Whitty v. First Nationwide Mortgage Corporation, D045303 (Cal. App. 12/11/2006)
| Decision Date | 11 December 2006 |
| Docket Number | D045303 |
| Parties | FRANK WHITTY et al., Plaintiffs and Appellants, v. FIRST NATIONWIDE MORTGAGE CORPORATION, Defendant and Respondent. |
| Court | California Court of Appeals Court of Appeals |
Appeal from a judgment and an order of the Superior Court of San Diego County, No. GIC789369, John S. Meyer, Judge. Appeal from judgment dismissed. Order denying motion for judgment notwithstanding the verdict affirmed.
Frank and Tazu Whitty sued First Nationwide Mortgage Corporation (First Nationwide), alleging numerous causes of action arising from the nonjudicial foreclosure of the Whittys' property. At trial, the Whittys asserted two claims: wrongful foreclosure and conversion. On a special verdict, the jury found the Whittys did not prove either cause of action. The court subsequently denied the Whittys' equitable claim seeking a portion of the funds received from the foreclosure sale. The court thus entered judgment in First Nationwide's favor.
The Whittys appeal from the judgment and from the court's order denying their motion for judgment notwithstanding the verdict (JNOV). As to the judgment, we conclude the appeal is untimely. As to the order denying the JNOV motion, we determine the appeal is timely but the Whittys failed to establish reversible error. Accordingly, we affirm.
Under well-settled appellate rules, we summarize the relevant facts in the light most favorable to First Nationwide, the prevailing party.
In 1989, the Whittys purchased a home in Poway for $285,000 cash. The Whittys soon began to remodel the property. During the remodel, the Whittys borrowed $385,000 from Beverly Hills Securities Company and, in April 1992, the Whittys executed a promissory note with a variable interest rate (the Note). The Note was secured by a first deed of trust encumbering the property. First Nationwide is the successor mortgage loan servicer of the Note and deed of trust.
Within one year, the Whittys began to miss their required monthly payments on the Note. The Whittys frequently made partial payments and/or paid with checks that were returned for insufficient funds. In May 1994, the lender filed a notice of default and election to sell under the deed of trust, stating the Whittys had failed to pay their monthly payments and that they owed $12,922.51.
The next month, in June 1994, the Whittys filed for bankruptcy to prevent a foreclosure because they could not afford to pay the default amount. Generally, a bankruptcy filing automatically stays any foreclosure sale.
Several months later, the Whittys dismissed the bankruptcy action, and First Nationwide's predecessor recorded a second notice of trustee's sale, scheduling the nonjudicial foreclosure sale for October 1995. Mr. Whitty then filed another bankruptcy petition to prevent the foreclosure sale. After Mr. Whitty dismissed that bankruptcy, First Nationwide rescheduled the foreclosure sale for August 1996. The Whittys then filed a new bankruptcy petition.
In December 1997, the bankruptcy court entered an order requiring the Whittys to make the regular mortgage payments to First Nationwide. Under this order, if the Whittys missed a payment, First Nationwide was entitled to file a declaration to that effect, and the Whittys would then have 10 days to pay this amount. If the Whittys did not pay the amount owed, First Nationwide could seek an order to obtain relief from the automatic stay.
In February 1998, First Nationwide filed a Proof of Claim in bankruptcy court, stating the total amount of the secured loan was $478,792.66 (including the outstanding loan balance, interest, impound funds, and recoverable attorney fees), and the amount owed on the loan as of September 1997 (the reinstatement figure) was $106,744.60. First Nationwide submitted an attachment supporting the accuracy of the claimed amounts.
In May 1998, Mr. Whitty filed an objection to this claim, stating the reinstatement amount was "not properly calculated . . . ." In support, Mr. Whitty filed his own declaration claiming the amount owed on the Note was $47,602.33.
In July 1998, the bankruptcy court issued an order stating that because the lender had not submitted an opposition to Mr. Whitty's declaration, the lender "is allowed as a secured claim in the amount of $47,602.33." We shall refer to this order as the "July 1998 arrearages order."
Two months later, in September 1998, the Whittys attempted to obtain a loan to pay off the Note. Michael Zau, an associate manager of United PanAm Mortgage, notified First Nationwide that his company had "prequalified" the Whittys for a loan that would net the Whittys $420,000. Zau said he recognized the payoff amount was $473,928.55 (which reflected First Nationwide's claimed arrearages amount), but asked for an 89 percent settlement of this amount. First Nationwide rejected this payoff offer, and enclosed a payoff demand showing the principal outstanding balance on the loan was $474,458.07.
During the next 19 months, First Nationwide filed several declarations in the bankruptcy court stating that the Whittys had failed to comply with the December 1997 order to maintain regular monthly postbankruptcy petition payments. In May 2000, First Nationwide filed an ex parte motion for relief from the bankruptcy stay based on the Whittys' failure to pay their postbankruptcy mortgage payments. First Nationwide gave the Whittys notice of this motion, but the Whittys did not oppose the request. On May 26, 2000, the bankruptcy court granted First Nationwide permission to proceed with the foreclosure of the Whittys' property. This order stated in relevant part: "the Automatic Stay . . . is immediately vacated and extinguished for all purposes . . . and [First Nationwide] . . . may hereafter proceed with foreclosure of and hold a Trustee's Sale of the subject Property, . . . and thereafter commence any action necessary to obtain complete possession of the subject Property."
The Whittys then filed an "emergency" motion to set aside the order, claiming they did not have notice of First Nationwide's request for relief from the stay. The hearing on the motion was held on June 20, 2000. During a break at the hearing, Mr. Whitty and his counsel asked First Nationwide's counsel (Edward Schloss) for "a couple more months" to attempt to refinance, and, in connection with this request, Mr. Whitty stated that he was willing to engage in settlement discussions regarding the disputed prebankruptcy arrearages amount owed on the Note. Schloss accepted this "global" settlement proposal and agreed to postpone the foreclosure sale for several months, on the conditions that: (1) Mr. Whitty would agree to a procedure to permit the court to reconsider the arrearages amount; (2) the order granting First Nationwide relief from the bankruptcy stay would remain effective; and (3) the Whittys would maintain their required postbankruptcy mortgage payments. Mr. Whitty agreed with these conditions.
The parties thereafter signed a written stipulation reflecting this agreement. The stipulation, entered by the court on November 15, 2000, provides in relevant part:
[¶] . . . [¶] . . . 1 (Italics added, capitalization omitted.)
On November 20, First Nationwide served the Whittys and the bankruptcy trustee with a notice of motion requesting the court to reconsider its July 1998 arrearages order.2 The notice stated First Nationwide's reconsideration motion would be heard on December 12, 2000.
Shortly before the December 12, 2000 hearing on First Nationwide's reconsideration motion, the parties orally agreed to a process to determine the prebankruptcy petition arrearages amount owed by the Whittys. The parties agreed: (1) to meet and attempt to reach an agreement on the arrearages amount based on relevant accounting paperwork; (2) if the parties could not reach an agreement, either party may request arbitration; and (3) no foreclosure sale would be conducted until 90 days after the date of the award by the arbitrator.
Four months later, on April 7, 2001, Mr. Whitty (and his counsel) and Nationwide's counsel (Schloss) met to discuss the arrearages. After lengthy discussions, Mr. Whitty agreed to immediately provide proof of five mortgage payments, and Schloss was to obtain certain tax and insurance refund information. At this meeting, Schloss made clear that First Nationwide would be proceeding with the foreclosure but would delay the foreclosure sale for three months. If the parties complied with their obligations, the parties expected that the issue of the arrearages amount would settle close to the Whittys' claimed amount.
However, 10 days later, on April 17, 2001, the Whittys dismissed the bankruptcy action without providing First...
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