Meadows v. Bakersfield Sav. & Loan Ass'n

Citation59 Cal.Rptr. 34,250 Cal.App.2d 749
CourtCalifornia Court of Appeals
Decision Date05 May 1967
PartiesRobert L. MEADOWS and Barbara Meadows, Plaintiffs and Appellants, v. BAKERSFIELD SAVINGS & LOAN ASSN., Defendant and Respondent. Civ. 703.
OPINION

STONE, Associate Justice.

Plaintiffs appeal from a judgment of nonsuit in their action for damages predicated on the theory of abuse of process.

Defendant Bakersfield Savings & Loan Association financed the purchase of a residence for plaintiffs, who, in turn, executed a promissory note for the principal sum of $20,200 with interest at the rate of 6.6 per cent per annum, payable in monthly installments on account of principal and interest in the sum of $138. The note provided for a late-payment penalty equal to 10 per cent of any installment not paid within 15 days of its due date. Plaintiffs also signed an agreement to pay all the taxes and assessments affecting the real property, and to pay fire insurance premiums, taxes and insurance premiums to be prorated monthly and impounded by defendant in a reserve account from which future taxes and insurance premiums were to be paid. To the monthly installment of $138 for principal and interest, defendant added an estimated $28 for prorate of taxes and $4 for fire insurance, or a total of $170 commencing June 1, 1962.

Defendant advised plaintiffs May 16, 1963, that because of an increase in Kern County real property taxes it was necessary to increase the monthly payment for tax reserve, so that their total monthly payment was increased from $170 to $194. Plaintiffs were also advised that the 10 per cent delinquency rate would be $19.40 after June 1, 1963.

In November 1963 plaintiffs sent their monthly check for $194 more than 15 days after it was due, and the association returned the check with a notice of a 10 per cent late charge of $19.40, making the amount due $213.40

A dispute arose, plaintiffs contending the late penalty payment provided in the promissory note was expressly limited to 10 per cent of the monthly installment of $138 on principal and interest, and that defendant had no right to charge the penalty on the reserve payments for taxes and fire insurance premiums. In the course of the controversy, plaintiffs discovered that defendant had prorated taxes on an 11-month basis instead of in 12 equal payments. They demanded that the prorated portion of their monthly payment be restored to the original $28 per month. Plaintiffs made no more payments. Several conferences were had between them and various representatives of defendant, but without success, and on January 29, 1964, defendant caused a 'Notice of Default and Election to Sell Under Deed of Trust' to be recorded in Kern County, and a copy to be served upon each of the plaintiffs.

Shortly before the time fixed for sale, plaintiffs sought relief by way of a complaint stating a first cause of action for declaratory relief, and a second cause of action for damages. They obtained a temporary restraining order preventing defendant from proceeding with the sale under the deed of trust.

A bifurcated trial was ordered; the declaratory relief action was set for trial by the court, to be followed by a jury trial of the second cause of action for damages. The trial court decided the declaratory relief action in favor of plaintiffs. The same judge presided over the jury trial for damages.

Plaintiffs advised the court that their cause of action for damages was predicated upon abuse of process, and they proceeded to trial on that theory. The case did not reach the jury, however, as defendant's motion for nonsuit was granted.

From the pleadings, it is difficult to tell the nature of plaintiffs' second cause of action. They pleaded the original loan agreement with monthly payments including impound for taxes and insurance, and that the impounds were increased beyond amounts legally chargeable, including an excessive demand for late charges. They also alleged that defendant was notified, both orally and in writing, that the charges exceeded those agreed upon, that plaintiffs suggested that defendant seek advice of counsel in interpreting the loan instruments but nevertheless defendant threatened to foreclose upon and sell plaintiffs' property if they did not comply with 'defendant's extortionate demands.' It is then charged that defendant, in pursuance of these threats, caused a notice of default to be recorded on January 29, 1964, in the official records of the County Recorder of the County of Kern, and on May 7, 14 and 21, 1964, caused to be published a notice of trustee's sale to be held May 29, 1964.

Plaintiffs premised their claim for damages upon the allegations that each of them suffered 'great distress of mind consisting of humiliation, and embarrassment before their friends, neighbors, and the public at large to the damage of each of them in the sum of $5,000.00 for a total sum of $10,000.00,' and that 'in doing all things herein alleged, defendants acted maliciously and with a wanton disregard of the rights and feelings of plaintiffs, and their acts are and were entirely against public policy, and by reason thereof, plaintiffs demand exemplary and punitive damages against said defendants in the sum of $100,000.00.' Abuse of process, as such, is not pleaded.

The pretrial order conforms to the complaint. Apparently the trial judge was not clear as to the theory of the second cause of action because when defendant moved for a nonsuit, the following colloquy between plaintiffs' counsel and the court occurred:

'BY THE COURT: Very well. Now let's get back to the main question and that is what theory are you proceeding under.

MR. MEADOWS: Your Honor * * *.

BY THE COURT: What is the basis of the liability that you contend is present in this case?

MR. MEADOWS: Your Honor, I am still proceeding on an abuse of process theory.

BY THE COURT: All right, you are not proceeding on any question of slander of title are you?

MR. MEADOWS: No your Honor.

BY THE COURT: All right, I want that clear. Abuse of process is your real basis for your position that the defendant is liable.'

Thereafter the trial court granted the motion for nonsuit, upon the ground plaintiffs had failed to plead or prove a prima facie case of abuse of process.

The few California cases concerning abuse of process all approve the definition of that tort as delineated in 3 Restatement of Torts, section 682, page 464. The gravamen of the cause of action lies in the misuse of process, no matter how properly obtained, for any purpose other than that which it was designed to accomplish. (Trachina v. Arcinas, 78 Cal.App.2d 522, 524, 178 P.2d 65; Pimentel v. Houck, 101 Cal.App.2d 884, 886, 226 P.2d 739; Tellefsen v. Key System Transit Lines, 198 Cal.App.2d 611, 613, 17 Cal.Rptr. 919; Kyne v. Eustice, 215 Cal.App.2d 627, 631, 30 Cal.Rptr. 391; Coy v. Advance Automatic Sales Co., 228 Cal.App.2d 313, 318, 39 Cal.Rptr. 476; Thornton v. Rhoden, 245 A.C.A. 80, 94, 53 Cal.Rptr. 706.)

Perhaps the most exhaustive review of abuse of process in a California case is found in Spellens v. Spellens, 49 Cal.2d 210, 317 P.2d 613, wherein the Supreme Court, after approving the definition in 3 Restatement of Torts, section 682, page 464, quotes the definition of Mr. Justice Pound in Dean v. Kochendorfer, 237 N.Y. 384, 143 N.E. 229:

"The gist of the action for abuse of process lies in the improper use of process after it is issued. To show that regularly issued process was perverted to the accomplishment of an improper purpose is enough." (P. 231, 317 P.2d p. 626.)

(See also Prosser, Law of Torts (3d ed.) p. 876; Harper & James, The Law of Torts, vol. 1, § 4.9, p. 330; 1 Am.Jur.2d p. 250.)

We are confronted with the question whether recording a notice of default and publishing a notice of trustee's sale pursuant to the terms of a deed of trust...

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