Knapp v. Doherty, H026670.

• Decision Date: 20 September 2004
• Docket Number: No. H026670.,H026670.
• Citation: 123 Cal.App.4th 76,20 Cal.Rptr.3d 1
• Court: California Court of Appeals Court of Appeals
• Parties: Johnn P. KNAPP et al., Plaintiffs and Appellants, v. John P. DOHERTY et al., Defendants and Respondents. John P. Doherty, Plaintiff and Respondent, v. Margaret C. Knapp et al., Defendants and Appellants.

20 Cal.Rptr.3d 1

123 Cal.App.4th 76

Johnn P. KNAPP et al., Plaintiffs and Appellants, v. John P. DOHERTY et al., Defendants and Respondents.

John P. Doherty, Plaintiff and Respondent, v. Margaret C. Knapp et al., Defendants and Appellants.

No. H026670.

Court of Appeal, Sixth District.

September 20, 2004.

Edwin A. Frey, Soquel, CA, for Defendants and Appellants and for Plaintiffs and Appellants.

Edward Newman, Newman, Marcus & Clarenbach, Capitola, CA, for Defendant and Respondent and for Plaintiff and Respondent.

Eric Donald Houser, Houser & Allison, Irvine, CA, for Defendant and Respondent Ocwen Federal Bank, FSB.

Paul E. Vallone, Hinshaw & Culbertson, San Francisco, CA, for Defendant and Respondent Cameron & Dreyfuss.

WALSH, J.^*

Johnn and Margaret Knapp (Borrowers) lost their home through nonjudicial foreclosure sale in November 2002, nearly one year after the original date noticed for the sale. During the entire time that the foreclosure sale was threatened, they did nothing to cure their default. Afterward, the buyer at the trustee's sale filed an action to evict Borrowers. Two weeks later, Borrowers sued to set aside the trustee's sale, claiming that the sale notice was never served, as required under Civil Code section 2924b, subdivision (b)(2).¹ Their suit was consolidated with the unlawful detainer action.

The lender, trustee, and buyer sought summary judgment in the action to set aside the foreclosure. They effectively negated Borrowers' claim that the sale notice was not served. Borrowers opposed summary judgment by raising other claims— not alleged in their complaint—that the foreclosure proceedings were irregular because of defects in the default notice and sale notice. After affording Borrowers three separate hearings and the opportunity (twice) to submit supplemental briefing, the trial court granted summary judgment. The unlawful detainer case proceeded to trial, and the buyer was awarded possession of the premises.

Borrowers now appeal, asserting various claims of error with respect to the granting of summary judgment against them in their action to set aside the foreclosure sale. They argue that the trial court failed to recognize the existence of triable issues of material fact with respect to claimed irregularities concerning both the default notice and sale notice served and recorded by the trustee. Borrowers claim that, at minimum, the court should have granted their request for a continuance of the summary judgment motion.

After a de novo review of the record, we conclude that the sale notice was served slightly prematurely, but that this minor procedural irregularity was in no way prejudicial to Borrowers. They received adequate notice of the trustee's sale; indeed, they received nine days more than the 20-day notice required under section 2924b, subdivision (b)(2). Accordingly, summary judgment was proper and we affirm the judgment.

FACTS

In or about September 1988, Borrowers executed a note and deed of trust in favor of Great Western Bank. The deed of trust granted a security interest in residential property located at 156 Las Colinas Drive, Watsonville, California 95076 (Property). The note and deed of trust were thereafter assigned to Ocwen Federal Bank, FSB (Lender) in or about December 1996. Borrowers defaulted on the loan. Lender initiated foreclosure proceedings in September 2001.

On September 5, 2001, Lender—through the trustee, Cameron & Dreyfuss, PLC (Trustee)—recorded a notice of default (Default Notice). The notice indicated that Borrowers had defaulted with respect to monthly payments commencing in July 2000. The Default Notice identified the amount due under the loan as of September 4, 2001, as being $38,011.40.

Lender, through Trustee, recorded on December 12, 2001, a notice of trustee's sale, dated December 6, 2001 (Sale Notice); the notice set the sale date for December 27, 2001. The Sale Notice was posted on the Property on December 6, 2001. It was served on Borrowers by registered or certified mail and by first class mail on November 28, 2001.

Borrowers filed a bankruptcy petition in December 2001. Accordingly, the trustee's sale was postponed 13 times because of the pending bankruptcy.² The sale was postponed a 14th time at Lender's request.

The trustee's sale took place on November 14, 2002. The Property was sold to the highest bidder, John P. Doherty (Buyer), who paid $240,100.³ The trustee's deed—recorded November 25, 2002—included a recital that the Trustee had "complied with all applicable statutory requirements of the State of California," including the recordation and mailing of the Default Notice and Sale Notice.

PROCEDURAL HISTORY

Buyer filed an action for unlawful detainer against Borrowers on December 16, 2002, (case no. CV145234). He alleged that he acquired title to the Property by a trustee's deed after foreclosure sale. Buyer alleged further that he had served on Borrowers the appropriate statutory three-day notice to quit, that the time had elapsed, and that he demanded possession of the Property.

On December 30, 2002, Borrowers filed suit (complaint) seeking, among other things, to set aside the trustee's sale and to cancel the trustee's deed (case no. CV 145359). The complaint named Buyer, Trustee, and Lender as defendants. Borrowers alleged that the trustee's sale under which Buyer took title to the Property was invalid because they were not served with the Sale Notice as required by law. Borrowers sought equitable relief—an order setting aside the trustee's sale, an order canceling the trustee's deed, and an accounting of the amount owed by them under the loan from Lender—or, in the alternative, money damages.

On March 8, 2003, the court—pursuant to the parties' stipulation—ordered the two actions consolidated. Trustee filed a motion for summary judgment on the complaint. Buyer and Lender joined in the motion. Lender filed a similar motion for summary judgment. In partial response to the summary judgment motions, Borrowers filed a motion to amend the complaint to allege—as an additional basis for setting aside the trustee's sale—that Lender's Default Notice contained an excessive demand.

The court conducted three hearings in connection with the summary judgment motions. The court's tentative ruling at the time of the first hearing (on July 24, 2003) was to grant summary judgment. After extended argument, the court continued the matter for further hearing to consider a case cited by Borrowers at the hearing, System Inv. Corp. v. Union Bank (1971) 21 Cal.App.3d 137, 98 Cal.Rptr. 735 (System Inv.). The parties submitted supplemental briefs, and the court issued a supplemental tentative decision reaffirming its prior tentative decision.

After further argument on August 1, 2003, the court continued the case for a third hearing for the parties to brief a new legal argument raised by Borrowers at the hearing concerning the Sale Notice. After supplemental briefing and a third hearing, the court granted the motions for summary judgment. A formal order granting the summary judgment motions was entered on September 2, 2003.

The unlawful detainer case proceeded to trial on August 25, 2003. At its conclusion, the court awarded Buyer possession of the Property and damages of $40 per day from August 20, 2003, to the date of judgment. The court entered judgment in the consolidated cases on September 3, 2003. Thereafter, pursuant to Borrowers' motion, the court stayed the judgment pending appeal, allowing them to retain possession of the Property under certain conditions.

Borrowers filed a notice of appeal on November 3, 2003. The appeal from the judgment was filed timely (Cal. Rules of Court, rule 2(a)(1)) and is a proper subject for appellate review. (Code Civ. Proc., § 437c, subd. (m); see also Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2004) ¶ 10:384, p. 10-122.12 [order granting summary judgment not itself appealable, but appeal lies from judgment entered on such order].)

DISCUSSION

I. Standard Of Review

"The purpose of the law of summary judgment is to provide courts with a mechanism to cut through the parties' pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute." (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843, 107 Cal.Rptr.2d 841, 24 P.3d 493 (Aguilar).) A summary judgment motion must demonstrate that "material facts" are undisputed. (Code Civ. Proc., § 437c, subd. (b)(1).) The pleadings determine the issues to be addressed by a summary judgment motion (Metromedia, Inc. v. City of San Diego (1980) 26 Cal.3d 848, 885, 164 Cal.Rptr. 510, 610 P.2d 407, revd. on other grounds (1981) 453 U.S. 490, 101 S.Ct. 2882, 69 L.Ed.2d 800), and the declarations filed in connection with such motion "must be directed to the issues raised by the pleadings." (Keniston v. American Nat. Ins. Co. (1973) 31 Cal. App.3d 803, 812, 107 Cal.Rptr. 583.)

The moving party "bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law." (Aguilar, supra, 25 Cal.4th at p. 850, 107 Cal.Rptr.2d 841, 24 P.3d 493, fn. omitted.) A defendant moving for summary judgment must "`show[ ] that one or more elements of the cause of action ... cannot be established' by the plaintiff." (Id. at p. 853, 107 Cal.Rptr.2d 841, 24 P.3d 493, quoting Code Civ. Proc., § 437c, subd. (o)(2).) A defendant meets its burden by presenting affirmative evidence that negates an essential element of plaintiff's claim. (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 334, 100 Cal.Rptr.2d 352, 8 P.3d 1089 (Guz).) Alternatively, a defendant meets its burden by submitting evidence "that the plaintiff does not possess, and cannot reasonably obtain, needed evidence" supporting an essential element of its claim. (Aguilar, supra, 25 Cal.4th at p. 855, 107 Cal.Rptr.2d 841, 24 P.3d 493.)

Since summary...