Escrow companies linked to Gearhart win civil lawsuit

October 8, 2013
Kelly Gearhart

Kelly Gearhart

A lengthy and complex civil fraud trial featuring  Kelly Gearhart and his associated property predators ended Tuesday with complete exoneration of three escrow companies alleged to have conspired with the disgraced North County developer.

Hurst Financial investors, many of whom lost their nest eggs in Ponzi-type scheme, looked stricken as the verdict was read. Many broke out in tears.

The jury deliberated for three days prior to the verdict.

The two-month trial, before San Luis Obispo County Superior Court Judge Charles Crandall, ended in a 9-3 verdict favoring the defendants, Cuesta Title, Stewart Title of California and Stewart Title Guarantee. That was the barest majority required for a favorable verdict.

Eight plaintiffs claimed the title companies committed civil conspiracy, aiding and abetted Gearhart and Hurst Financial, and elder abuse.

The eight plaintiffs were suing for approximately $3 million. However, this was a bellwether case and if the title companies had been found liable, it would have set the stage for hundreds of investors receiving damages.

Neither Gearhart nor former hard-money lender Jay Hurst Miller of Hurst Financial were directly involved in the trial; both await criminal proceedings.

Plaintiff’s attorney David J. Noonan, with the San Diego law firm Kirby Noonan Lance & Hoge, said he was uncertain if an appeal would be made.

“It was devastating for our clients and extremely disappointing,” Noonan said. “I have great respect for the jury system and the court. We will talk to our clients and determine our next step, if any.”


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Geahart Trial Date Continued to February 18, 2014 (Previous Date: 11/12/2013)

Why does this not surprise me? Guess Jay and Kelly haven’t thrown enough of the ‘good old boys’ under the bus yet huh? If had dealings with these guys, I’d be losing sleep right about now!

I am hoping a “Dislike” is a dislike?

LOL! For sure! DISLIKE the fact that once again the trial is continued! Let’s’ getter done’ once and for all!

What a heartbreak. Alot of people were counting on this. So since Kelly and Jay have spent all our money, I guess they can just ‘skate’ too? And what about David Graves? Alot of folks invested in him as well…when will it be HIS turn to account for all their money? I know Kelly, Jay and Dave had a “pact”, sort of like ‘blood brothers’….but there is no loyality among thieves so maybe one will squeal on the others. Pigs, them all.

There is a little money in the properties they (bankruptcy court) have been selling but it won’t be much after lawyers and what little there is. I have figured from the start (I lost money on the business side) that it will be pennies on the dollar. Unfortunately history has proven time and again in these cases, that you don’t get much. Even if they won the verdict on these companies here, I don’t think any of them would have enough of anything once you liquidate them. They really don’t own anything, like Kelly would have, so I don’t think it would have been of financial benefit. It would have been a nice moral victory but that’s about it.

The best that those of us who believe in a God can hope for, is that both these assholes rot in hell for eternity

Sorry to hear about your losses and you are right in how wrong this all is.

Looks like Kelly just bought him a little more time!

Can someone explain why this is a civil fraud trial, as opposed to a criminal fraud trial?

I smell chicken soup, but that’s not a chicken! Why does everything taste like chicken in the Superior Crock Pot.

Wow maybe Kelly is next

We can only hope Kelly is next…putting guilt where it belongs and not suing under the investors title policies. The employees at Cuesta Title were professional and knowledgeable and were just doing their jobs, for which they received a paycheck. That’s how it works. The business practices that Kelly and Jay conducted are what they have to live with…although I feel for the investors that lost money…investing in hard money loans is risky to say the least. Due diligence is always the best thing to do to protect yourselves. What isn’t the best thing to do is to go after the title companies just because they have deep pockets, and to perpetuate our litigious crazed society.

Agreed but how does one loan money on a fraud for title report and the title company is clean?

If you saw Melanie Schneider on the stand, she was “guilty as sin”. Unfortunately there was no smoking gun and the defense team relentlessly pushed the “Blame the Investor” card.

If an Escrow Company doesn’t insure legitimate title what are they good for?

Strike that…

What I meant was these “titles ” were tainted and should have been covered by the “title insurance”.

First of all Al, you might want to get ahold of a title policy and read what it covers and what it doesn’t cover. “Tainted titles” is not even a term. And escrow companies don’t insure title, they prepare instruction from all parties and do what the instruction tells them to do. As far as Melanie being “guilty as sin…” are you a body language expert? She was probably nervous as sin but I doubt “guilty” explains how she was or wasn’t on the witness stand.

Everyone can point fingers and post random posts but alot of careers and investments were ruined by this whole mess…it was a tragic time for alot of people and the domino effect from it was incredible. No one is blaming the investors…all I’m pointing out is the blame shouldn’t be put on the title companies either.

Local Andy…here’s the deal! And I suspect you already are well aware of this.

Cuesta Title staff altered several title reports to make certain properties appear as if they were owned free and clear when in fact they were not. This fraudulent alteration mislead the next layer of investors to think their investments were secure.

Buyers, sellers, lenders, realtors (honest ones anyway) and surveyors all rely on title companies to provide truthful representations of the liens, encumbrances, etc. on real property I’m not talking about the occasional mistake here,


will agree with your statement that “Escrow (Title) companies …do what the instruction tells them to do. Especially in this tragic case as apparently somebody told Melanie Schneider to alter these title documents and she complied. Cuesta’s senior title officer Marcus Harmon must have known about this or he is more stupid than he appeared if that is possible.

Congratulations to defendant’s counsel though, they must have put on a great show for this jury.

My goodness NorCoMod, it appears you have so much knowledge of what the title company did and didn’t do, perhaps you should have been up on the stand testifying.

I disagree, when your get a title search or title insurance there’s no room for if, ands, or buts. This area is steeped in corruption and ignorance. That’s the only explanstion for the verdict.

So, are you saying that the court system, as well as the jury IS corrupt and ignorant?? That’s how they came up with their verdict?

I’m sure that YOU sat in the court room EACH and EVERY day, listening to the testimony of each and every person, took notes, reviewed evidence, and came up with the assumption the Judge/Jury were corrupt????

I would have to say, that until you are sitting in that juror’s chair, taking on that responsibility…don’t make assumptions without proof! Oh, that’s right…that’s what you “bloggers” do on this site….my bad!

Are we talking about escrow or title companies? If they are escrow I can see how they may have been unwittingly involved. in deception but if they are title companies who the hell else is responsible for the title? Don’t care if they had a crook working there or they are all idiots who else you gonna try to blame? clear title, title insurance title company etc.

When we invested with Jay, he had a 20 year good record. We DID do due dilligence. We also asked NOT to have our money involved with Gearheart at all, but Jay did it anyway. Blaming the investors for trusting 2 citizens who were so highly touted in the community, one of them even won the citizen of the year award is shitty. How can you “know” that all those years of good record and “good citizen” were all lies? The title companies are at least insured…OK…what are they insured FOR if not for things like this? And as for Kelly and Jay “having to live with” what they’ve done? Give it up Andy. Kelly and Jay don’t give a rat’s a** for what they’ve done to people.

Certainly this ploy for profit was not by accident and having the Chief Crimminal Investigator for the DA as a family associate likely helped in ways we may not like.

And when Cuesta Title, Chicago Title, First American Title and Fidelity Title did business with Jay his 20 year record was good as well. Believe it or not, Kelly’s track record was good also. Yep – they were two citizens highly touted in the community (your words, not mine) that went bad but how in the world is it the title company’s responsibility for that? They don’t trace funds, they issue title policies. No one “altered” title reports. There is alot of process to issuing title insurance that people aren’t aware of…that obviously got proven in court; that’s why the article said it was a long and complicated trial. And I do agree with you, that Kelly and Jay don’t give a rat’s a** for what they’ve done to people, because they got caught. Investing in hard money loans carries a risk. Pure and simple.

Andy, you are wrong. Title reports were most definitely altered by Cuesta Title. I have one title report showing a Deed of Trust on a certain piece of property. When the final Subdivision Guarantee came in verifying who the record title and interest holders were for signatures, that Deed of Trust was no longer listed. Turns out, the Deed of Trust was never paid off. The beneficiary’s signature was still required on the grant deed but wasn’t obtained because the Title Company purposely omitted that Deed of Trust. When the claim from the beneficiary came in disputing our grant deed, I asked someone at the title company why this happened. I was told the title officer was only doing what he was told by Gearhart because Gearhart told the title officer the Deed of Trust was paid off. Maybe “following instructions” is a good enough defense for the escrow officers, but that doesn’t work for the title officers. The title officer’s job is to report what is on public record for the title, not to act on what others tell them. Forget civil court, these title companies should be in criminal court.

It would be great if Kelly was next to actually be locked up! Then Jay and anyone else that ripped the investors off! Crazy how it seems like they have just been rubbing everyones faces in their lies and deceit, when others who have done 1/2 of what these clowns did, were marched straight to jail! What’s up with that?? They not only went to jail, but they lost all the precious toys they bought with the investors money! But, once again, Kelly gets his day in court put off for another 3 months! And what about Jay Miller? Does he even HAVE a court date? Makes me wonder what the feds are waiting for. But,”there is no loyality among thieves”, true statement! Maybe they’re just waiting for the Kelly and Jay to rat their buddies out!

And O.J. was not guilty either….

the jury did not think so.

.ALL the evidence to the contrary.

judge’s wife, fuhrman’s watch commander

Remember, it’s a jury of your peers. Frightening if you think about it too much.

better than the alternative