Leyva v. Superior Court

• Citation: 210 Cal.Rptr. 545,164 Cal.App.3d 462
• Parties: , Blue Sky L. Rep. P 72,193 Jesus V. LEYVA, et al., Petitioners, v. SUPERIOR COURT, San Bernardino County, Respondent, ORANGE COAST TITLE COMPANY, a California corporation, and Title Insurance Company of Minnesota, a Minnesota corporation, Real Parties in Interest. E001262.
• Decision Date: 06 February 1985
• Court: California Court of Appeals

Page 545

210 Cal.Rptr. 545

164 Cal.App.3d 462, Blue Sky L. Rep. P 72,193

Jesus V. LEYVA, et al., Petitioners, v. SUPERIOR COURT, San Bernardino County, Respondent ORANGE COAST TITLE COMPANY, a California corporation, and Title Insurance Company of Minnesota, a Minnesota corporation, Real Parties in Interest.

E001262.

Court of Appeal, Fourth District, Division 2, California.

Feb. 6, 1985.

Loeb & Loeb, Robin Meadow, Peter N. Scolney, Los Angeles, Gibson Dunn & Crutcher, Richard G. Duncan, Jr., and J. Michael Brennan, Newport Beach, for real parties in interest.

OPINION

MORRIS, Presiding Justice.

Petitioners, Jesus V. Leyva, et al., seek review of an order denying summary adjudication that assignments of fractional interests in promissory notes, secured by trust deeds, constituted securities.

FACTS

On September 16, 1983, the superior court made and entered an "Order Re Class Certification." The class certification order made the following finding: "The Complaint ... alleges that the defendants [real parties in interest, Orange Coast Title Company and Title Insurance Company of Minnesota], with the intention to deceive or defraud, materially assisted Wayne Burton in [the] sale of what are allegedly fraudulent securities to the plaintiff class in violation of California Corporations Code section 25504."

The original class certification order defined the class in part as parties who "purchased promissory notes from Wayne Burton ... under his name or under the names of Universal Financial or California Equities Home Loan ... which were ostensibly secured by the assignment of fractionalized interests in deeds of trust in which Burton identities were both the trustor and beneficiary...."

Finally, the class certification order limited the issues to be tried on a class basis. The existence of a security was one of those issues, and was phrased by the court as follows: "Did the promissory note and the assignment to a class member of a fractionalized interest in a deed of trust as security for said promissory note constitute a security within the meaning of Section 25019 of the California Corporations Code?"

Petitioners moved for summary adjudication that the instruments here did constitute securities. They submitted four declarations in support of their motion. Based on personal knowledge, these declarations stated that: (1) petitioners purchased promissory notes in exchange for personal or cashier's checks made to the order of one of the real parties in interest; (2) petitioners were requested to sign a loan funding procedure; (3) petitioners received an alleged assignment of a fractional interest in a deed of trust as collateral security; (4) petitioners were given a copy of an alleged borrower note secured by the deed of trust. The instruments referred to were attached as exhibits. Petitioners also submitted a copy of a federal complaint and federal judgment, and a California cease and desist order for judicial notice. Real parties in interest submitted no affidavits or declarations.

The court denied the motion for summary adjudication, finding as material triable controversies, (a) whether the collateral security was adequate and (b) whether the investors depended on the promoter's success for a return on investment. This petition for a writ of mandate followed.

DISCUSSION

I.

Real parties in interest initially contend that the writ of mandate should be denied on the procedural ground that petitioners failed to demonstrate the absence of an adequate remedy at law. We disagree.

In general terms, Code of Civil Procedure sections 1086 and 1103 state that seeking a writ is appropriate "... in all cases where there is not a plain, speedy and adequate remedy ...," in the ordinary course of the law. In addition, Code of Civil Procedure section 437c, subdivision (l ), explicitly allows a petition for a writ upon the denial of a motion for summary judgment.

Although the availability of an action at law or in equity normally precludes resort to the writ of mandate (Irvine v. Gibson (1941) 19 Cal.2d 14, 16, 118 P.2d 812; Keyston v. Banta-Carbona Irr. Dist. (1937) 19 Cal.App.2d 384, 65 P.2d 371), courts generally consider the merits of a writ based upon a denial of summary judgment (Roman Catholic Archbishop v. Superior Court (1971) 15 Cal.App.3d 405, 410, 93 Cal.Rptr. 338; Bank of America v. Superior Court (1970) 4 Cal.App.3d 435, 441, 84 Cal.Rptr. 421; Whitney's at the Beach v. Superior Court (1970) 3 Cal.App.3d 258, 265-266, 83 Cal.Rptr. 237). One purpose of summary judgment is to provide a speedy legal resolution of uncontested facts; "... a denial of [summary judgment] when it should as a matter of law have been granted should open the door to an equally speedy review of the matter." (Bank of America v. Superior Court, supra, 4 Cal.App.3d at p. 441, 84 Cal.Rptr. 421.) Because there is no appeal from a denial of summary judgment (Bricklayers & Masons Union No. 1 v. Superior Court (1963) 216 Cal.App.2d 578, 582, 31 Cal.Rptr. 115), the writ is the only speedy review available. ¹

II.

Petitioners contend that the trial court erred in denying their motion for an order summarily adjudicating that assignments of fractional interests in notes and deeds of trust constituted securities. We disagree.

" 'Summary judgment is proper only if the affidavits in support of the moving party would be sufficient to sustain a judgment in his favor and his opponent does not by affidavit show such facts as may be deemed by the judge hearing the motion sufficient to present a triable issue. The aim of the procedure is to discover, through the media of affidavits, whether the parties possess evidence requiring the weighing procedures of a trial. In examining the sufficiency of affidavits filed in connection with the motion, the affidavits of the moving party are strictly construed and those of his opponent liberally construed, and doubts as to the propriety of granting the motion should be resolved in favor of the party opposing the motion. Such summary procedure is drastic and should be used with caution so that it does not become a substitute for the open trial method of determining facts.' (Stationers Corp. v. Dun & Bradstreet, Inc. (1965) 62 Cal.2d 412, 417 ... [42 Cal.Rptr. 449, 398 P.2d 785]; see Joslin v. Marin Mun. Water Dist. (1967) 67 Cal.2d 132, 146-148.... [60 Cal.Rptr. 377, 429 P.2d 889] )" (Corwin v. Los Angeles Newspaper Service Bureau, Inc. (1971) 4 Cal.3d 842, 851-852, fn. omitted, 94 Cal.Rptr. 785, 484 P.2d 953.)

In the instant case we do not have any counteraffidavits. Therefore, we need only determine whether the affidavits of the petitioners in support of their motion for summary adjudication of the securities issue, strictly construed, are sufficient to sustain a judgment in their favor. (Koret of Cal., Inc. v. City etc. of San Francisco (1969) 2 Cal.App.3d 87, 89, 81 Cal.Rptr. 698; Martin v. General Finance Co. (1966) 239 Cal.App.2d 438, 446, 48 Cal.Rptr. 773; Goldstein v. Hoffman (1963) 213 Cal.App.2d 803, 810, 29 Cal.Rptr. 334.) To be sufficient, by admissible facts the petitioners must establish every element necessary to a favorable decision. (Martin v. General Finance Co., supra, 239 Cal.App.2d at p. 446, 48 Cal.Rptr. 773; Goldstein v. Hoffman, supra, 213 Cal.App.2d at p. 811, 29 Cal.Rptr. 334.)

In addition to affidavit, admissible facts may be provided by declaration (Zemelman v. Boston Ins. Co. (1970) 4 Cal.App.3d 15, 19, 84 Cal.Rptr. 206), and by judicial notice (McKinney v. County of Santa Clara (1980) 110 Cal.App.3d 787, 794, 168 Cal.Rptr. 89). Reasonable inferences from admissible evidence are also admissible. (Code Civ.Proc., § 437c, subd. (c).)

III.

Undisputed declarations established that petitioners received alleged assignments of fractional interests in notes and deeds of trust from real parties in interest. Petitioners contend because the complaint alleged securities fraud that these assignments, standing alone, constituted securities as a matter of law, and that the trial court should have summarily adjudicated this issue accordingly.

Section 25019 of the Corporations Code ² states in relevant part that: " 'Security' means any note; stock; ... evidence of indebtedness; ... collateral trust certificate; ... investment contract; ... or in general, any interest or instrument commonly known as a 'security' ...." (Emphasis added.)

Regardless of the type of securities law violation involved, all California courts, and virtually all federal courts, have rejected a literal interpretation of section 25019 and the equivalent federal statutes. ³ (See Silver Hills Country Club v. Sobieski (1961) 55 Cal.2d 811, 814, 13 Cal.Rptr. 186, 361 P.2d 906; People v. Davenport (1939) 13 Cal.2d 681, 685-686, 91 P.2d 892; People v. Schock (1984) 152 Cal.App.3d 379, 385, 199 Cal.Rptr. 327; Hamilton Jewelers v. Department of Corporations (1974) 37 Cal.App.3d 330, 334-335, 112 Cal.Rptr. 387; United Housing Foundation, Inc. v. Forman (1975) 421 U.S. 837, 851-852, 95 S.Ct. 2051, 2060, 44 L.Ed.2d 621.) " '[I]t plainly was not the legislative intent that "every " note or evidence of indebtedness, regardless of its nature and of the circumstances surrounding its execution, should be considered as included within the meaning and purpose of the act.' " (People v. Schock, supra, 152 Cal.App.3d at p. 385, 199 Cal.Rptr. 327, quoting People v. Davenport, supra, 13 Cal.2d at p. 686, 91 P.2d 892.)

"Thus, the determination of whether a particular instrument constitutes a security must be made on an ad hoc basis upon a review of the surrounding facts and circumstances and in light of the regulatory purposes to be served under the Corporate Securities Law." (Id.; see People v. Skelton (1980) 109 Cal.App.3d 691, 714, 167 Cal.Rptr. 636; Sarmento v. Arbax Packing Co. (1964) 231 Cal.App.2d 421, 424, 41 Cal.Rptr. 869.) This determination is to be made as a matter of law. (People v. Skelton, supra, 109 Cal.App.2d at pp....