Judge: Lee W. Tsao, Case: 24NWCP00029, Date: 2024-04-09 Tentative Ruling

Case Number: 24NWCP00029    Hearing Date: April 9, 2024    Dept: C

Quality Loan Service Corp. vs. All Claimants to Surplus Funds

Case No.: 24NWCP00029

Hearing Date: April 9, 2024 @ 10:30 AM

#10

Tentative Ruling

Petitioner’s Motion to Deposit Surplus Funds and Discharge Petitioner is GRANTED. 

Petitioner to give notice.  

Background 

Quality Loan Service Corp. (“Petitioner”) is the Trustee under a Deed of Trust executed by Raul Ruvalcaba; recorded on August 31, 2011.  The Deed of Trust was secured by real property located at 7716 Stewart and Grey Road #B, Downey, CA 90241.  On August 10, 2023, the real property was sold at a non-judicial foreclosure sale as a result of a default under the terms of the Deed of Trust for the sum of $532,000.00.  After payment of the foreclosing beneficiary’s unpaid debt, there remained surplus funds in the amount of $266,619.97.  On September 15, 2023, Petitioner mailed a Notice of Surplus Funds from the Trustee Sale to all persons identified to have a lien associated with the subject property.  The persons identified to have a lien associated with the subject property include only Raul Ruvalcaba as the prior owner.

On October 18, 2023 Petitioner mailed a Second Notice of Surplus Funds after not having received a claim or waiver of claim from Raul Ruvalcaba.  To date, Petitioner has not received a claim or waiver of claim from Raul Ruvalcaba.  Petitioner claims that due to an absence of response from Mr. Ruvalcaba, Petitioner is unable to determine how the surplus funds should be distributed.   

As a result, on January 22, 2024 Petitioner filed a Petition and Declaration Regarding Unresolved Claims and Deposit of Undistributed Surplus Proceeds of Trustee’s Sale (Judicial Council Form, MC-095, hereinafter “Petition”) seeking to deposit the surplus funds with the Court. 

On February 27, 2024, Petitioner filed a Motion to Deposit Surplus Funds and Discharge Petitioner which seeks to deposit surplus funds with the Court and an order discharging the Petitioner from the action. 

Legal Standard

Unless an interpleader action has been filed, within 30 days of executing the trustee’s deed resulting from a sale in which there are proceeds remaining after payment of the costs and expenses accrued by the trustee and the obligations secured by the deed of trust, the trustee must send written notice to all persons with recorded interests in the real property as of the date immediately prior to the trustee’s sale.  (Civ. Code, § 2924j, subd. (a).)  “The trustee must exercise due diligence to determine the priority of the written claims received by the trustee to the trustee’s sale surplus proceeds from those persons whom notice was sent.”  (Id., § 2924j, subd. (b).)  

“If, after due diligence, the trustee is unable to determine the priority of the written claims received by the trustee to the trustee’s sale surplus of multiple persons or if the trustee determines there is a conflict between potential claimants, the trustee may file a declaration of the unresolved claims and deposit with the clerk of the superior court of the county in which the sale occurred, that portion of the sales proceeds that cannot be distributed, less any fees charged by the clerk[.]”  (Id., § 2924j, subd. (c).)  “The declaration shall specify the date of the trustee's sale, a description of the property, the names and addresses of all persons sent notice pursuant to subdivision (a), a statement that the trustee exercised due diligence pursuant to subdivision (b), that the trustee provided written notice as required by subdivisions (a) and (d) and the amount of the sales proceeds deposited by the trustee with the court.”  (Ibid.)  The Petitioner must use mandatory Judicial Council Form MC-1095 titled, “Petition and Declaration Regarding Unresolved Claims and Deposit of Undistributed Surplus Proceeds of Trustee’s Sale.”  “Upon deposit of that portion of the sale proceeds that cannot be distributed by due diligence, the trustee shall be discharged of further responsibility for the disbursement of sale proceeds.”  (Ibid.) 

“Before the trustee deposits the funds with the clerk of the court pursuant to subdivision (c), the trustee shall send written notice by first-class mail, postage prepaid, to all persons described in subdivision (a) informing them that the trustee intends to deposit the funds with the clerk of the court and that a claim for the funds must be filed with the court within 30 days from the date of the notice, providing the address of the court in which the funds were deposited, and a telephone number for obtaining further information.”  (Id., § 2924j, subd. (d).)

Discussion

Here, Petitioner has complied with all procedural requirements outlined in Civil Code § 2924j and has demonstrated that, despite due diligence, Petitioner is unable to distribute the surplus funds associated with the non-judicial foreclosure sale of the subject property.  On September 15, 2023, Petitioner sent written notice to all persons with recorded interests in the subject property by first-class mail informing each of the trustee’s sale and the surplus funds.  (Podmenik Decl., Ex. A.)  On October 18, 2023, Petitioner sent a second written notice to all persons with recorded interests in the subject property after Petitioner did not received a claim or waiver of claim from priority junior lienholder, Raul Ruvalcaba.  (Id., Ex. B.)  To date, Petitioner has not received a claim or waiver of claim from Raul Ruvalcaba.  (Id., ¶¶ 5-7.)  Petitioner demonstrates that it exercised due diligence to determine the priority of distribution of the surplus assets, however Petitioner is unable to do so due to the absence of a claim or waiver of claim from the priority junior lienholder.  (Ibid.; Petition, ¶ 8.)  Further, Petitioner has properly sent written notice by first-class mail, postage pre-paid informing all lienholders that Petitioner intends to deposit the surplus funds with the clerk of the court and that a claim for the funds must be filed with the court within 30 days from the date of the notice.  (Podmenik Decl., Ex. D.)  Accordingly, Petitioner has complied with all procedural requirements outlined in Civil Code § 2924j and has demonstrated that, despite due diligence, Petitioner is unable to distribute the surplus funds associated with the non-judicial foreclosure sale of the subject property.