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Judge Challenged by Appellate Court
by Spencer B. Graves
Sunday Dec 16th, 2012 5:56 PM
A hearing is scheduled for Monday, December 24, 2012, to discuss the response of the Santa Clara County Superior Court to a demand from the appellate court that they either recuse Judge James L. Stoelker from Merritt v. Mozilo, Countrywide, et al., or explain why not. Merritt v. Mozilo is a predatory loan case filed December 22, 2009. It may be unique in that other predatory loan cases have been settled in at most nine months, usually in favor of the banks.

In 2006 newlyweds David and Salma Merritt were tricked into signing loan documents containing blank spaces that were subsequently filled in with text allegedly committing them to four times the obligation they had agreed to. After discovering the depth of the deception they filed suit in Santa Clara County Superior Court (case number 1-09-CV-159993), naming Angelo Mozilo, Countrywide, Bank of America, Wells Fargo, and other individuals and organizations as defendants. Their claim is consistent with published statements by Eileen Foster, former Executive Vice President of Fraud Risk Management at Countrywide, that fraud was endemic to certain parts of Countrywide.


In 2010 Wells Fargo was removed as a defendant. The Merritts appealed. On December 19, 2011, the appellate court reinstated Wells Fargo as a defendant, thereby handing the superior court its first reversal in this case.


Meanwhile, Judge James L. Stoelker was ruling on discovery. In August 2012 the Merritts discovered that Stoelker had represented defendants in this case in numerous other cases for 25 years before coming to the bench in December 2010. On August 17, they filed a motion asking that Judge Stoelker be disqualified from further actions in this case. The California Code of Civil Procedure (CCP) 170.3(c)(3) gives a judge 10 days to respond to to such a motion. Stoelker replied on the 11th day.


On November 26, the California State Court of Appeals for the Sixth District ruled on an appeal from the Merritts (appellate case number H038883). The appellate court demanded that the superior court invite the parties to comment on whether Stoelker should be recused for not having responded within 10 days. {CCP 170.3(c)(4) further says that a judge who fails to reply "within the time allowed shall be deemed to have consented to his or her disqualification". This interpretation of the time limit was upheld in Lewis v. Superior Court (People) (1988) 198 Cal. App. 3d 1101 [244 Cal. Rptr. 328]; this precedent was cited in the current appellate decision.}


On December 24, 2012, Judge Mark Pierce will hear arguments from both sides regarding how the Santa Clara County Superior Court should respond to this appellate ruling.