Evans v. California Trailer Court, Inc.

• Decision Date: 20 September 1994
• Docket Number: No. F019607,F019607
• Citation: 33 Cal.Rptr.2d 646,28 Cal.App.4th 540
• Court: California Court of Appeals Court of Appeals
• Parties: William EVANS et al., Plaintiffs and Appellants, v. CALIFORNIA TRAILER COURT, INC. et al., Defendants and Appellants.

Page 646

33 Cal.Rptr.2d 646

28 Cal.App.4th 540

William EVANS et al., Plaintiffs and Appellants, v. CALIFORNIA TRAILER COURT, INC. et al., Defendants and Appellants.

No. F019607.

Court of Appeal, Fifth District, California.

Sept. 20, 1994.

Rehearing Denied Oct. 17, 1994.

Review Denied Dec. 15, 1994.

[28 Cal.App.4th 545] Brian C. Davis, Modesto, CA, for plaintiffs and appellants.

Susan E. Burns, Michael G. Loeffler, Kroll, Loeffler & Waggoner, Modesto, CA, for defendants and appellants.

OPINION

THAXTER, Associate Justice.

We decide here that the antideficiency statutes do not bar an action under the following circumstances:

1) The seller/beneficiary holds two trust deeds on the same real property, each securing a separate note for $300,000;

2) The seller/beneficiary reacquires the property at a nonjudicial foreclosure sale of the senior deed of trust with a credit bid which is less than the full amount of indebtedness secured by the two deeds of trust; and,

3) The action seeks damages from the buyers/trustors on various tort theories.

FACTS AND PROCEDURAL HISTORY

Plaintiffs William and Peggy Evans (plaintiffs or Evans) sold their trailer park business and property to defendant California Trailer Court, Inc. (CTCI), taking back two promissory notes. Each note was secured by a separate deed of trust on the real property. CTCI made payments on the notes until it transferred the property to a third party. The third party defaulted on both notes.

Plaintiffs filed this action against CTCI, its president and sole shareholder Gary Trimble, (collectively defendants) and others seeking contract and tort damages. They also exercised their power of sale conferred by the first deed of trust and purchased the property for $314,901, an amount equal to the balance due on the first note plus foreclosure costs.

According to the allegations of plaintiffs' first amended complaint, in May 1987 the plaintiffs agreed to sell to CTCI certain real property, together with their mobilehome park business and related personal property, and to give a covenant not to compete, all for $600,000. The agreement allocated $300,000 of the price to the real property and the balance to the covenant not to compete. CTCI signed two $300,000 promissory notes in favor of plaintiffs. ¹ Each note was payable in monthly installments of $2,632.50 each. The sales contract includes a nonassignment clause, an attorney fees provision, a promise by CTCI to maintain the property in good repair, and an assignment of rents clause. Trimble, the alleged alter ego of CTCI, signed a personal guaranty for the monthly payments.

In December 1990, without Evans's knowledge or consent, CTCI transferred the property to C.S. Corporation.

First Cause of Action: CTCI breached the purchase agreement by failing to pay on the promissory notes, failing to pay taxes and utility charges, failing to notify Evans that it intended to transfer title to a third party, and by allowing the property to become seriously dilapidated. Evans suffered damages of $500,000 as a result of the breaches. Trimble, the alter ego of CTCI, also is liable for these damages.

Second Cause of Action: In December 1990, CTCI breached the agreement by conveying the property to C.S. Corporation without Evans's knowledge or consent. As a result of this breach, under the terms of the agreement, Evans were entitled to rents paid by the tenants from the date of the unauthorized conveyance. CTCI and Trimble, as the alter ego of CTCI, converted those rental payments to their own use.

Third Cause of Action: CTCI and Trimble fraudulently promised to pay Evans $600,000 for the property, told Evans not to record one of the $300,000 deeds of trust until a later date to be agreed upon by the parties, and promised to maintain the property in good repair. Evans reasonably relied on the representations and transferred the property to CTCI. As a result of defendants' fraud, Evans were forced to expend approximately $100,000 to recover the property, secure unpaid rents, and make necessary repairs. In addition, as a result of defendants' fraud, the value of the property "seriously decreased."

Fourth Cause of Action: At the time of purchase, CTCI and Trimble negligently misrepresented they would pay the full purchase price, the second $300,000 deed of trust would be recorded at a later date, and they would properly maintain the property. As a result, Evans suffered damages of $600,000.

Fifth Cause of Action: Between September and December 1990, Trimble engaged in a number of acts designed to, and which did, cause Evans mental distress. Those acts included discontinuing utilities, cutting electric wires to the premises, failing to pay taxes and other obligations, causing the property to deteriorate, wrongfully transferring the property and attempting to encumber it, and fraudulently modifying his personal guaranty.

Sixth Cause of Action: Defendant Anthony Drew Rowe, ² an attorney who acted as escrow officer for the sale, negligently performed his duties by failing to properly draft documents, obtain a personal guaranty from Trimble, and prepare and have executed an all-inclusive deed of trust. As a result, Evans suffered damages of $300,000.

All defendants filed general denial answers and asserted sundry affirmative defenses, including that all of plaintiffs' claims were barred by the antideficiency statutes.

On the first day of trial, CTCI and Trimble sought judgment on the pleadings on the ground plaintiffs' first five causes of action were barred by the antideficiency statutes (CODE OF CIV.PROC., §§ 580B³, 580d), and the one-action rule embodied in section 726. During argument of the motion, the defendants requested that the court judicially notice a recorded trustee's deed. Plaintiffs' counsel stated he had no objection to the request. The deed, dated May 20, 1991, and recorded the following day, reflected that Chicago Title Company, as trustee under a deed of trust executed by CTCI, conveyed title of the real property to plaintiffs following a trustee's sale pursuant to the power of sale contained in the deed of trust. The deed reflects that the amount of the unpaid debt was $314,901.67 and that amount was paid by plaintiffs. ⁴

At the conclusion of the hearing the trial court granted judgment on the pleadings for CTCI and Trimble on the first five causes of action. It then did likewise for Rowe on the sixth cause of action.

Thereafter, the court heard motions by all defendants for awards of attorney fees (in the aggregate amount of over $53,000) as costs and as sanctions under section 128.5. By minute order the court granted the motion, awarding fees of $6,000 in favor of the attorneys for CTCI and Trimble and $750 in favor of the attorney for Rowe.

The plaintiffs filed a timely appeal from the entire judgment. CTCI and Trimble cross-appealed from the order awarding them only $6,000 in attorney fees.

DISCUSSION

1. Standard for review and matters properly considered in reviewing judgment on the pleadings

A motion for judgment on the pleadings is the equivalent of a general demurrer but is made after the time for demurrer has expired. The rules governing demurrers apply. (People v. $20,000 U.S. Currency (1991) 235 Cal.App.3d 682, 691, 286 Cal.Rptr. 746.) The grounds for a motion for judgment on the pleadings must appear on the face of the challenged complaint or be based on facts which the court may judicially notice. (§ 438(d); Tiffany v. Sierra Sands Unified School Dist. (1980) 103 Cal.App.3d 218, 225, 162 Cal.Rptr. 669.) On review we must determine if the complaint states a cause of action as a matter of law. "A judgment on the pleadings ... admits the truth of all material facts alleged in the complaint." (Ramirez v. USAA Casualty Ins. Co. (1991) 234 Cal.App.3d 391, 397, 285 Cal.Rptr. 757.)

Plaintiffs initially complain that in ruling on the motion the trial court considered matters beyond the pleadings. To the extent this argument may be directed to the trustee's deed of which the court took judicial notice, it is unavailing. On a motion for judgment on the pleadings, a court may take judicial notice of something that cannot reasonably be controverted, even if it negates an express allegation of the pleading. (Columbia Casualty Co. v. Northwestern Nat. Ins. Co. (1991) 231 Cal.App.3d 457, 468-469, 282 Cal.Rptr. 389.)

The court may take judicial notice of recorded deeds. (Maryland Casualty Co. v. Reeder (1990) 221 Cal.App.3d 961, 977, 270 Cal.Rptr. 719; Cal-American Income Property Fund II v. County of Los Angeles (1989) 208 Cal.App.3d 109, 112, fn. 2, 256 Cal.Rptr. 21.) In this case, CTCI and Trimble asked the court to judicially notice the recorded trustee's deed pursuant to Evidence Code section 452, subdivision (g). Plaintiffs stated they did not object to the request and the court took judicial notice of the deed.

The court did not err or abuse its discretion in granting the request. The trustee's deed does not negate any express allegation of the amended complaint, but even if it did its existence and authenticity cannot reasonably be controverted. Plaintiffs conceded the truth of the matters evidenced by the deed: they made a credit bid on their senior deed of trust and reacquired the property at the trustee's sale. Such admissions or concessions of matters which cannot reasonably be controverted are properly considered on a motion for judgment on the pleadings. (Columbia Casualty Co. v. Northwestern Nat. Ins. Co., supra, 231 Cal.App.3d at p. 468, 282 Cal.Rptr. 389.) ⁵

2. Plaintiffs are not precluded from pursuing tort claims after a nonjudicial foreclosure of their senior deed of trust

The court below ruled that all of the plaintiffs' causes of action were barred by the antideficiency legislation in view of the nonjudicial foreclosure of the plaintiffs' senior deed of trust. We will conclude that while that ruling may have been correct as to the plaintiffs' contract causes, it...