Judge: Michelle Williams Court, Case: 22STCP01615, Date: 2022-08-05 Tentative Ruling

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Case Number: 22STCP01615    Hearing Date: August 5, 2022    Dept: 74

22STCP01615            IN THE MATTER OF: CALIFORNIA TD SPECIALISTS

Claimant Pac Fin’s Motion, Hearing and Claim for Surplus Funds

TENTATIVE RULING:  The motion is taken OFF-CALENDAR.  The Court sets a Hearing on Claims to Surplus Proceeds of Trustee’s Sale for September 6, 2022 at 8:30 a.m.. The clerk is directed to serve written notice of the hearing by first-class mail on all claimants identified in the trustee's declaration at the addresses specified therein. (Civ. Code § 2924j(d).)

Background

On April 29, 2022, Petitioner California TD Specialists filed a petition and declaration regarding unresolved claims and deposit of undistributed surplus proceeds of trustee’s sale noting real property located at 4155 South Hobart Boulevard, Los Angeles, California 90062 had been sold at a trustee’s sale on December 14, 2019 with a surplus of $227,510.22. After removing trustee fees and expenses as well as the filing fee for this petition, Petitioner deposited $223,150.22 with the Court.

On May 31, 2022, Keenan Brown, as special administrator of the Estate of Adolphus Williams filed a claim for surplus funds.

On June 3, 2022, Carolyn L. Harper, daughter of Adolphus Williams, filed a Notice of Intent to Claim a Portion of Surplus Funds of Foreclosure Sale. Harper has not filed a separate claim.

Motion

On May 31, 2022, Pac Fin, LLC filed the instant Notice of Motion, Hearing and Claim for Surplus Funds.

Opposition

On July 25, 2022, Keenan Brown, Special Administrator of the Estate of Adolphus Williams, filed an opposition to the motion, noting Pac Fin failed to provide proper notice of motion, there was no notice of deposit given, and no proof of consideration was provided for the purported lien held by Pac Fin.

Reply

In reply, Pac Fin contends Brown lacks standing to assert a claim to the funds, Pac Fin has priority, and whether or not notice of the deposit of funds or proof of consideration was given for the lien are irrelevant as to Pac Fin.

Resolution of Claims to Surplus Funds

Standard

When a trustee’s sale is concluded and there are surplus funds, the trustee has 30 days from the execution of the trustee’s deed to send written notice to individuals with a recorded interest in the real property prior to the trustee’s sale. (Civ. Code § 2924j(a).) This allows those individuals to make a claim to the surplus funds. (Civ. Code § 2924j(a)(3).) Claimants have 30 days to make a claim. (Civ. Code §¿2924j(a)(4).) Once claims have been received, the trustee must exercise due diligence to determine the priority of the claims. (Civ. Code § 2924j(b).) If there is no dispute as to the priority, the trustee pays out the funds within 30 after the conclusion of the notice period. (Civ. Code § 2924j(b).) If the trustee fails to determine priority or there is a dispute, the trustee must deposit the funds with the court pursuant to Civil Code § 2924j(c).

“Within 90 days after deposit with the clerk, the court shall consider all claims filed at least 15 days before the date on which the hearing is scheduled by the court, the clerk shall serve written notice of the hearing by first-class mail on all claimants identified in the trustee's declaration at the addresses specified therein. Where the amount of the deposit is twenty-five thousand dollars ($25,000) or less, a proceeding pursuant to this section is a limited civil case. The court shall distribute the deposited funds to any and all claimants entitled thereto.” (Civ. Code § 2924j(d).)

The Court determines priority according to Civil Code § 2924k(a): (1) the costs and expenses incurred in the selling of the property, (2) payment of any obligations secured by the deed or mortgage, (3) to satisfy any outstanding obligations encumbering the property, and (4) to the vested owner at the record time of the trustee’s sale.

The Motion Hearing is Taken Off-Calendar

Pursuant to Civil Code section 2924j(d), the Court, not a claimant, sets the hearing and provides notice thereof. (Civ. Code § 2924j(d) (“Within 90 days after deposit with the clerk, the court shall consider all claims filed at least 15 days before the date on which the hearing is scheduled by the court, the clerk shall serve written notice of the hearing by first-class mail on all claimants identified in the trustee's declaration at the addresses specified therein.”).) The August 5, 2022 hearing is on calendar pursuant to Claimant Pac Fin’s motion and the proof of service accompanying Pac Fin’s motion solely indicates service upon the Petitioner, California TD Specialists. Accordingly, the Court cannot determine the parties’ claims or distribute funds on August 5, 2022 as the hearing was not set by the Court and notice was not provided to all claimants as required. Claimant Pac Fin’s motion is taken OFF-CALENDAR.

The Court signed the Order Authorizing Petitioner to Deposit Surplus Proceeds of Trustee’s Sale with Clerk of the Court Pursuant to Civil Code section 2924j(c) on May 12, 2022. The funds were deposited with the Court on June 14, 2022.

The Court must set the hearing no later than Monday, September 12, 2022, while providing sufficient notice to the claimants to file their claims more than 15 days prior to the hearing. (Civ. Code § 2924j(d).)