Nguyen v. Calhoun, H022134.

• Citation: 129 Cal.Rptr.2d 436,105 Cal.App.4th 428
• Decision Date: 15 January 2003
• Docket Number: No. H022134.,H022134.
• Court: California Court of Appeals
• Parties: Lo NGUYEN, Plaintiff and Respondent, v. Richard CALHOUN et al., Defendants and Appellants.

129 Cal.Rptr.2d 436

105 Cal.App.4th 428

Lo NGUYEN, Plaintiff and Respondent, v. Richard CALHOUN et al., Defendants and Appellants.

No. H022134.

Court of Appeal, Sixth District.

January 15, 2003.

Rehearing Denied February 13, 2003.

Phillip M. Adleson, Patric J. Kelly, Adleson, Hess & Kelly, Campbell, Attorneys for Defendants and Appellants.

Martin T. McGuinn, Dean T. Kirby, Jr., Hovey & Kirby, San Diego, Attorneys for California Trustee's Association as Amicus Curiae on behalf of Appellants.

James L. Stoelker, Mount & Stoelker, San Jose, Attorneys for Plaintiff and Respondent.

WUNDERLICH, J.

In this case, we are called upon to resolve competing claims of ownership to residential real property. The plaintiff claims his title as a result of purchasing the property from the previous owners, who were then in default on their secured real estate loan. The defendants claim their title as a result of purchasing the property the same day at the lender's foreclosure sale.

The trial court gave judgment for the plaintiff. The defendants appeal.

For reasons explained below, we reverse the judgment.

FACTS

The facts in this case are largely undisputed.¹

In May 1994, Josephina Sabedra, Tony David Chavez, and Tina Chavez (collectively, Chavez) were the owners of a home located in San Jose (the property). At that time, Chavez obtained a loan, which was evidenced by a promissory note (the note) and secured by a first deed of trust on the property (the deed of trust).

The Chavez note and deed of trust were later assigned to Harbor Financial Mortgage Corporation (Harbor). Harbor's business office was in Houston, Texas.

In December 1997, Chavez stopped making payments on the loan.

In March 1998, Harbor recorded a notice of default and election to sell.

Thereafter, Chavez was approached by real estate agent Edgar Rivera (Rivera). In mid-April 1998, Chavez signed a listing agreement with Rivera in an effort to sell the property before foreclosure could take place.

In late April 1998, Chavez entered into a contract to sell the property to plaintiff Lo Nguyen (plaintiff). Rivera represented both Chavez as seller and plaintiff as buyer in the sale. Plaintiff was aware of the pending foreclosure proceedings at the time he entered into the contract.

Chavez opened an escrow with Financial Title Company (Financial Title). Pursuant to the property sale contract, escrow was to close by late May 1998. Escrow did not close by the scheduled date.

While the escrow was pending, Financial Title requested loan payoff information from Harbor. Harbor submitted a payoff statement in response to each of Financial Title's three requests. The first payoff statement was good to May 13, 1998; the second was good to July 8, 1998; the third was good to July 9, 1998. Neither Chavez, nor Financial Title, nor Rivera contacted Harbor to get updated payoff figures after July 9, 1998. Harbor's payoff statements included a Houston mailing address for sending funds.

Meanwhile, in late June 1998, Harbor recorded a notice of trustee's sale; the sale was scheduled for July 9, 1998. Financial Title was aware of the scheduled trustee's sale. Financial Title also knew that the sale had been postponed one day at the trustee's discretion and was set to go forward on July 10,1998, at noon.

Sometime on July 9, 1998, Rivera telephoned Linda Kubricht of Harbor and requested that Harbor postpone the trustee's sale. Kubricht left a voice mail message for Rivera, stating that Harbor would postpone the trustee's sale if Rivera could provide proof that plaintiffs new loan had funded. There was no written agreement to postpone the trustee's sale beyond July 10, 1998, at noon, however. After business hours on July 9, 1998, Rivera left a voice message for Linda Kubricht, informing her "that the escrow was supposed to fund the next morning and that he would try to fax something."

Plaintiffs new loan in fact funded, and the funds were received in escrow by wire on July 9, 1998, at 1:30 p.m.

On Friday, July 10, 1998, Financial Title closed escrow on the sale from Chavez to plaintiff. The escrow closing statement allocated $141,664.22 to pay off Harbor's loan, and Financial Title sent a check in that amount to Harbor at its office in Houston, using Federal Express delivery. Harbor did not receive the check until July 13, 1998. In addition to disbursing funds at the close of escrow, Financial Title also recorded escrow documents that day. Among the documents recorded on July 10, 1998, was the grant deed transferring title to the property to plaintiff. However plaintiffs grant deed would not have been indexed by the recorder's office until the next business day, Monday, July 13, 1998.

At Rivera's request, Financial Title's escrow officer transmitted a certified copy of the final escrow settlement statement to Harbor by facsimile. That facsimile transmission was sent at 8:23 a.m. California time on July 10, 1998. The transmission was sent using a fax number provided by Rivera, rather than the number listed at the bottom of Harbor's payoff statements. The transmission was directed to "Linda Cooper" at Harbor; Harbor employed no one by that name.

Linda Kubricht did not receive the facsimile transmission from Financial Title on July 10, 1998, nor did she hear from anyone concerning the escrow that morning.²

The foreclosure was allowed to proceed as scheduled on July 10, 1998, at noon. The foreclosure trustee complied with all statutory requirements prior to and at the sale. The only bidder at the sale was defendant Richard Calhoun (Calhoun), a licensed real estate broker and an occasional investor in real property foreclosures. At the time of the foreclosure sale, Calhoun had no notice of any agreements, discussions, or arrangements between or among Chavez, plaintiff, Rivera, Harbor, or Financial Title, nor did he then have any notice or suspicions of any claimed improprieties in the foreclosure proceedings. Neither plaintiff, nor Chavez, nor Rivera attended the foreclosure sale. With his own funds and funds provided by defendant Toribio Valdivia (Valdivia), Calhoun bid $141,631.27 for the property. The crier accepted Calhoun's bid and gave Calhoun a sworn declaration of trustee's sale. As is customary, the trustee's deed was to be delivered later.

As a result of the events at the foreclosure sale, at the end of the day on Friday, July 10, 1998, defendants Calhoun and Valdivia believed they had purchased the property from the trustee.

As a result of the events in the escrow, at the end of the day on Friday, July 10, 1998, plaintiff believed he had purchased the property from Chavez.

The problem came to light the following week. On Monday, July 13, 1998, Linda Kubricht at Harbor received the errant facsimile transmission from Financial Title. Harbor also received the check from Financial Title that day, which it cashed in the normal course of business. Three days later, Harbor issued a refund check to Financial Title and Chavez, mailing it with a cover letter explaining why the funds were being returned. Meanwhile, Financial Title's request for a deed of reconveyance was declined. A request to rescind the trustee's sale also was declined. Sometime between July 16 and July 28, 1998, Calhoun was informed that there was an issue delaying delivery of the trustee's deed. Sometime after July 28, 1998, Rivera told Calhoun that someone else had purchased the property.

After some three weeks of investigation, on July 31, 1998, the trustee sent its trustee's deed to Calhoun by Federal Express. Calhoun received and recorded the trustee's deed on August 3, 1998. By then, he had received a copy of plaintiffs grant deed. The trustee's deed contains recitals indicating statutory compliance by the trustee.

PROCEDURAL HISTORY

In August 1998, plaintiff brought this action, seeking quiet title, declaratory relief, and attorneys' fees against defendants Calhoun and Valdivia.³ Defendants demurred. The trial court sustained defendants' demurrer as to the attorneys' fees claim, but otherwise overruled it. Defendants answered, interposing plaintiffs failure to properly tender payment as an affirmative defense.

Defendants brought a motion for summary judgment, or, in the alternative, for summary adjudication. Plaintiff brought a motion for summary adjudication. The trial court denied both motions.

The dispute between plaintiff and defendants eventually proceeded to a one-day bench trial in July 2000. The evidence in the case was largely undisputed, consisting of a stipulated fact statement and exhibits, plus the live testimony of a single expert defense witness who addressed issues concerning the escrow. After the presentation of evidence, the case was argued and submitted the same day.

The court issued its statement of decision within a week, finding for plaintiff. The trial court described the question before it as "purely a legal one of whether a sale to the plaintiff of the subject property occurred prior to the later trustee's sale to the Defendants. . .." The court concluded that the case was "controlled by `escrow law'" and that "the presence of a pending trustee's sale" was "of no consequence in this determination. . .." The court found that all the required conditions of escrow were timely met. It therefore determined "that title passes to plaintiff, and that the trustee's deed to Defendants is null and void. . .."

The court entered judgment for plaintiff the following month.

This timely appeal by defendants ensued. The California Trustee's Association appears as amicus curiae in support of defendants' appeal, seeking to clarify the law of nonjudicial foreclosure.

APPEALABILITY

None of the parties to this appeal raised the threshold issue of whether the judgment is appealable. Nevertheless, "since the question of appealability goes to our jurisdiction, we are dutybound to consider it on our own motion." (Olson v. Cory (1983) 35 Cal.3d 390, 398, 197 Cal. Rptr. 843, 673...