Los Angeles Fed. Credit Union v. Brandford CA 2/2

FACTS AND PROCEDURAL HISTORY

I. Facts

The Range Rover at the center of this case has had many owners. In pertinent part (and in chronological order), they were Anahit Margaryan (Margaryan), Anahit Pakhanyan (Pakhanyan), CarMax Auto Superstores California, LLC (CarMax), and Hopeton and Karyl Brandford (Hopeton or, jointly, the Brandfords). JP Morgan Chase Bank, NA (Chase) loaned Margaryan $40,000 to buy the car and secured that loan with a perfected security interest in the car. At some point, Margaryan fell behind in her payments, and a towing company impounded the car and sold it to Pakhanyan for $4,000 at a lien sale. The sale was fraudulent: Evidence suggested that Margaryan and Pakhanyan were the same, and that Margaryan’s son-in-law (who sold her the car) was still driving the car after it was “sold” to Pakhanyan. Chase received notice of the tow yard lien sale from the DMV, but did not intervene to halt the sale and later claimed it was “unaware” of the DMV notices in its own files. As a result of the lien sale, Chase’s security interest no longer appeared on the car’s certificate of ownership and Pakhanyan’s resulting title was “clear.” Pakhanyan then sold the car to…