Multani v. Neal, B237295

• Court: California Court of Appeals
• Writing for the Court: ZELON
• Citation: 215 Cal.App.4th 1428,155 Cal.Rptr.3d 892
• Parties: Afshan MULTANI et al. Plaintiffs and Appellants, v. WITKIN & NEAL et al. Defendants and Respondents.
• Decision Date: 29 May 2013
• Docket Number: B237295

?215 Cal.App.4th 1428
155 Cal.Rptr.3d 892

Afshan MULTANI et al. Plaintiffs and Appellants,
v.
WITKIN & NEAL et al. Defendants and Respondents.

B237295

Court of Appeal, Second District, Division 7, California.

Filed May 1, 2013
As Modified on Denial of Rehearing May 29, 2013

Affirmed in part, reversed in part, and remanded.

See 4 Witkin, Summary of Cal. Law (10th ed. 2005) Security Transactions in Real Property, § 233.

APPEAL from a judgment of the Superior Court of Los Angeles County, C. Edward Simpson, Judge. Reversed. (Los Angeles County Super. Ct. No. GC044440)

Law Office of Gary Kurtz, Westlake Village, and Gary Kurtz for Plaintiffs and Appellants.
Richardson Harman Ober, Kelly G. Richardson, Pasadena, and Brian D. Moreno, San Diego, for Defendants and Respondents.
ZELON, J.

[215 Cal.App.4th 1434]

INTRODUCTION

The Castle Green Homeowners Association notified Afshan and Rahim Multani that they were delinquent in paying their monthly assessment fees. After the Multanis disputed the debt, the Association conducted a nonjudicial foreclosure sale of their condominium unit. The Multanis sued to set aside the foreclosure alleging irregularities in the sale notices and procedure. They further alleged that the Association and its agents had committed tortious acts during the foreclosure process.

The defendants filed a motion for summary judgment or adjudication arguing that the court should dismiss the foreclosure claims because plaintiffs had actual knowledge of the foreclosure proceedings and failed to exercise their post-sale right of redemption. The defendants also argued that plaintiffs' tort claims were untimely and predicated on privileged conduct related to the foreclosure process. The court granted the motion.

We reverse the trial court's dismissal of plaintiffs' claims seeking to set aside the foreclosure sale, concluding that defendants failed to demonstrate that they notified the plaintiffs of their right of redemption as required by Code of Civil Procedure section 729.050.

FACTUAL AND PROCEDURAL BACKGROUND A. Summary of Plaintiffs' Complaint
1. Plaintiffs' factual allegations

In January of 2010, plaintiffs Afshan and Rahim Multani filed a complaint against the Castle Green Homeowners Association (the Association) and

[215 Cal.App.4th 1435]

numerous other parties arising from a foreclosure of the Multanis' condominium unit.¹ The complaint alleged that, in 1998, plaintiffs had purchased a condominium unit in the “Castle Greens” building in Pasadena, California. Plaintiffs obtained financing to purchase the unit from Chase Bank, who later transferred the loan to Indymac Bank.

In 2005, Rahim Multani returned from an overseas trip and was informed by the Association and its agents, LB Property Management and SBS Lien Services, that he was delinquent in paying his homeowner assessment fees. Although Multani paid the delinquent fees, he received a letter from SBS in August of 2005 alleging that he still owed approximately $2,000 in fees and costs. Multani met with SBS and issued a payment of $743.16 that was never credited to his account. In October, Multani attempted to pay the Association his monthly assessment but was told that the account had been referred to SBS “for collection.” One month later, the Association, acting through SBS, recorded a notice of delinquent assessment against the property in the amount of $3,317, which consisted of $2,229 in unpaid assessments and an additional $1,087 in attorney's fees, costs, late fees and interest.

Throughout 2006, Multani and the Association continued to “disput[e] the validity of the amount ... owed ...” In February of 2007, Multani received a notice of sale informing him that the Association “intended to enforce the lien created by the November ... recording of the Notice of Assessment by selling the Subject Property on March 27, 2007.” The Association alleged that Multani now owed almost $12,000 in assessment fees and costs. Although Multani disputed the Association's accounting, he agreed to pay the full amount and the Association released the assessment lien.

Shortly after the lien was released, Multani contacted the Association and “requested that his account be given ... credit f[or] ... previously non-credited payments.” Between April and July of 2007, Multani continued to make his “required monthly assessment payments, but was never given the credit due on the account.” In February of 2008, the Association recorded a second notice of delinquent assessment lien against the property and, in June, recorded a “Notice of Default and Lien.” Six months later, on December 5, 2008, the Association and its trustee, Witkin & Neal, “set a sale date of the property to take place on January 27, 2009.” Multani “sent a letter disputing the validity of the amount owed” and requested alternative dispute resolution. The Association did not respond.

[215 Cal.App.4th 1436]

On January 5, 2009, “Indymac [Bank], the lender and beneficiary of the senior deed of trust [on the condominium unit], mistakenly instructed their [sic] trustee to foreclose ... on the property.” Plaintiffs immediately filed a wrongful foreclosure action and Indymac agreed to issue a notice of rescission of foreclosure, which was recorded on April 28, 2009. Plaintiffs contended that Indymac's actions had effectively “extinguish[ed] [the Association's] lien and its Notice of Trustee's Sale,” thereby requiring the Association to reinitiate the foreclosure process by recording a new lien.

The Association, however, elected to proceed and directed Witkin & Neil to record the notice of trustee sale set for January 27, 2009. In May of 2009, Multani informed the president of the Association, Randy Banks, that he “ha[d] been trying for some time to correct and rectify what seemed an impossible task of getting a [sic] accurate accounting on Plaintiffs' account and getting the proper credits that were due.” Banks told Multani that he was unaware of the accounting discrepancies and would “provide assistance ... with the outstanding issues regarding the [improper] Association assessments.”

Despite these assurances, on May 21, 2009, the Association placed a notice on the door of the Multanis' condominium stating that they owed $13,640 for delinquent assessments and costs. Shortly after the notice was posted, the Multanis' tenants informed them that the locks on the condominium unit had been changed. When Multani arrived at Castle Green to investigate the matter, he was met by Banks, who said that he had contacted the police and that Multani would be arrested if he did not leave the premises. Although Multani informed the responding officers that he was the legal owner of the condominium, he was forced to leave the building. Between May and October of 2009, Banks and other Association members continued to “harass[ ] Plaintiffs' tenants,” causing them to vacate the condominium.

On July 23, 2009, the Association conducted a foreclosure sale of the Multanis' condominium, which was purchased by ProValue Properties. Although the “property was estimated to be valued at approximately $400,000,” ProValue paid only $20,400, subject to Indymac Bank's $75,000 deed of trust. The Association and its trustee never notified the Multanis that the sale had been postponed from January 27 to July 23, nor did they provide any notice after the sale was completed.

In October of 2009, the Multanis signed a lease with new tenants who moved into the condominium. However, on November 19, the Multanis received a courtesy copy of an unlawful detainer complaint from the Los Angeles Superior Court stating that: (1) a nonjudicial foreclosure of the condominium had occurred on July 23, 2009; (2) although originally scheduled to occur on January 27, 2009, the Association's trustee had “from time

[215 Cal.App.4th 1437]

to time postponed” the sale until July 23; and (3) a trustee deed of sale had been recorded on October 24, 2009, which was 90 days after the plaintiffs' “right to redemption” had expired. Prior to receiving the unlawful detainer complaint, the plaintiffs were unaware of the foreclosure sale.

In November and December of 2009, ProValue repeatedly changed the locks on the condominium unit. Multani and his tenants had several disputes with ProValue, culminating in an altercation on December 17, 2009. Based on misrepresentations made by ProValue, the Pasadena police told Multani that he had to vacate the condominium by the end of the weekend or he would be arrested for trespassing. After being repeatedly harassed and threatened with arrest, Multani finally relinquished possession of the unit and elected to file a lawsuit against the Association, its agents—Witkin & Neal, SBS Lien Services and LB Property Management—and numerous other parties, including ProValue.

2. Summary of plaintiffs' claims

The Multanis' complaint asserted numerous claims seeking to set aside the foreclosure, including: quiet title, wrongful foreclosure, rescission and declaratory relief. The Multanis alleged that the foreclosure was improper because the Association and its agents (collectively defendants) had failed to properly serve the notice of trustee sale or comply with other procedural requirements mandated under Civil Code section 2924, et seq. Plaintiffs also alleged that the defendants had failed to comply with “Civil Code section 1367 et seq.,” which imposes additional procedural requirements on nonjudicial foreclosures conducted by homeowner associations for delinquent assessment fees. More specifically, plaintiffs alleged that the defendants “failed to provide alternate dispute resolution as required by [Civil Code section 1367.4].” The Multanis further asserted that all of the defendants' foreclosure notices had been “effectively voided” when “Indymac Bank ... conducted their non-judicial foreclosure sale of January 2009 and recorded the Deed Upon Sale.”

In addition to the foreclosure claims, the complaint alleged several tort claims based...