Judge: Theresa M. Traber, Case: 24STCV02626, Date: 2025-02-11 Tentative Ruling

Case Number: 24STCV02626    Hearing Date: February 11, 2025    Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE:     February 11, 2025                 TRIAL DATE: NOT SET

CASE:                         MTC Financial, inc., v. 1422 South Orange Dr., Los Angeles CA 90019

CASE NO.:                 24STCP02626           

PETITION TO DEPOSIT SURPLUS PROCEEDS FROM TRUSTEE’S SALE

MOVING PARTY:               Petitioner MTC Financial, Inc.

RESPONDING PARTY(S): No response on eCourt as of 02/06/24

CASE HISTORY:

·         08/16/24: Petition filed.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

            This is a petition to deposit undistributed surplus proceeds from a trustee’s sale.

Petitioner seeks to deposit the surplus funds and be discharged of liability.

TENTATIVE RULING:

The Petition to Deposit Surplus Proceeds and be Discharged is GRANTED.

            Petitioner’s request for attorney’s fees is GRANTED.

            Petitioner is ordered to deposit the balance of the funds, totaling $393,318.69, with the Court within 10 days of this order and to file proof of such deposit with the Court. Petitioner shall be discharged upon filing proof of deposit.

DISCUSSION:

Petitioner seeks to deposit $393, 318.69 in surplus funds from a trustee’s sale 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 MTC Financial Inc. is the Trustee under a Deed of Trust executed by Mildred H. Johnson and recorded on July 2, 2008. (Petition ¶¶ 1-3.) The Deed of Trust was secured by real property commonly known as 1422 South Orange Dr., Los Angeles, CA 90019. (Id. ¶ 2.) The property was sold at a trustee’s sale on June 27, 2023, for $855,500, which exceeded the amount owing under Civil Code section 2924k subdivision (a)(1) and (a)(2) by $400,221.71. (Petition ¶¶ 4-7.) Petitioner mailed notice of surplus funds to all claimants on September 11, 2023. (Petition ¶ 8; Attach. 8.) Petitioner has received two claims for surplus funds: the first from Lavonne Hill on July 1, 2023 as next of kin to the former owner, and the second from Johnathan Morales on October 12, 2023 pursuant to a May 24, 2023 Deed of Trust. (Petition ¶ 11; Attach. 11b Exhs. A-F.) Ms. Hill has objected to Mr. Morales’s claim on the grounds that the May 24, 2023 Deed of Trust is allegedly fraudulent. (Id. Exh. G.) Petitioner thus contends that an actual conflict exists between claimants.

            All claimants have been served the Petition and supporting papers by mail on August 23, 2024, at the addresses presented in their claims. (Proof of Service by Mail filed August 28, 2024.)

Petitioner requests permission to deposit the surplus funds with the Court and a court order discharging Petitioner from the matter. (Petition Attach. 11b.) 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. 

Petitioner requests $6,703.02 in fees and expenses to be awarded from the base total of $400,221.71 in surplus funds, leaving a remainder of $393,318.69. (Petition ¶¶ 15; 16e.) Petitioner has provided an itemized breakdown of the fees incurred, demonstrating that fees were incurred in the amount of $5,045.50 for 14.3 hours of work at hourly rates from $175 to $425 per hour for the investigation of claims and preparation of required notices and papers, including this petition. (Petition Attach. 15.) Petitioner has also provided itemized breakdown of the costs incurred, totaling $1,657.52. (Id.) Having reviewed the records, the Court finds that the requested fee and cost award is reasonable.

CONCLUSION:

            Accordingly, the Petition to Deposit Surplus Proceeds and be Discharged is GRANTED.

            Petitioner’s request for attorney’s fees is GRANTED.

            Petitioner is ordered to deposit the balance of the funds, totaling $393,318.69, with the Court within 10 days of this order and to file proof of such deposit with the Court. Petitioner shall be discharged upon filing proof of deposit.

            Moving Party to give notice.

IT IS SO ORDERED.

Dated:  February 11, 2025                              ___________________________________

                                                                                    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.