MTC Fin. Inc. v. Cal. Dep't of Tax & Fee Admin.

• Decision Date: 31 October 2019
• Docket Number: G056234
• Citation: 254 Cal.Rptr.3d 485,41 Cal.App.5th 742
• Parties: MTC FINANCIAL INC., Plaintiff, v. CALIFORNIA DEPARTMENT OF TAX AND FEE ADMINISTRATION, Defendant and Respondent; Rajindar Mehta, Defendant and Appellant.
• Court: California Court of Appeals Court of Appeals

41 Cal.App.5th 742

254 Cal.Rptr.3d 485

MTC FINANCIAL INC., Plaintiff,

v. CALIFORNIA DEPARTMENT OF TAX AND FEE ADMINISTRATION, Defendant and Respondent;Rajindar Mehta, Defendant and Appellant.

G056234

Court of Appeal, Fourth District, Division 3, California.

Filed October 31, 2019

Winters Law Firm and Dennis Winters, Santa Ana, for Defendant and Appellant.

Xavier Becerra, Attorney General, Diane S. Shaw, Assistant Attorney General, Lisa W. Chao and Charles Tsai, Deputy Attorneys General, for Defendant and Respondent.

OPINION

MOORE, J.

Proceeds remaining after a home foreclosure sale were deposited with a trial court due to competing claims to the proceeds. A primary dispute between the claimants was whether a first in time trust deed sufficiently described the foreclosed property. Among other things, the court found the description was insufficient and the trust deed therefore void. It entered judgment in favor of a next in time state tax lien. Finding no error in the result of the judgment, we affirm.

IFACTS AND PROCEDURAL HISTORY

In 2017, a foreclosure sale for the home (the property) of Kamini and Anand Chopra (collectively, the Chopras) was conducted by MTC Financial Inc. (the trustee). Following an initial distribution of the sale proceeds, the trustee determined there was a conflict between outstanding claims to the remaining proceeds (the surplus fund). The trustee deposited the fund with the trial court so it could determine the claimants’ respective priorities pursuant to Civil Code section 2924j, subdivisions (c) and (d).¹ Among the claimants was appellant Rajindar Mehta, the grantee of a 2004 deed of trust signed by the Chopras (the trust deed). Mehta claimed his trust deed was senior in priority because it was created first in time relative to the outstanding claims to the fund. Respondent, the California Department of Tax and Fee Administration (the Tax Department),² disputed Metha’s claim and contended that its 2008 tax lien against Kamini Chopra had senior priority as next in time because, among other things, the trust deed was void and unenforceable based upon its insufficient legal description of the property.³

A. The Ambiguous Trust Deed

The trust deed’s legal description of the property contains multiple points of inaccuracy or ambiguity: (1) the lot number of "68" is incorrect (it should be "88"); (2) the book page number of "810-11" is incorrect (it should be "1-11"); (3) the city of the property is not identified; and (4) regarding the county where the property is located, the description only reads "said county," although a preceding information field does state the correct "Orange County."

At the same time, the trust deed references an assessor’s parcel number, which matches the number identified for the property according to attachments to the trustee’s petition which was filed with the deposit of the surplus fund.⁴ The attachments include two copies of a purported assessor’s map denoting information that could correspond to the trust deed’s legal description of the property. For example, the map purports to depict a "Tract No. 9268," which is the tract described in the trust deed. Ambiguously, however, both numbers "68" and "88" (respectively, the incorrect lot number listed in the trust deed and the true lot number that should have been listed) appear at different locations on the map. Neither Mehta nor the Tax Department discussed this map in their briefs, either at the trial court level or on this appeal.

B. The Trial Court’s Judgment in Favor of the Tax Department

After conducting two hearings, the trial court found in favor of the Tax Department.⁵ Among other things, the court determined the Tax Department’s tax lien claim to have priority over Mehta’s claim because the trust deed contained a fatally defective legal description of the property and Mehta had failed to produce evidence of actually lending money to the Chopras, as the trust deed purported.⁶ The order also stated: "As for the assessor’s parcel number appearing on the face of the [trust deed], there is no evidence that such number is the correct assessor’s parcel number assigned by the Orange County Assessor to the subject real property, especially given the other erroneous information appearing in the deed of trust." A judgment for the Tax Department was entered and this timely appeal by Mehta followed.

IIDISCUSSION

A. Standard of Review and Relevant Law

Mehta argues the trial court erred in finding the trust deed void. Mehta does not discuss what standard of review should be applied to his appeal whereas the Tax Department contends a substantial evidence standard is appropriate. With respect to the trial court’s judgment being based upon an interpretation of the trust deed without the aid of extrinsic evidence, we review the trial court’s determination de novo for an error of law. (See City of Manhattan Beach v. Superior Court (1996) 13 Cal.4th 232, 238, 52 Cal.Rptr.2d 82, 914 P.2d 160 [finding that unless the interpretation of a written instrument turns upon the credibility of extrinsic evidence, de novo review is proper]; see also Pou Chen Corp. v. MTS Products (2010) 183 Cal.App.4th 188, 192, 107 Cal.Rptr.3d 57 [finding that de novo review applied to the determination of the relative priorities between contractual liens and an equitable offset based upon an assigned judgment].) For any finding of fact by the court, " ‘[w]e apply a substantial evidence standard of review ... [where] findings of fact are liberally construed to support the judgment and we consider the evidence in the light most favorable to the prevailing party, drawing all reasonable inferences in support of the findings.’ " ( Integrated Lender Services , Inc. v. County of Los Angeles (2018) 22 Cal.App.5th 867, 875, 231 Cal.Rptr.3d 902.) Mehta, as the appellant, has the burden of demonstrating the trial court erred. ( Allen v. Liberman (2014) 227 Cal.App.4th 46, 53, 173 Cal.Rptr.3d 463.)

Well-established principles for determining the relative priorities of property interests are implicated. This state observes a "first in time, first in right" system of lien priorities where, generally, competing enforceable interests have priority among themselves "according to the time of their creation." (§ 2897.) As to determining the enforceability of such interests, a trust deed must sufficiently describe the property securing it to be enforceable. ( Saterstrom v. Glick Bros. Sash, Door & Mill Co. (1931) 118 Cal.App. 379, 5 P.2d 21.) "To be sufficient the description must be such that the land can be identified or located on the ground by use of the same." ( Edwards v. Santa Paula (1956) 138 Cal.App.2d 375, 380, 292 P.2d 31.) "[A] description that is equally applicable to two different parcels is fatally defective." ( Id. at p. 382, 292 P.2d 31.)

B. The Tax Department’s Standing

Mehta contends the Tax Department lacked standing to challenge the trust deed. We are not persuaded. " ‘ "To have standing, a party must be beneficially interested in the controversy; that is, he or she [or it] must have ‘some special interest to be served or some particular right to be preserved or protected over and above the interest held in common with the public at large.’ [Citation.] The party must be able to demonstrate that he or she has some such beneficial interest that is concrete and actual, and not conjectural or hypothetical." ’ " ( City of Palm Springs v. Luna Crest Inc. (2016) 245 Cal.App.4th 879, 883, 200 Cal.Rptr.3d 128 ; see Mendoza v. JPMorgan Chase Bank, N.A. (2016) 6 Cal.App.5th 802, 810, 212 Cal.Rptr.3d 1 [wrongful foreclosure borrower must demonstrate standing by alleging a " ‘beneficial interest’ " that was " ‘ "concrete and actual, and not conjectural or hypothetical" ’ "].) Mehta does not challenge this general principle but argues the Tax Department lacked standing in this case because it was not a party to the transaction that created the trust deed at issue. Specifically, Mehta cites to Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 58 Cal.Rptr.2d 875, 926 P.2d 1061 ( Rosenthal ) and Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 199 Cal.Rptr.3d 66, 365 P.3d 845 ( Yvanova ), to argue his trust deed was immune from challenge by the Tax Department because it was ratified as a transaction that was merely voidable, since "fraud in the execution or other illegality" had not been shown to render it void.

The argument fails because, while Rosenthal does stand for a proposition that a fraud in the " ‘execution’ " or " ‘inception’ " of a contract will render it void ( Rosenthal , supra , 14 Cal.4th at p. 415, 58 Cal.Rptr.2d 875, 926 P.2d 1061 ), it does not follow that fraud is the only ground upon which a document can be found void. Indeed, the contrary is demonstrated by well-established authorities—some cited to by the Tax Department in its respondent’s brief and the trial court in its ruling in this case—where defects in property descriptions rendered deeds void without any connection to fraud-related claims. (E.g., Edwards v. Santa Paula , supra , 138 Cal.App.2d at pp. 380-381, 292 P.2d 31 ; Saterstrom v. Glick Bros. Sash, Door & Mill Co. , supra , 118 Cal.App. at p. 381, 5 P.2d 21.) In other words, Mehta’s citation to Rosenthal does not demonstrate his proffered argument that the trust deed was merely voidable due to a lack of "fraud in the execution or other illegality."

As a result, Mehta’s attempt to rely upon Yvanova —to argue that he and the Chopras subsequently ratified the trust deed—fails for not demonstrating its logically necessary premise of a voidable (as opposed to void) trust deed. Moreover, while it is true the analysis in Yvanova involved the concept of a voidable transaction being capable of ratification by one or more of its involved parties ( Yvanova , supra , 62 Cal.4th at p. 930, 199 Cal.Rptr.3d 66, 365 P.3d 845 ), we note the Yvanova court expressly limited its scope of review to "action[s] seeking...