Daaus Funding, LLC v. Mironer
| Decision Date | 28 December 2016 |
| Docket Number | B263730 |
| Court | California Court of Appeals Court of Appeals |
| Parties | DAAUS FUNDING, LLC, Plaintiff and Appellant, v. VADIM JEFF MIRONER et al., Defendants and Appellants. |
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Los Angeles County Super. Ct. Nos. BC469595 & BD398253)
APPEAL from a judgment of the Superior Court of Los Angeles County. Thomas Trent Lewis, Judge. Affirmed in part and reversed in part.
Dan S. Maccabee for Plaintiff and Appellant.
Garrett & Tully, Ryan C. Squire, Motunrayo D. Akinmurele; Cunningham & Treadwell and James H. Treadwell for Defendants and Appellants.
* * * * * * After the family court entered an order dissolving a marriage and directing that the family home be sold and its proceeds split between the former spouses, one of those spouses borrowed money from a lender and secured that loan with a deed of trust on the as-yet-unsold family home. The home was subsequently sold to a third party in a family court-approved sale. When the lender did not get full repayment of its loan from the sale's proceeds, the lender and the third party sued each other. On cross motions for summary adjudication and after a bench trial, the trial court held that the lender's lien was valid, that the lender could judicially foreclose on the lien, and that the lien was worth more than $1.9 million by the time of judgment. Both parties appeal. We conclude that the lien is valid and subject to foreclosure, but that the trial court's calculation of the lien amount is partially incorrect. Accordingly, we affirm in part and reverse in part.
FACTS AND PROCEDURAL BACKGROUND
The subject of this litigation is a luxury home on Summit Court in the Beverly Hills Post Office neighborhood of Los Angeles (Property).1
John Ohanesian (John) and Adela Gregory Ohanesian (Adela) were married in 1989.2 In 2001, they acquired the Property and eventually held it as their community property.
In 2003, Adela filed for divorce. In 2007, the family court hearing the dissolution action ordered the spouses to "place [] [the Property] on the market immediately, with the funds received from the sale to be included in the final accounting . . . ." On March 14, 2008, the family court entered an order of dissolution. Because the spouses had not yet sold the Property, the dissolution order provided that "[t]he net proceeds from the sale of the [Property] shall be awarded one-half to [Adela] and one-half to [John]," and "reserve[ed] [the family court']s jurisdiction to resolve any [related] disputes."
In March 2010, Adela borrowed $775,000 from plaintiff, respondent and cross-appellant Daaus Funding, LLC (Daaus) and secured the loan with a deed of trust on the Property (the lien). She did so without the consent of John or the family court.
In the promissory note memorializing the loan, Adela agreed to prepay $186,000 in interest and to repay the full amount of the loan two years later (on March 31, 2012). The note specified a 12 percent interest rate, but acknowledged that "[u]nder no circumstances shall the interest rate on this note be more than the maximum rate allowed by applicable law." The note contained a due-on-default clause: If Adela did not repay the loan or breached any "representation, warrantee or covenant"—including the promise, contained in the related Loan and Security Agreement, not to transfer the property without Daaus's written consent—Daaus could demand immediate payment of the full loan amount by giving "written notice . . . ofsuch default." And upon such default, the interest rate jumped to 20 percent, and "all reasonable costs of collection"—namely, attorney's fees, expenses and court costs—would be added to the principal "when incurred" and would accrue interest at the 20 percent rate. The note also spelled out the specific due-on-sale clause included in the deed of trust to be recorded, as set forth below.
In the Loan and Security Agreement memorializing the lien, Adela represented that she "own[ed] . . . a 50% undivided interest as tenants in common" in the Property. The agreement defined eleven different "events of default," including "[a]ny transfer of the Property . . . without [Daaus's] prior written consent." It also contained a due-on-sale clause that required Adela to "immediately" pay the principal of the loan along with any "reasonable costs and expenses . . . incurred by [Daaus] in connection with the [l]oan" and to pay the higher, 20 percent interest rate on those amounts. The due-on-sale clause was triggered automatically by Adela's bankruptcy or any default on the promissory note, but otherwise took effect "at the option of [Daaus] upon written notice to Borrower."
The deed of trust embodying the lien also contained a due-on-sale clause tracking the language set forth in the promissory note. That clause provided that, should Adela "sell, convey, transfer or dispose of the Property . . . without the written consent of [Daaus], . . . [Daaus] shall have the right, at its option, to declare all sums of [money] secured hereby forthwith due and payable." (Italics added)
Because Daaus had received a preliminary title report on the Property, Daaus knew that its lien was subordinate to several other liens on the Property. Believing that the remaining equityin the Property was sufficient to pay off its lien, Daaus funded the loan to Adela, and she used some of the money to pay off one of her outstanding debts. Daaus recorded the deed of trust at the Los Angeles County Recorder's office on March 31, 2010, and a UCC Financing Statement regarding the lien on April 1, 2010.
Less than two weeks later, on April 13, 2010, John filed an ex parte application alerting the family court to Adela's unilateral encumbrance of the Property. In the application, John sought some of the loan's proceeds but did not seek to void the encumbrance. The family court issued an order on April 14, 2010, "further restrain[ing Adela] from hypothecating the [Property]."
By October 2010, John had found a prospective buyer for the Property—defendants, appellants and cross-respondents Vadim Jeff and Luba Mironer (collectively, the Mironers). In an order dated October 7, 2010, the family court granted John permission to proceed with the sale for a price of $4.75 million.
The escrow agent for the sale sent a letter to Daaus explaining that "the encumbrance you hold on the [Property] is to be paid in full through this escrow" and asking Daaus to reconvey its security interest on the Property. Following the escrow agent's assurance that Daaus would be "paid in full" and "conditioned on full payment of [its] loan," Daaus on October 27, 2010 executed a full reconveyance.
In an order dated December 14, 2010, the family court issued an updated order dictating how the proceeds from the upcoming sale of the Property would be distributed. As pertinent here, the court divided the $4.75 million in proceeds evenly between John and Adela, ordered that seven of Adela's securedcreditors be paid immediately from her half of the proceeds, and ordered that the remainder of Adela's half of the proceeds be placed in a blocked account for Adela's remaining seven secured creditors. Although Daaus was never made a party to the family law proceeding disposing of the Property either by summons or a complaint in joinder, the family court "deemed" Daaus to be a claimant and included it in the group of secured creditors to be paid from the blocked account. The family court set a further hearing for January 19, 2011, "to resolve issues regarding payment of the" secured creditors who would be splitting the funds in the blocked account.
Escrow closed on the Property on December 30, 2010. The Mironers took title to the Property in the name of their family trust. The closing statement in escrow indicated that Daaus would receive a "loan payoff of $45,576 (for its $775,000 loan), but Daaus was not immediately disbursed that amount.
Following the hearing on January 19, 2011, the family court ordered that the funds in the blocked account be distributed first to Adela's six secured creditors with higher priority liens, with "the remaining balance . . . to Daaus."3 That balance of $269,503.84 was not enough to pay off Daaus's lien, and the funds remained in a sequestered account until April 2015.
On January 26, 2011, Daaus gave written notice to Adela that it was invoking the due-on-sale clause. Around the same time, Daaus recorded two documents with the Los Angeles County Recorder's office purporting to reinstate its lien. On January 18, 2011, Daaus recorded an Affidavit and Notice of Erroneous Deed of Reconveyance stating that its priorreconveyance of its lien was conditioned upon full payment of its lien and that the condition was not met. And on the same basis, Daaus on February 16, 2011, recorded a Rescission of Reconveyance and Reinstatement of the Deed of Trust as Though the Reconveyance Had Never Been Issued and Recorded.
In September 2011, Daaus sued the Mironers for (1) declaratory relief, (2) quiet title, (3) judicial foreclosure, (4) rescission of its deed of reconveyance, and (5) an equitable lien. The Mironers filed a cross-complaint for (1) declaratory relief, and (2) quiet title.
The parties filed cross-motions for summary judgment and/or summary adjudication. After a further round of supplemental briefing, the trial court ultimately granted Daaus's motion on its declaratory relief, quiet title, rescission and equitable lien claims; the court denied the Mironers' motion.4 In its 16-page written order, the trial...
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