Judge: Theresa M. Traber, Case: 24STCP01422, Date: 2024-06-21 Tentative Ruling
Case Number: 24STCP01422 Hearing Date: June 21, 2024 Dept: 47
Tentative Ruling
Judge Theresa M. Traber, Department 47
HEARING DATE: June 21, 2024 TRIAL DATE: NOT
SET
CASE: Quality Loan Service Corp. v. All
Claimants to Surplus Funds After Trustee’s Sale of Real Property Located At
4238 3rd Avenue Los Angeles CA 90008
CASE NO.: 24STCP01422 
MOTION
TO DEPOSIT SURPLUS FUNDS AND DISCHARGE PETITIONER
MOVING PARTY: Petitioner Quality Loan Service Corp.
RESPONDING PARTY(S): No response on
eCourt as of 6/18/24
STATEMENT
OF MATERIAL FACTS AND/OR PROCEEDINGS:
Filed on May 3, 2024, this petition seeks an order authorizing deposit of
undistributed surplus proceeds from a trustee’s sale.
Petitioner moves to deposit the
surplus funds and be discharged of liability.
TENTATIVE RULING:
Petitioner’s
Motion to Deposit Surplus Funds and Discharge Petitioner is CONTINUED to July
22, 2024 at 9:00 AM. Petitioner is ordered to file and serve supplemental
papers demonstrating how it calculated the fees and costs requested on or
before June 28, 2024.
DISCUSSION:
Petitioner moves to deposit the
surplus funds and be discharged of liability.
Legal Standard for Disposition of Surplus Funds from
Trustee’s Sale
Distribution
of surplus funds from a trustee’s sale is governed by Civil Code section 2924j.
This statute provides, in relevant part:
(b) The trustee shall 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 to whom notice was sent pursuant to
subdivision (a)…If the trustee has failed to determine the priority of written
claims within 90 days following the 30-day notice period, then within 10 days
thereafter the trustee shall deposit the funds with the clerk of the court
pursuant to subdivision (c) or file an interpleader action pursuant to
subdivision (e). Nothing in this section shall preclude any person from
pursuing other remedies or claims as to surplus proceeds.
(c) 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 pursuant to this
subdivision. 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. Further, the trustee shall submit a
copy of the trustee’s sales guarantee and any information relevant to the
identity, location, and priority of the potential claimants with the court and
shall file proof of service of the notice required by subdivision (d) on all
persons described in subdivision (a).
The clerk shall deposit the amount with the county
treasurer or, if a bank account has been established for moneys held in trust
under paragraph (2) of subdivision (a) of Section 77009 of the Government Code,
in that account, subject to order of the court upon the application of any
interested party. The clerk may charge a reasonable fee for the performance of
activities pursuant to this subdivision equal to the fee for filing an
interpleader action pursuant to Chapter 5.8 (commencing with Section 70600) of
Title 8 of the Government Code. 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. A
deposit with the clerk of the court pursuant to this subdivision may be either
for the total proceeds of the trustee’s sale, less any fees charged by the
clerk, if a conflict or conflicts exist with respect to the total proceeds, or
that portion that cannot be distributed after due diligence, less any fees
charged by the clerk.
(d)¿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.
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(b)-(d).
Discharge and Deposit
Petitioner
Quality Service Corp. is the Trustee under a Deed of Trust executed by James
Crosland and recorded on April 20, 2011. (Memorandum p.1.) The Deed of Trust
was secured by real property commonly known as 4238 3rd Avenue, Los
Angeles, CA, 90008. (Id.) The property was sold at a non-judicial
foreclosure sale on December 14, 2023 as a result of default, and generated
funds exceeding the amount due and owing under the Deed of Trust. (Id.)
Before the
foreclosure sale, the owner of the property was James Terry Crosland III as
trustee of the James Terry Crosland III Living Trust Agreement. (Declaration of
Matthew Podmenik ISO Mot. Exh. B; see also Petition Exh. B.) James Crosland III
passed away on August 11, 2019, before the foreclosure sale. (Petition Exh. C.)
On January 29, 2024, Petitioner’s counsel mailed a Notice of Surplus Funds from
Trustee’s Sale to all potential claimants by first class mail. (Id. Exh.
A.) No response was received, so Petitioner mailed a second Notice on February
27, 2024. (Id. ¶ 4, Exh. B.) Petitioner has exercised due diligence in
attempting to determine the claims to the surplus funds and “has determined
that there is a conflict between potential claimants to the surplus
proceeds.” (Petition ¶¿11(b), Attach. 11b.)
On May 3, 2024, Petitioner filed a Petition and Declaration
Regarding Unresolved Claims and Deposit of Undistributed Surplus Proceeds of
Trustee’s Sale. The Petition states that the property located at 4238 3rd
Avenue, Los Angeles CA 90008 was the subject of a trustee sale held on December
14, 2023. (Pet. ¶¶ 2, 4.) The property was sold for $601,000 and $405,661.40
in surplus funds remained. (Id. at ¶¶ 6-7.) A copy of the
trustee’s sales guarantee is attached to the Petition. (Id. at ¶
5, Attach. 5.) The identity, location, and priority of the potential
claimants is discussed in the Petition. (Petition ¶¶ 8, 11, Attachs. 8,
11b.)
All claimants have been served with Notice of Petition,
Petition, and related documents. (Podmenik Decl. ¶ 6, Ex. C; Petition
Attach. 13.) They have also been served with the Notice of Motion and
Motion. (May 14, 2024 Proof of Service.)
Petitioner requests permission to deposit the surplus funds
with the Court and a court order discharging Petitioner from the matter.
(Podmenik Decl. ¶ 7.)
The Court observes that Tameka Renee Crosland has appeared ex
parte as a self-represented litigant to assert a claim for the surplus
funds. However, although the Court permitted Ms. Crosland to file a response to
this petition, no response has been received. (See May 22, 2024 Minute Order.)
Having reviewed the Petition, the Court finds it satisfies
the requirements of Civil Code §¿2924j with respect to the trustee’s
declaration, trustee’s notice, and service of written notice to all potential
claimants to the surplus funds.
Costs
and Expenses
Civil Code section 2924k(b) allows the
trustee to “charge costs and expenses incurred for such items as mailing and a
reasonable fee for services rendered in connection with the distribution of the
proceeds from a trustee's sale, including, but not limited to, the
investigation of priority and validity of claims and the disbursement of funds.
If the fee charged for services rendered pursuant to this subdivision does not
exceed one hundred dollars ($100), or one hundred twenty-five dollars ($125)
where there are obligations specified in paragraph (3) of subdivision (a), the
fee is conclusively presumed to be reasonable.
Here, Petitioner requests $6,699.52 in attorney’s fees and
costs. (Memorandum p. 3; Pet. ¶ 15.) Petitioner states that these
costs and expenses were incurred as follows:
Provide notice of surplus funds to all potential claimants,
receive and review claims from potential claimants, determine order of priority
of claims received, obtain and/or request all necessary supportive
documentation, draft and send second notice of surplus funds, if necessary, to
all potential claimants, correspondence with claimants, draft notice of intent
to disburse if the Trustee intends to disburse, provide breakdown of costs to
claimants, receive and review written disputes from claimants, draft all
necessary documentation to deposit surplus funds with the court including cover
sheets and attachments, attend any necessary hearings, draft any necessary
pleadings associated with depositing funds with the court, and process surplus
deposit checks.
(Petition. ¶ 15.) This vague
statement is not sufficient to determine whether the request for attorney’s
fees and costs is reasonable. The Court exercises its discretion to permit
Petitioner to supplement its filings to cure this deficiency.
//
CONCLUSION:
For
the reasons explained above, the Motion to Deposit Surplus Funds and Discharge
Petitioner is CONTINUED to July 22, 2024 at 9:00 AM. Petitioner is ordered to
file and serve supplemental papers on or before June 28, 2024, demonstrating
how it calculated the fees and costs requested.
Moving
Party to give notice.
IT IS SO ORDERED.
Dated: June 21, 2024 ___________________________________
Theresa
M. Traber
Judge
of the Superior Court
Any party may submit on the
tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day
before the hearing. All interested parties must be copied on the email. It
should be noted that if you submit on a tentative ruling the court will still
conduct a hearing if any party appears. By submitting on the tentative you
have, in essence, waived your right to be present at the hearing, and you
should be aware that the court may not adopt the tentative, and may issue an
order which modifies the tentative ruling in whole or in part.