Judge: Helen Zukin, Case: 21SMCV00756, Date: 2023-01-24 Tentative Ruling
Case Number: 21SMCV00756 Hearing Date: January 24, 2023 Dept: 207
Background
This case arises
from the sale of real property located at 2478 Glyndon Avenue, Los Angeles, CA
90291. Defendant Allstar Financial Services, Inc., the lender on a loan secured
by the property, sought to sell the property at a non-judicial foreclosure
sale. Plaintiff Alvin Cox (“Plaintiff”) claims he was the highest bidder for
the property under the provisions of a recently-enacted statutory scheme which
changes the procedures for certain non-judicial foreclosure sales as codified
by the Legislature at Civil Code § 2924m. The property and Defendant Allstar’s
attempted sale have given rise to multiple lawsuits which have been
consolidated in whole or in part with the initial suit brought by Sunrise
Projects, LLC (“Sunrise”), Case Number 21SMCV00756.
Plaintiff Cox’s operative
pleading is the First Amended Complaint filed July 14, 2021, in Case Number
21SMCV01011 asserting causes of action against Defendant Allstar for violation
of Civil Code § 2924m, declaratory relief, unfair competition, and injunctive
relief. Defendant Allstar now moves for summary judgment, or, alternatively,
summary adjudication as to every cause of action asserted by Plaintiff Cox.
Defendant’s motion is opposed by Plaintiff Cox and is partially opposed by
Sunrise.
Objections to Evidence
Sunrise’s objections to Defendant Allstar’s evidence and
supporting declarations are OVERRULED. Plaintiff Cox’s objections to Defendant
Allstar’s evidence and supporting declarations are OVERRULED.
Summary Judgment Standard
Motions for summary judgment are governed by Code Civ. Proc. §
437c, which allows a party to “move for summary judgment in an action or
proceeding if it is contended that the action has no merit or that there is no
defense to the action or proceeding.” (C.C.P. § 437c(a)(1).) The function of a
motion for summary judgment or adjudication is to allow a determination as to
whether an opposing party cannot show evidentiary support for a pleading or
claim and to enable an order of summary dismissal without the need for trial. (Aguilar v. Atlantic Richfield Co. (2001)
25 Cal.4th 826, 843.) Code Civ. Proc. § 437c(c) “requires the trial judge to
grant summary judgment if all the evidence submitted, and ‘all inferences
reasonably deducible from the evidence’ and uncontradicted by other inferences or
evidence, show that there is no triable issue as to any material fact and that
the moving party is entitled to judgment as a matter of law.” (Adler v. Manor Healthcare Corp. (1992) 7
Cal.App.4th 1110, 1119.) “The function of the pleadings in a motion for summary
judgment is to delimit the scope of the issues; the function of the affidavits
or declarations is to disclose whether there is any triable issue of fact
within the issues delimited by the pleadings.” (Juge v. County of Sacramento (1993) 12 Cal.App.4th 59, 67, citing FPI Development, Inc. v. Nakashima
(1991) 231 Cal. App. 3d 367, 381-382.) Courts “liberally construe the evidence
in support of the party opposing summary judgment and resolve doubts concerning
the evidence in favor of that party.” (Dore
v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.)
As to each
claim as framed by the complaint, the defendant moving for summary judgment
must satisfy the initial burden of proof by presenting facts to negate an
essential element, or to establish a defense. (C.C.P. § 437c(p)(2); Scalf v. D. B. Log Homes, Inc. (2005)
128 Cal.App.4th 1510, 1520.) Courts “liberally construe the evidence in support
of the party opposing summary judgment and resolve doubts concerning the
evidence in favor of that party.” (Dore
v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.) Once the defendant
has met that burden, the burden shifts to the plaintiff to show that a triable
issue of one or more material facts exists as to that cause of action or a
defense thereto. To establish a triable issue of material fact, the party
opposing the motion must produce substantial responsive evidence. (C.C.P. §
437c(p)(2); Sangster v. Paetkau
(1998) 68 Cal.App.4th 151, 166.)
Summary Adjudication Standard
A party may move for summary adjudication as to one or more
causes of action, affirmative defenses, claims for damages, or issues of duty
if that party contends there is no merit to the cause of action, defense, or
claim for damages, or there is no duty owed. (See CCP §437c(f)(1).) “A motion
for summary adjudication shall be granted only if it completely disposes of a
cause of action, an affirmative defense, a claim for damages, or an issue of
duty.” (Ibid.) A party moving for summary
adjudication bears the burden of persuasion that there are no triable issues of
material facts. Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826,
850.
In analyzing motions for summary
adjudication, the court must “view the evidence in the light most favorable to
the opposing party and accept all inferences reasonably drawn therefrom.” (Hinesley v. Oakshade Town
Center (2005) 135 Cal.App.4th 289, 294; Dore v. Arnold Worldwide, Inc.
(2006) 39 Cal.4th 384, 389 (Courts “liberally construe the evidence in support
of the party opposing summary judgment and resolve doubts concerning the
evidence in favor of that party”).) A motion for summary adjudication must be
denied where the moving party's evidence does not prove all material facts,
even in the absence of any opposition (Leyva v. Sup. Ct. (1985) 164
Cal.App.3d 462, 475) or where the opposition is weak (Salasguevara v.
Wyeth Labs., Inc. (1990) 222 Cal.App.3d 379, 384, 387).
Analysis
The background facts are largely undisputed by the parties.
The subject property was previously owned by LDM-PP, LLC (“LDM”). Defendant
provided a loan to LDM secured by a deed of trust for the property. Defendant
then assigned its interest in the deed of trust to a group of individuals
collectively referred to by the parties as the “Beneficiaries.” The loan
included $600,000 in funds to redevelop and expand the existing residence on
the property. When the loan became delinquent, Defendant foreclosed and decided
to sell the property at a trustee’s sale. At Defendant’s direction, the opening
bid on the property was $364,770. The sale was held on March 4, 2021, and the
only bid received was from the Beneficiaries in the amount of $364,770. (UMF
Nos. 11-12.) Defendant then executed a Trustee’s Deed Upon Sale, which was
recorded on March 9, 2021. (UMF No. 14.)
On March 17, 2021, Defendant received a Notice of Intent to
Bid from Plaintiff for purchase of the property pursuant to Civil Code § 2924m,
a recently-enacted statute which changes the procedures for non-judicial
foreclosures. (UMF Nos. 16-17.) Prior to the new
statute, the delivery of the trustee’s deed to a bona fide purchaser was
conclusive and the buyer took free and clear of any other claims. Section 2924m
changes that. With regard to sales of properties having one to four residential
units, the sale is not immediately final. Rather, the sale only becomes final
after 15 days unless an eligible bidder, as defined by the statute, submits a
notice of intent to bid an amount exceeding the highest bid at the sale. An
eligible bidder then has an additional 30 days to submit a formal bid with a
tender of payment by cash or cashier’s check. Plaintiff’s Notice of Intent to
Bid indicated he intended to bid $369,770 for the property, $5,000 more than
the highest bid at the March 4 dale.
On March 29, 2021, Plaintiff
submitted his formal bid for the property. On March 30, 2021, Defendant
recorded a Notice of Rescission of Trustee’s Deed Upon Sale purporting to
rescind the March 4, 2021, trustee’s sale. (UMF No. 23.) On April 2, 2021, a
new Notice of Trustee’s Sale was recorded setting a new sale date for April 28,
2021. (UMF No. 27.) On April 28, 2021, the Court granted Sunrise’s request for
a temporary restraining order prohibiting the sale from happening. On May 26,
2021, the Court entered a preliminary injunction further enjoining the sale of
the property.
The central issues raised by
Defendant’s motion are (1) whether Civil Code § 2924m applies to the subject
property, and (2) whether Plaintiff has satisfied the requirements of section
2924m such as to be entitled to purchase the property.
1. Civil
Code § 2924m
Plaintiff claims to be an
“eligible bidder” for purposes of section 2924m as a prospective
owner-occupant. Section 2924m(a)(1) defines a “prospective owner occupant” in
pertinent part as a natural person who “will occupy the property as their
primary residence within 60 days of the trustee’s deed being recorded.” To take
advantage of the provisions of section 2924m, an eligible bidder has 45 days from
the date of sale to submit a higher bid to the trustee “in the form of cash, a cashier’s
check drawn on a state or national bank, a cashier’s check drawn by a state or federal
credit union, or a cashier’s check drawn by a state or federal savings and loan
association, savings association, or savings bank specified in Section 5102 of the
Financial Code and authorized to do business in this state.” (Civ. Code § 2924m(c)(4).)
Defendant alleges Plaintiff cannot
take advantage of the provisions of section 2924m because the statute does not
apply to the subject property. Defendant further alleges that even if section
2924m did apply, Plaintiff could not establish he is entitled to rely on it as he
never tendered a higher bid by cash or cashier’s check as required by the statute.
Defendant also claims Plaintiff cannot establish he satisfies the definition of
a “prospective owner tenant” under section 2924m(a)(1) because the residence would
not have been suitable for habitation within 60 days of the recording of the trustee’s
deed. Ultimately, the Court need not decide whether section 2924m applies to
the subject property, as even if the Court were to assume that it does,
Plaintiff has failed to demonstrate he has satisfied the requirements to
purchase the property set forth in section 2924m.
Plaintiff concedes he did not tender
a higher bid in cash or cashier’s check as required by section 2924m(c)(4). Instead,
Plaintiff argues he was not required to comply with the requirements of the statute
because it would have been “useless” for him to tender the full amount of the bid.
(Cox Opposition at 10-11.) The Court rejects this argument for several reasons.
Plaintiff cites to three cases which he claims show formal tender of the full amount
was not required: Reed v. Lincoln (1910)
157 Cal. 646; Williams v. Amerland (1935)
6 Cal.App.2d 527; and Moore v. Pickell (1947)
78 Cal.App.2d 809. The Court has been unable to
locate any of these cases as each of these citations are to pages of unrelated cases
bearing other names. Similarly, the Court has been unable to locate any cases with
these names containing the quotes provided in Plaintiff’s brief. The Court has also
been unable to locate any California case which contains the quotation Plaintiff
attributes to Moore v. Pickell.
Setting aside the issues with these
citations, “as a general principle of contract law” (Beeler v. American
Trust Co. (1946) 28 Cal.2d 435, 439) courts have acknowledged “[a] tender is not necessary where the declarations of the
offeree are such as to indicate that the actual offer of money will be rejected;
the law does not require a man to do a vain and fruitless thing;
a strict and formal tender is not necessary where it appears that if it had been
made it would have been refused.” (Enfield v. Hoffman Motor Co.
(1953) 117 Cal.App.2d 800, 807.)
Plaintiff relies
on Enfield as well as Hoppin v. Munsey (1921) 185 Cal. 678 in arguing tender would have been
futile, but neither case squares with the facts presented
on the instant motion. The Court in Hoppin found tender was not
necessary where an offer to pay had been made and refused based on the
reasoning that “formal tender is excused when the person who should have made
it is induced not to do so by any act of the other party.” (Id. at 685-686.)
In Enfield, plaintiff took a car into defendant’s shop for repairs.
Defendant refused to return the car to plaintiff, claiming a mechanics lien
over the car based on work defendant had performed on the car for its prior
owner for which the prior owner never paid defendant. Defendant also indicated
to plaintiff that it would not turn over the car even if plaintiff paid the
amount owing on the prior owner’s bill, demanding that plaintiff also provide
additional evidence of the validity of his ownership over the vehicle. (Enfield,
117 Cal.App.2d at 804.) The Court found given
defendant’s statement that it would not turn over the vehicle even if the bill
had been satisfied, no formal tender of that amount was required by plaintiff.
(Id. at 807.) Thus, like Hoffman, Enfield found tender was
excused based on some inducement or affirmative statement made to the party
claiming futility prior to the time tender was required. (See also Magnus v. Morrison (1949) 93 Cal.App.2d 1, 3 [finding
tender futile where party affirmatively refused to accept payment].)
By presenting
evidence that Plaintiff did not comply with the tender requirements of section
2924m, the burden shifted to Plaintiff to show a triable issue of material fact
as to the futility of such tender. Plaintiff’s operative First Amended
Complaint does not pled futility and Plaintiff has not put before the Court any
evidence showing that when he submitted his bid on March 29, 2021, Defendant
had made any indication to him that his bid would be rejected. In other words,
Plaintiff has not provided the Court with any evidence that Defendant induced
him to refrain from making the tender required by section 2924m under Hoffman
or Enfield.
Plaintiff claims
his tender was rendered futile by Defendant’s execution and recording of a
Trustee’s Deed Upon Sale prior to the statutory 15-day period for eligible
bidders to submit notices of intent to bid under section 2924m. Plaintiff does
not explain why the execution and recording of this deed rendered tender
futile. Indeed, Plaintiff’s entire case is premised on the notion that the
execution and recording of the deed did not deprive Plaintiff of the right to
purchase the subject property pursuant to section 2924m. In the May 26, 2021,
order granting Sunrise’s request for a preliminary injunction in this action,
the Court noted that if section 2924m applied to the sale of the property, then
the execution of the deed in contravention of the statutory waiting period
requirements “is of no effect.” (Order at 5.)
Additionally, in
both his Opposition and verified First Amended Complaint, Plaintiff states he
was unaware of this action by Defendant. (FAC at ¶16 [“Unbeknownst to
Plaintiff, the trustee executed a Trustee’s Deed Upon Sale dated March 5, 2021
and recorded on March 9, 2021 without allowing for the statutory 15-day period
for parties to submit their Notice of Intent to Place Bid pursuant to Civil
Code § 2924m”]; Opposition at 7.) Plaintiff has thus not shown any triable
issue of material fact exists as to whether Defendant, by actions or
statements, induced Plaintiff to forgo a formal tender as required by section
2924m.
The Court also
notes the rights and procedures outlined in section 2924m are purely
legislative creations and thus must be strictly construed. (See e.g. Landstar Global Logistics, Inc. v. Robinson & Robinson,
Inc. (2013) 216 Cal.App.4th 378, 390 [statutory
provisions governing enforcement of judgments must be strictly construed because
they are “purely legislative creations”]; Vershbow v. Reiner (1991) 231 Cal.App.3d
879, 882 [statutes concerning pre-judgment attachment “are subject to strict construction
because they are purely the creation of the Legislature”]; C. I. T. Corp. v. Commercial Bank of Patterson (1944) 64 Cal.App.2d 722, 727 [“In a supplemental
brief filed by appellant bank subsequent to the oral argument the contention is
made that the Trust Receipt Law has been legislatively
approved by codification; that it is a creature of statute
and should therefore be strictly construed. As a general principle we agree with this
contention”].) As set forth above, section 2924m expressly requires an eligible
bidder to tender a bid which includes the full amount of a higher bid in cash
or cashier’s check within 45 days of the date of sale.
Plaintiff clearly
understood compliance with the procedures set forth in section 2924m were
necessary to perfect his claim as an eligible bidder. Otherwise, Plaintiff
would not have submitted a formal bid on March 29, 2021. By its express terms,
section 2924m required that formal bid include a tender of the full amount of
Plaintiff’s bid in cash or cashier’s check. On the facts before it, the Court
finds Plaintiff has not demonstrated a triable issue of material fact as to
whether his failure to do so was excused by futility. Accordingly, the Court
finds that even if section 2924m were deemed to apply to the subject property,
Plaintiff would not be able to establish Defendant violated the statute by
failing to honor his March 29, 2021 bid. Defendant is thus entitled to summary
adjudication as to Plaintiff’s first cause of action for violation of Civil
Code § 2924m.
As the Court
finds Plaintiff cannot establish he was the highest bidder in compliance with
section 2924m, the Court need not determine whether section 2924m applies to
the subject property and declines to do so.
2. Remaining
Causes of Action
Defendant argues
a finding in its favor on Plaintiff’s cause of action under Civil Code § 2924m
effectively disposes of Plaintiff’s remaining claims for declaratory relief,
injunctive relief, and unfair competition under Business & Professions Code
§ 17200, et seq. The Court agrees. Each of these remaining causes of action are
premised on allegations that Plaintiff has been harmed and/or prejudiced by
Defendant’s failure to honor his bid under Civil Code § 2924m. (FAC at
¶¶33-47.) As the Court has found Plaintiff cannot establish he satisfied the
requirements as an eligible bidder under section 2924m, he necessarily cannot
establish he has suffered any harm or is entitled to any relief from
Defendant’s failure to honor his bid under section 2924m. Accordingly,
Defendant’s motion for summary judgment on Plaintiff’s claims is GRANTED.
Conclusion
Defendant Allstar Financial Service’s motion for summary judgment
on the claims raised by Plaintiff Alvin Cox is GRANTED.