Judge: Melvin D. Sandvig, Case: 22CHCP00408, Date: 2023-05-16 Tentative Ruling

Case Number: 22CHCP00408    Hearing Date: May 16, 2023    Dept: F47

Dept. F47

Date: 5/16/23

Case #22CHCP00408

HEARING ON CLAIMS FOR SURPLUS FUNDS

Petition filed on 11/22/22.

PETITIONER: Trustee Quality Loan Service Corp.

CLAIMANT: Wayne Michael Mertes, as Administrator of the Estate of Paul Matthew Mertes

RULING:

Quality Loan Service Corp. (Trustee/Petitioner) is the Trustee under a Deed of Trust executed by Paul Mertes recorded on 1/29/09.  Said Deed of Trust was secured by real property commonly known as 15528 Donmetz St, Mission Hills, CA 91345, which was sold at a non-judicial foreclosure sale on 5/5/22 as the result of a default under the terms of the Deed of Trust.  The non-judicial foreclosure sale resulted in the receipt of funds that exceeded the amount of the funds due and owing under the Deed of Trust foreclosed upon. 

Pursuant to the non-judicial foreclosure on 5/5/22, the subject real property was transferred to the highest bidder, a third party, for the sum of $638,000.00.  After payment of the foreclosing beneficiary's unpaid debt and trustee and attorney costs and fees pursuant to Civil Code 2924d and 2924k, there remained surplus funds from the sale in the amount of $320,127.98.  On 7/1/22, a Notice of Surplus Funds from the Trustee Sale was mailed to all persons entitled to notice pursuant to Civil Code 2924b and 2924j(a).  (Petition, Ex.A).

Pursuant to the Trustee Sale Guarantee and surplus endorsement, the Trustee identified a  junior lien associated with the subject property: A deed of trust in favor of Secretary of Housing and Urban Development. 

Paul Mertes was the owner of the subject property prior to the foreclosure sale.  (Petition, Ex.B).  However, Paul Mertes died on 7/28/20.  (Petition, Ex.C).   

The Trustee determined that no amount is currently owed to Secretary of Housing and Urban Development.

Since Paul Mertes, owner of the subject property just prior to the foreclosure sale, is deceased, the Estate of Paul Mertes is entitled to any remaining surplus funds.  Civil Code 2924k(a)(4).

The Trustee hired a private investigator to identify and locate the potential heirs of Paul Mertes. Petitioner disbursed surplus funds in the amount of $1,275.00 to Quality Claims Management Corp. as payment for fees and costs associated with that investigation.

Pursuant to the private investigator's final report, Petitioner learned that Paul Mertes has the following potential surviving heirs: Wayne Mertes, Cynthia L. Shank, Deborah L. Gunter, Timothy E. Mertes, Nicholas T. Mertes, and Toni L. Mertes.

The Trustee communicated with attorney Chris Fields who was representing Wayne Mertes, Cynthia L. Shank, Nicholas T. Mertes, and Toni L. Mertes.  Attorney Chris Fields informed the Trustee that a probate case was being opened by his office to establish administration of the Estate of Paul Mertes. 

Since the amount of the remaining surplus funds exceeds $166,250.00, the Estate of Paul Mertes cannot be considered a small estate in the State of California and a probate order regarding that estate must be issued before the remaining surplus funds can be disbursed to any party.  The petition indicates that because the petition for probate was currently being prepared, no order was available regarding the Estate of Paul Mertes. 

Since the Trustee had not received a claim and probate order from the Estate of Paul Mertes and, since the probate case regarding the Estate of Paul Mertes is ongoing, the Trustee was unable to determine how the remaining surplus funds should be distributed.

Therefore, on 11/22/22, Trustee filed the subject petition to deposit the remaining funds with the Court and to be discharged from this matter.  After deducting the Trustee’s fees and expenses and filing fee, pursuant to this Court’s order, on 12/21/22, $318,417.98 was deposited with the Court and the Trustee was discharged of any further responsibility for the disbursement of the sale proceeds. 

On 3/15/23, the Court scheduled a Notice of Hearing on Claims to Determine Disbursement of Surplus Funds on Deposit Pursuant to Civil Code 2924j(c) and (d) for 5/16/23 and sent notice to all potential claimants. 

On 5/3/23, attorney Joseph B. McHugh of LA Law Center, PC, on behalf of Wayne Michael Mertes, as Administrator of the Estate of Paul Matthew Mertes, filed a claim for the surplus funds pursuant to Civil Code 2924k(a)(4).  On 4/13/23, pursuant to Letters of Administration, Wayne Michael Mertes, was appointed as administrator of Paul Matthew Mertes’ estate.  (See W. Mertes Decl. ¶6, Ex.B (mistakenly identified as Ex.C in the W. Mertes Decl.)).  Pursuant to the appointment, Wayne Michael Mertes, as personal representative, is authorized to administer the estate under the Independent Administration of Estates Act with full authority.  Id.

Based on the  foregoing, the Court finds that Wayne Michael Mertes, as Administrator of the Estate of Paul Matthew Mertes is entitled to the funds deposited with the Court pursuant to this Court’s 12/21/22 order in this case.