Judge: Helen Zukin, Case: 21SMCV01011, Date: 2023-03-08 Tentative Ruling

Case Number: 21SMCV01011-01    Hearing Date: March 8, 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 (“Cox”) 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 Financial Services, Inc.’s (“Allstar”) 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.

On January 24, 2023, the Court granted Allstar’s motion for summary judgment as to Cox’s First Amended Complaint, finding Cox could not claim the benefit of section 2924m because he had not complied with the statutory requirements of section 2924m in tendering his bid to Allstar. Cox now brings a combined motion seeking: (1) a new trial on the claims of his operative Complaint against Allstar, (2) an order vacating the Court’s ruling on Allstar’s motion for summary judgment, and (3) leave of Court to file a Second Amended Complaint against Allstar to add allegations concerning the futility of Cox’s compliance with the statute. Allstar and Sunrise oppose Cox’s motion.

Objections to Evidence

Sunrise’s objections to the Declarations of Timothy Reed and Alvin Cox are OVERRULED.

Legal Standards

The California Constitution states in Article 6, section 13:

No judgment shall be set aside, or new trial granted, in any cause, on the ground of misdirection of the jury, or of the improper admission or rejection of evidence, or for any error as to any matter of pleading, or for any error as to any matter of procedure, unless, after an examination of the entire cause, including the evidence, the court shall be of the opinion that the error complained of has resulted in a miscarriage of justice.

Code Civ. Proc. § 657 permits a party to move the Court to vacate the verdict and order a new trial on seven specific bases enumerated by statute as follows:

1.                  “Irregularity in the proceedings of the court, jury, or adverse party, or any order of the court or abuse of discretion by which either party was prevented from having a fair trial”;

2.                  Juror or jury misconduct;

3.                  “Accident or surprise, which ordinary prudence could not have guarded against”;

4.                  “Newly discovered evidence … which [] could not, with reasonable diligence, have [been] discovered and produced at the trial”;

5.                  “Excessive or inadequate damages”;

6.                  “Insufficiency of the evidence to justify the verdict or other decision, or the verdict or other decision is against law”;

7.                  “Error in law, occurring at the trial and excepted to by the party making the application.”

(C.C.P. § 657.) The moving party must show that the error or irregularity materially affected its substantial rights, i.e., the error complained of must be prejudicial. (Ibid.)

Where a party moves for a new trial on grounds enumerated (1) through (4) above, the motion must be made upon affidavits; as to grounds enumerated (5) through (7), the motion “must be made on the minutes of the court.” (C.C.P. § 658; Gay v. Torrance (1904) 145 Cal. 144, 148 [motion for new trial on ground of irregularity of proceedings must be made on affidavits]; see also Phipps v. Copeland Corporation LLC (2021) 64 Cal.App.5th 319, 339 [holding in accord].) “The ‘minutes of the court’ include the records of the proceedings entered by the judge or courtroom clerk, showing what action was taken and the date it was taken ( Gov. Code, § 69844) and may also include depositions and exhibits admitted into evidence and the trial transcript. (§ 660.)” (Lauren H. v. Kannappan (2002) 96 Cal.App.4th 834, 839, fn. 4.)

“The determination of a motion for a new trial rests so completely within the court’s discretion that its action will not be disturbed unless a manifest and unmistakable abuse of discretion clearly appears.” (Jiminez v. Sears, Roebuck & Co. (1971) 4 Cal.3d 379, 387.) In assessing¿the need for a new trial,¿the court must rely on its¿view of the overall record,¿taking into account such factors, among others, as the nature and seriousness of the¿alleged¿misconduct, the general¿atmosphere, including the judge’s control, of the trial, the likelihood of prejudicing the jury, and the efficacy of objection or admonition under all the circumstances.¿(Dominguez v. Pantalone¿(1989) 212 Cal.App.3d¿201, 211.)¿ “[A] motion for a new trial is a new and independent proceeding, in which the trial court can reweigh the evidence and reevaluate the credibility of the witnesses. The trial court is authorized to disbelieve witnesses and draw inferences from the evidence contrary to the inferences drawn by the jury.” (Ajaxo Inc. v. E*Trade Group Inc. (2005) 135 Cal.App.4th 21, 46.)

Leave to amend is permitted under Code of Civil Procedure section 473, subdivision (a) and section 576. The policy favoring amendment and resolving all matters in the same dispute is “so strong that it is a rare case in which denial of leave to amend can be justified. . ..” “Although courts are bound to apply a policy of great liberality in permitting amendments to the complaint at any stage of the proceedings, up to and including trial [citations], this policy should be applied only ‘where no prejudice is shown to the adverse party . . .. [citation]. A different result is indicated ‘where inexcusable delay and probable prejudice to the opposing party’ is shown. [Citation].” (Magpali v. Farmers Group (1996) 48 Cal.App.4th 471, 487.)

A motion for leave to amend a pleading must also comply with the procedural requirements of California Rules of Court, Rule 3.1324, which requires a supporting declaration to set forth explicitly what allegations are to be added and where, and explicitly stating what new evidence was discovered warranting the amendment and why the amendment was not made earlier. The motion must also include (1) a copy of the proposed and numbered amendment, (2) specifications by reference to pages and lines where allegations would be deleted and added, and (3) a declaration specifying the effect, necessity and propriety of the amendments, date of discovery and reasons for delay. (See Cal. Rules of Court, rule 3.1324, subds. (a), (b).)

Analysis

Cox asserts newly discovered evidence on the issue of futility warrants the vacating of the Court’s order granting Allstar’s motion for summary judgment and ordering a new trial on the claims he has asserted against Allstar in his First Amended Complaint. To justify the granting of a motion for new trial based on newly discovered evidence, the moving party must show the evidence could not have been discovered by the moving party with reasonable diligence and produced at trial. (Linhart v. Nelson (1976) 18 Cal.3d 641; New York Times Co. v. Superior Court (2005) 135 Cal.App.4th 206, 212-213.)

The Court finds Cox has failed to carry his burden of demonstrating new evidence compels a granting of a new trial on the causes of action asserted in his First Amended Complaint. Cox relies on deposition testimony, such as that of Al Haberstroh, which was taken in October 2021 and November 2022, and thus was fully available to Cox to include and argue in connection with Allstar’s summary judgment motion. Cox also relies on his own March 29, 2021, bid letter (Ex. 6 to Cox Decl.) and March 25, 2021, correspondence to Allstar (Ex. 3 to Cox Decl.) This evidence was plainly in Cox’s possession before the inception of the litigation, and nothing prevented Cox from submitting these documents to the Court in connection with its opposition or arguing their significance. In other words, Cox has not demonstrated he has discovered any new evidence which he could not or did not submit in connection with his opposition to Allstar’s motion for summary judgment.

In finding Cox had failed to establish a triable issue of material fact with respect to futility in connection with his tender of cash or cashier’s check as required by Civil Code § 2924m, the Court noted:

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.

(January 24, 2023, Order at 6-7.)

Cox now argues he was only unaware of recording of the deed of sale at the time he submitted his initial Notice of Intent to Bid. He claims he was actually aware of this action when he submitted his formal bid on March 29, 2021, pointing to his bid to Allstar. (Ex. 6 to Cox Decl.) Cox’s March 29, 2021, bid states in pertinent part:

I hereby tender cash in the full amount of the bid, Three Hundred Sixty-Nine Thousand Seven Hundred Seventy Dollars ($369,770). According to the public records, you issued a Trustee’s Deed Upon Sale and recorded the deed as document number 20210377262 on September 9, 2021. As the trustee, please immediately take all necessary steps to set aside this deed as it violates Civil Code 2924m.

(Id.) However, this letter undercuts Cox’s futility argument rather than supports it. The letter shows Cox was aware of the deed but believed it to be null and void under section 2924m. Cox thus understood the existence and recording of the deed did not negate his purported rights under section 2924m. Cox’s bid did not assert the deed obviated any need to comply with the statutory requirements of section 2924m by tendering cash or cashier’s check in the full amount. Rather, Cox’s bid indicates the deed did not render his compliance futile because the deed violated section 2924m. This is entirely in keeping with the Court’s own analysis, set forth above, that the execution of the deed in contravention of the statutory waiting period requirements is of no effect and did not render Cox’s performance futile. (Order at 6-7.)

In granting Allstar’s motion for summary judgment, the Court determined the law on futility relied on by Cox required some affirmative acts made by Allstar which induced Cox into forgoing a tender of cash or cashier’s check as required by the statute. Cox’s instant motion does not put before the Court any new authority contradicting this determination. Rather, Cox has submitted a declaration stating that Allstar “induced me to believe that the submission of a cashier’s check would have been fruitless as the property had already been transferred to third parties.” (Cox Decl. at ¶10.) Cox’s self-serving and conclusory declaration of inducement is insufficient to show any error by the Court in granting Allstar’s motion for summary judgment. The burden was on Cox to submit evidence establishing such inducement in his opposition. He did not submit any such evidence in his opposition or in connection with his instant motion. Instead, Cox points to events which took place after he submitted his formal bid, such as Allstar’s returning of Sunrise’s cashier’s check. But such actions could not have possibly induced Cox’s conduct before those actions happened.

Cox’s remaining arguments regarding his motion for new trial are simply restatements of arguments raised in connection with Allstar’s motion for summary judgment. The Court rejects those arguments for the same reasons as set forth in its January 24, 2023, order on Allstar’s motion.

Cox also moves for leave to amend his Complaint to plead additional allegations in connection with his assertion of futility, citing Kirby v. Albert D. Seeno Construction Co. (1992) 11 Cal.App.4th 1059 and Atkinson v. Elk Corp. (2003) 109 Cal.App.4th 739. Neither case supports his request.

In Kirby the trial court granted a motion for summary judgment on statute of limitations ground. The motion was not based on any evidence, but instead was based solely on a statement in the plaintiffs’ complaint which indicated plaintiffs began to discover damage to the property they had purchased from defendant as early as 1982. Defendant’s summary judgment motion argued this 1982 date fell beyond the statute of limitations, thus rendering plaintiffs’ claims untimely. Plaintiffs opposed the motion, submitting deposition testimony indicating that although plaintiffs began to see cracks in 1982, they did not suspect any serious damage to the property until 1985, which would fall within the statute of limitations. The trial court granted summary judgment, and the Court of Appeal reversed, finding that because the defendant’s motion “was based solely on the ambiguous allegation of the complaint, it merely showed that the action may have been, but was not certainly, barred.” (Kirby, supra, 11 Cal.App.4th at 1067.) The Court also found the trial court should have granted plaintiffs’ motion for leave to amend their complaint to clarify this ambiguous provision, stating “When considering challenges to the sufficiency of a pleading, the rule is that if it is reasonably possible that a defect in a complaint can be cured by an amendment, the trial court abuses its discretion by dismissing the action.” (Id. at 1069.)

Here, by contrast, the Court’s granting of Allstar’s motion for summary judgment was not based on a defect or ambiguity in Cox’s First Amended Complaint, but rather was based on affirmative evidence put forth by Allstar which established Cox did not tender cash or a cashier’s check with his bid and thus could not claim the protections of Civil Code § 2924m. Cox failed to rebut this evidence by establishing a triable issue of material fact, and thus the Court granted Allstar’s motion. Kirby thus has no bearing on the facts before the Court.

In Atkinson the trial court granted defendant’s motion for summary adjudication as to one of plaintiff’s causes of action which sought relief under the Consumer Legal Remedies Act. The plaintiff then sought leave to amend to assert different causes of action, including claims under the Magnuson-Moss Act, Business and Professions Code § 17200, and for fraudulent concealment and misrepresentation. The trial court denied the motion and the Court of Appeal reversed on the basis that the defendant “has not claimed that it will be prejudiced by this amendment” and reiterating the general rule that it is an abuse of discretion to deny leave to amend where the opposing party was not misled or prejudiced by the amendment. (Atkinson, supra, 109 Cal.App.4th at 761.)

By contrast, Allstar would clearly be prejudiced by this proposed amendment, which would negate the granting of summary judgment in its favor on Cox’s First Amended Complaint. Cox argues this prejudice would be minimal if the Court were to grant his request for a new trial. However, as set forth above, the Court has determined Cox has failed to establish any basis for a new trial. In its concurrent order on Cox’s separate motion for leave to amend his Cross-Complaint, the Court noted Cox’s proposed new allegations of futility had long been known to Cox and he had not been diligent in seeking leave to amend to assert them. The same holds true here. This lack of diligence, coupled with the clear and obvious prejudice to Allstar, leads the Court to deny his request for leave to file a Second Amended Complaint.

Cox also moves to vacate the Court’s ruling granting summary judgment in favor of Allstar pursuant to Code Civ. Proc. § 662. Cox’s arguments under section 662 are intermingled with his arguments for a new trial pursuant to section 657 and are rejected for the same reasons.

Conclusion

Cox’s combined motion for a new trial, to vacate the Court’s order granting summary judgment to Allstar, and for leave to file a Second Amended Complaint is DENIED.