Ruby Falls Fund v. Aqualegacy Development CA6

I. INTRODUCTION

These appeals arise from a dispute regarding the ownership of waterfront property on Cannery Row in Monterey. AquaLegacy Development, LLC (AquaLegacy) was the successful bidder at the foreclosure sale held under the second deed of trust on the property and thereafter recorded a trustee’s deed upon sale. However, the property remained encumbered by a first deed of trust that was in default. During the relevant time period, the membership of 2012 Canrow Owner, LLC (Canrow) consisted of the numerous investors in the promissory note secured by the first deed of trust. AquaLegacy engaged in lengthy negotiations with Canrow regarding the title issues that AquaLegacy had discovered and AquaLegacy’s efforts to obtain financing to pay off the debt owed under the first deed of trust. While negotiations were ongoing, Canrow, through trustee Medallion Servicing, LLC (Medallion Servicing), held a foreclosure sale under the first deed of trust without notice to AquaLegacy, and obtained the property with a credit bid. After recording a trustee’s deed, Canrow sold the property to Ruby Falls Fund, LLC (Ruby Falls). AquaLegacy then filed an action against numerous defendants,…