Who owns home? Newman case tied up in courts
04/21/2008 3:02 AM
04/21/2008 6:39 AM
Carlos Gonzales and Ernestina Valladarez thought they were buying a home in summer 2002, when they gave a real estate agent $22,481 and moved into a three- bedroom, two-bathroom house on a corner lot in Newman.
More than five years later, Gonzales and Valladarez claim they were cheated by that agent, who took monthly payments from them to cover the home's mortgage, but later filed a lawsuit seeking to evict them.
After a three-day trial in November 2006, a Stanislaus County Superior Court jury said Gonzales and Valladarez didn't have to move out, and the couple prevailed again this March, when the 5th District Court of Appeal in Fresno upheld that verdict.
The victory is not enough to forestall foreclosure, because Gonzales and Valladarez don't hold title to the home at 2143 Orchard Creek Drive. So the legal battle continues, and the main allegation of a convoluted case, that the real estate agent defrauded the couple, remains on the horizon.
In the meantime, nobody is paying for the home.
The working-class couple -- who gave the home a paint job, then added a sunroom and covered patio -- fear they may find themselves out on the street.
"This is the only thing we've got, our house," Valladarez said.
And the real estate agent -- who crafted a purchase agreement for Gonzales but sold the home to her husband, then to her son -- said Gonzales and his wife are just tenants who repeatedly refused to take back their down payment.
"It was supposed to be an easy eviction, but it turned out to be something totally different," said Erica Burdg of Modesto, who worked for American Security Financial in 2002 and now works for PMZ Real Estate.
It all began May 18, 2002, when Gonzales signed an agreement to purchase the home for $155,000.
He was on disability from his job as a laborer but said he had more than $40,000 in the bank, saw the housing market heating up and thought he could protect his family's future by putting some equity into a home.
According to Gonzales and Va-lladarez, Burdg told them they would not qualify for a loan unless her creditworthy husband, David Burdg, co-signed the application. The couple believed this was a stopgap measure and planned to take over the mortgage once Gonzales was back on the job.
That never happened, and Gonzales, who speaks Spanish, is still out of work.
$22,481 to agent's account
Valladarez, who speaks English, said she wondered why a real estate agent would do such a favor, but was reassured when Erica Burdg told her she wanted to generate $8,000 in commissions by leveraging her husband's credit to sell the house.
Erica Burdg said the couple refuses to see that the deal was off because Gonzales did not get a loan.
Six weeks after Gonzales signed the purchase agreement, Valladarez drew a cashier's check for $22,481, made out to Chicago Title. She said Erica Burdg told her to get a check made out to David Burdg instead. The second check was deposited into the Burdgs' bank account July 5, 2002, court records show.
David Burdg purchased the home, with the deed transferring July 19, 2002.
During the next year, Gonzales and Valladarez made monthly payments of $1,283 to the lender, Aegis Wholesale Corp. From August 2003 to April 2005, Gonzales and Valladarez made monthly payments to David Burdg, according to court records.
In April 2005, a bank statement arrived at the home, showing that Erica and David Burdg had refinanced the home, dropping the monthly mortgage payments to $946.
Valladarez said she and Erica Burdg argued during a phone call that ended when both sides promised to hire lawyers.
Gonzales and Valladarez paid $946 in April 2005 and again in May 2005, then stopped paying, because Erica Burdg now said the couple and their teenage son were mere tenants. Until then, Gonzales and Valladarez said, they believed they co-owned the home with David Burdg and someday would take over the mortgage.
In September 2005, Erica Burdg served a three-day notice, saying Gonzales and Valladarez had to pay $4,526 in rent or get out. Later that month, Erica and David Burdg sold the home to her son, Carlos Obando Jr. of Modesto, for $325,000, property records show.
More twists and turns
As the case moved into court, the arguments got even more confusing.
Judge Roger Beauchesne found in favor of the Burdgs, but vacated his eviction order and sent the case back to square one after attorney Michael Linn, who represents Gonzales and Valladarez, proved that he had not been given notice of the hearing.
Gonzales and Valladarez temporarily dismissed a portion of their complaint alleging fraud by the Burdgs because Judge William Mayhew said they must come up with $9,005 to cover a backlog of monthly "mortgage" or "rent" payments to keep the allegations alive, which they were not able to do.
Judge David VanderWall presided over a three-day trial that revolved around the Burdgs' desire to evict the couple from the home.
A June 25, 2002, rental agreement presented by the Burdgs' was a key issue, with Gonzales telling the jury that he knew nothing of the document. He was backed by a handwriting expert who said the agreement appeared to be fabricated, endorsed with a cut-and-paste signature of Gonzales.
The disputed contract, which is part of the court record, is between Gonzales and David Burdg, and witnessed by Erica Burdg. It calls for a $3,567 security deposit, although by law deposits may be no more than twice the monthly rent.
Gonzales also claimed no knowledge of two addenda to the purchase agreement, which his attorney uncovered before the case came to trial. The first, dated June 14, 2002, deleted Gonzales from the home sale. The second, dated June 24, 2002, deleted Gonzales from an escrow agreement.
Erica Burdg told the court that Gonzales did not need to sign the addendum, because his purchase agreement was void. She said she substituted her husband to save a deal that would otherwise fall through, adding that any real estate professional would agree that her process was right and correct.
"Why not, I give him commission," said Erica Burdg, who speaks with a thick accent, according to a transcript of her testimony during the unlawful detainer trial. "I need to make money."
A jury sided with Gonzales and Valladarez, who remain in the home, and VanderWall said the Burdgs must pay the couple's $83,150 legal bill. A three-judge appellate panel concurred.
New fraud lawsuit
After they beat the Burdgs' eviction notice, Gonzales and Valladarez filed a lawsuit to rekindle their fraud claims, which are before Judge Donald Shaver.
In the lawsuit, Linn contends that the Burdgs' former lawyer, Sarah Birmingham, helped perpetuate the fraud by pressing Erica Burdg's claims. Her firm, Curtis & Arata of Modesto, denies wrongdoing.
Linn said he has taken his findings to the district attorney's office seeking criminal prosecution of Erica Burdg.
The home was sold and refinanced after Gonzales and Valladarez moved in, with Countrywide Financial Corp. holding a $304,000 note, Linn said. Obando, the Burdgs' son, stopped making mortgage payments in January 2007, Linn said.
Linn tried to get an injunction to halt foreclosure proceedings until the case is settled, but Shaver turned him down, saying the mortgage company could not have known about the dispute when it bought the loan, because the fraud claim was dismissed, then refiled.
Linn recently appealed that ruling, arguing that a title search would have shown a "notice of pendency of action" on the property.
A foreclosure sale might not be the easiest option, because Countrywide would have to disclose the dispute to potential buyers, and a buyer would have to file a lawsuit to get Gonzales and Va- lladarez out of the home.
So the future looks uncertain for everyone involved.
Attorney James Stoelker of San Jose, who represents Countrywide, could not be reached for comment. Attorney Ernie Montanari of Walnut Creek, who represents the Burdgs in the fraud case, declined to comment, but noted that there are two sides to every story.
Erica Burdg cut an interview short, a few minutes after she suggested that Gonzales sneaked his family into the home by memorizing the combination on a lock box she had to open to give him several tours of the premises.
Linn said he eventually will prove that the deal was a sale, not a lease, because tenants don't pay their landlord's mortgages or make major improvements to homes they are merely renting.
He said Gonzales and Valladarez would gladly pay the remainder of the $155,000 mortgage to remain in the home.
"They are ready, willing and able to pay," Linn said.
Bee staff writer Susan Herendeen can be reached at email@example.com or 578-2338.
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