Asuncion v. Superior Court

• Decision Date: 14 July 1980
• Citation: 166 Cal.Rptr. 306,108 Cal.App.3d 141
• Court: California Court of Appeals Court of Appeals
• Parties: Peter T. and Teresa A. ASUNCION, Petitioners, v. SUPERIOR COURT OF the COUNTY OF SAN DIEGO, Respondent, W. C. FINANCIAL, INC., Real Party in Interest. Civ. 22722.

Page 306

166 Cal.Rptr. 306

108 Cal.App.3d 141

Peter T. and Teresa A. ASUNCION, Petitioners, v. SUPERIOR COURT OF the COUNTY OF SAN DIEGO, Respondent W. C. FINANCIAL, INC., Real Party in Interest.

Civ. 22722.

Court of Appeal, Fourth District, Division 1, California.

July 14, 1980.

Dennis E. Holz, Gregory A. Veach and Joyce A. Wharton, San Diego, for petitioners.

No counsel for respondent.

Carmine J. Bua and John C. Lessel, San Diego, for real party in interest.

GERALD BROWN, Presiding Justice.

Action in unlawful detainer, filed in Municipal Court on October 15, 1979, by real party, W. C. Financial, Inc. (Financial) under Code of Civil Procedure section 1161a, subdivision (4), claiming lawful sale to Financial of the real property located at 4404 Logan Avenue, City of San Diego. Defendants Peter and Teresa Asuncion successfully moved in the municipal court for a transfer of the action to superior court on the ground title to real property worth more than $15,000 was in issue, a subject not within the jurisdiction of the municipal court. Also, the Asuncions on October 24, 1979, filed a complaint against Financial in the superior court alleging fraud, usury, unfair business practices, truth in lending violations, undue influence, and other causes, and requesting title to the property be quieted in their favor, rescission or cancellation of deed, and actual and punitive damages. After transfer of the eviction action to superior court, Financial obtained an order of the superior court retransferring the action to the municipal court. The Asuncions have petitioned this court for a writ of mandate, contending at this stage of the proceedings neither the superior nor the municipal court appears willing to take jurisdiction of the eviction, and further, to permit the eviction action to proceed summarily in the lower court will deprive the Asuncions of their legitimate defenses based on fraud and will irreparably damage them by causing their eviction from their home before their action in the superior court can be resolved. They have owned the subject real property since 1971, and by mid-1979 had an equity in the property exceeding $20,000.

The Asuncions' complaint in the superior court alleges: Financial regularly engages in unlawful, unfair and fraudulent business practices; it locates persons with substantial equity in encumbered residential real property who are in default on their home loans; represents to these homeowners Financial will offer them advice and assistance, and further states the homeowners must act at once to prevent foreclosure, despite the fact homeowners have 90 days to cure a default; offers to loan the homeowners funds to pay off the defaults, with the real property to be security for the loan; and then induces the homeowners to sign the legal papers which they do not understand and which obligate the homeowners to repay sums greatly in excess of their present undertakings, charge usurious rates of interest, and, unbeknownst to the homeowners, grant Financial legal title to the property. Since the assumed new obligation is always more burdensome than the existing loans, which the homeowner could not meet, there is a further default on the new agreement, and Financial then evicts the homeowners and converts the equity to its own use.

Here it is alleged the Asuncions in 1971 obtained a purchase money mortgage on the property of $19,800 with monthly payments of $149. In 1978 they executed a second trust deed on an obligation of $3,500, with payments of $64.84. They missed two payments on the second trust deed in June and July 1979. The beneficiary of the second trust deed filed a notice of default to commence foreclosure on July 12. On July 19 representatives of Financial contacted the Asuncions. The Asuncions signed papers on that date which they were told were necessary to prevent foreclosure on their home. The legal effect of those papers was, among other things, to grant title to the property to Financial, subject to a 45-day option to reacquire the property by executing in Financial's favor a $12,000 promissory note at 18 percent "or more" payable in three years. Financial in return promised to retire a furniture company debt in the sum of $1,126.36 and to pay the second trust deed of approximately $3,500. Financial recorded the grant deed immediately after its execution on July 19. On October 15, 1979, it commenced the unlawful detainer action alleging expiration of the option on September 3, 1979, resulting in ownership of the property in Financial.

The net effect of the parties' dealings is, Financial has loaned the Asuncions about $4,800 for 45 days, in return for real property having an equity in excess of $20,000. It is alleged such a loan may be usurious, as well as fraudulent and in violation of a number of laws, both state (unfair business practices, Bus. & Prof.Code, § 17200 et seq.; and usury, Cal. Const. art. XX, § 22, and Civ.Code, § 1916-2) and federal (truth in lending, 15 U.S.C., § 1601 et seq.).

It is generally recognized the summary unlawful detainer action is not a suitable vehicle to try complicated ownership issues involving assertions of fraud and deceptive practices such as the Asuncions allege here. In holding an unlawful detainer action is not res judicata on the question of fraud in the acquisition of title, Gonzales v. Gem Properties, Inc., 37 Cal.App.3d 1029, 1036, 112 Cal.Rptr. 884, 889 pointed out, "The summary nature of unlawful detainer proceedings suggests that, as a practical matter, the likelihood of the defendant's being prepared to litigate the factual issues involved in a fraudulent scheme to deprive him of his property, no matter how diligent defendant is, is not great." Normally, the unlawful detainer action may encompass only a "narrow and sharply focused examination of title" directed at the formal validity of the trustee sale (Vella v. Hudgins, 20 Cal.3d 251, 255, 142 Cal.Rptr. 414, 416, 572 P.2d 28, 30). Similarly, in a case which permitted the summary eviction of a gas station franchisee despite multiple asserted defenses of fraud, estoppel, bad faith, and violations of the franchise investment law, the court would not permit consideration of the franchisee's affirmative demands for relief by cross-complaint in the unlawful detainer, and further pointed out the defendant's right to raise such matter defensively in the eviction action had to be balanced against the interest in preserving the summary nature of eviction. "In causes where the legality of the reason for an eviction may be in issue, the court, in deciding whether to permit affirmative defenses, may balance the interest in preserving the summary nature of the unlawful detainer action against the public policies furthered by protecting the defendant from eviction under the alleged defenses." (Mobil Oil Corp. v. Handley, 76 Cal.App.3d 956, 963, 143 Cal.Rptr. 321, 325; see also S. P. Growers Assn. v. Rodriguez, 17 Cal.3d 719, 724, 131 Cal.Rptr. 761, 552 P.2d 721.) Similarly, another court found antitrust violations were not a proper defense in an unlawful detainer action. (Union Oil Co. v. Chandler, 4 Cal.App.3d 716, 84 Cal.Rptr. 756.)

Although no case appears to hold directly that ownership issues such as are raised here may, or may not, justify slowing the pace of eviction actions, the following cases are helpful in indicating the direction of legal development on this issue. Language in S. P. Growers Assn. v. Rodriguez, supra, 17 Cal.3d 719, 730, 131 Cal.Rptr. 761, 552 P.2d 721, indicates the possibility commercial evictions should be treated differently than residential evictions, permitting affirmative defenses more liberally in the latter situation. (S...