Woods

I.

FACTUAL AND PROCEDURAL

BACKGROUND

In June 2005, the Woodses lent $416,000 to Chetcuti & Associates, a company run by Benny Chetcuti. The loan was to be secured by real property owned by Chetcuti &

1 The entities are Magnate Fund #1 LLC, Magnate Fund #2 LLC, Magnate Fund #3 LLC, JWS Capital Investments, LHJS Investments, 27th Street Associates LLC, South Van Ness Associates LLC, 20 Parkridge LLC, and 55 Woodward LLC.

1 Associates, but the deed of trust prepared in 2005 identified no specific property and was not recorded. Chetcuti later told the Woodses that a property on Woodward Street in San Francisco (the Woodward property) was the property securing the loan. In 2007 and 2008, one of Simonse’s entities, Magnate Fund #2 LLC, made loans totaling $1,539,000 to Chetcuti and some of his businesses. Those loans were secured by recorded deeds of trust on the Woodward property. In late 2009, after Chetcuti missed several payments on the Woodses’ loan, the couple demanded repayment but were told he did not have the money. Chetcuti and his companies also defaulted on one of the loans to Magnate Fund #2. Magnate Fund #2 recorded a notice of default on the Woodward property and…