disputed version of the P&A Agreement submitted by Chase. This was wrong. Since Jolley has presented evidence that a longer agreement exists, the court below resolved a disputed issue of fact by resting its decision on the terms of the shorter agreement. Put otherwise, the court did not view the evidence favorably to Jolley. (See Gould v. Maryland Sound Industries, Inc. (1995) 31 Cal.App.4th 1137, 1145-1146 [existence of a written contract could not be judicially noticed where the opposing party claimed that an oral contract governed the relationship].)

It may be true that in some extreme circumstances ―a trial court may weigh the credibility of a declaration submitted in opposition to a summary judgment motion and grant the motion ‗where the declaration is facially so incredible as a matter of law that the moving party otherwise would be entitled to summary judgment.‘ (People v. Schlimbach (2011) 193 Cal.App.4th 1132, 1142, fn. 9, quoting Estate of Housley (1997) 56 Cal.App.4th 342, 359–360.) This is not such a case.

Thorne‘s declaration certainly raises significant issues vis a vis Chase and the FDIC, with testimony that is hardly run of the mill. But that testimony is not so incredible that it could be ignored or rejected as untruthful on summary judgment, especially given the FDIC‘s response here, which not only did not deny the existence of the longer agreement, but suggested there were documents to be produced if there were a confidentiality agreement.

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