Wood v. Herson

• Citation: 39 Cal.App.3d 737,114 Cal.Rptr. 365
• Parties: Lynn WOOD and Ward Wood, Plaintiffs and Appellants, v. Louis HERSON, Defendant and Respondent. Civ. 42147.
• Decision Date: 10 June 1974
• Court: California Court of Appeals Court of Appeals

Page 365

114 Cal.Rptr. 365

39 Cal.App.3d 737

Lynn WOOD and Ward Wood, Plaintiffs and Appellants, v. Louis HERSON, Defendant and Respondent.

Civ. 42147.

Court of Appeal, Second District, Division 5, California.

June 10, 1974.

Rehearing Denied July 2, 1974.

Steven Edmondson, Santa Monica and Victor Amstadter, Culver City, for plaintiffs and appellants.

Milton Zerin, Beverly Hills, for defendant and respondent.

HASTINGS, Associate Justice.

Louis Herson (Herson), in July 1970, sued Lynn and Ward Wood (Woods), husband and wife, in the Superior Court for

                unlawful detainer relating to real property commonly known as 625 Ocean Front, Santa Monica, California. 1  A judgment was entered in said case (WE C 19737) on November 24, 1970.  On October 13, 1970, Woods as plaintiffs sued Herson and several Does with a complaint entitled 'Complaint for specific performance to impose a trust and damages for interference of contract.'  Defendant Herson on June 2, 1972, filed a notice of motion for summary judgment on the ground that the complaint for specific performance contained the exact subject matter covered in the action for unlawful detainer, and that all of the issues in the present case were raised in the unlawful detainer action, and since judgment in that case was rendered on November 24, 1970, plaintiffs' action is barred [39 Cal.App.3d 740] by the doctrine of res judicata.  The trial court first granted a partial summary judgment, striking the first cause of action, and thereafter on further consideration granted a summary judgment striking the balance of the complaint (the second cause of action) and expunged the lis pendens recorded by Woods on said property
                

DISCUSSION

To understand the issues on appeal, it is necessary to know what transpired in the unlawful detainer action. While the complaint was orthodox in form, Woods pleaded an affirmative defense which in substance was identical to their first cause of action in the case at bar. This, of course, was a challenge to plaintiff's title which normally is not a permissible issue in an unlawful detainer action. The findings of the trial court clearly illustrate that it permitted evidence to be introduced on title as raised by the affirmative defense. These findings definitely influenced the trial court here and were the reasons for its granting of the summary judgment. In essence, the pertinent findings are as follows (the paragraph numbers are the same as in the findings):

(1) Plaintiff (Herson) is entitled to possession of the premises located at 625 Ocean Front by reason of the purchase of said property at a sale thereof in accordance with Section 2924 of the Civil Code.

(2) On July 7, 1970, the Marshal served on defendants (Woods) a Notice to Quit.

(3) Defendants Woods are in possession of the premises located at 625 Ocean Front.

(4) The reasonable rental value of the premises after June 4, 1970, to date hereof is $1,750 per month, and $2,000 per month thereafter, and plaintiff has sustained damage by reason of said unlawful detainer.

(5) Defendants Woods were purchasers under an assumed name pursuant to written escrow instructions with Peter Lawford. Defendant Lynn Wood was the subject of a petition in bankruptcy, and by reason thereof defendants had endeavored to take tile in the name of a friend, Alma Mason. However, Alma Mason was under the disability of a conservatorship, so defendants attempted to take title through a corporation, Soundtroncis, Inc., controlled by their attorney.

(6) The first trust deed encumbrance upon the premises was in foreclosure by the City National Bank of Beverly Hills by reason of the default of Peter Lawford.

(7) Defendants Woods were endeavoring to obtain a loan of approximately $125,000 from American Savings & Loan Associate to consummate their purchase from Peter Lawford. Defendants, in connection with the loan, requested plaintiff to act as guarantor for a loan to them, and subsequently to purchase the property in his name and to obtain a loan from American Savings & Loan Association. Plaintiff declined to be either a guarantor of a loan or purchaser of property for defendants.

(8) It is not true that prior to foreclosure of the premises it was orally agreed by and between plaintiff and defendants that plaintiff would cause a new first trust deed encumbrance in the sum of $125,000 (9) It is not true that plaintiff was the bidder at the foreclosure sale solely to take the same in trust for the use and benefit of defendants. It is not true that plaintiff violated any trust in causing the issuance to himself alone of the trustee's deed.

to be placed upon the premises for the use and benefit of defendants, for which plaintiff was to receive $5,000; nor is it true that plaintiff was to perform any services incidental to protecting the property from the foreclosure.

(13) There was never any written agreement or written memorandum of any kind by and between plaintiff and defendants.

Numerous other findings, not germane here, disclose the full extent and detail of the evidence heard on the alleged dealings between Woods and Herson as alleged in the affirmative defense and first cause of action in the Woods complaint. Woods' complaint for specific performance to impose a trust and for damages states two causes of action which in substance are as follows:

The first cause of action alleges that, prior to the date of the trustee sale, Woods purchased the real property 'under written contract of purchase through nominee through PETER LAWFORD.' Prior to the trustee sale, Herson orally and partially in writing agreed he would sign for and act as guarantor upon the first trust deed loan commitment in the sum of $125,000 and pledge his credit therefor for a total fee and commission of $5,000 which Woods agreed to pay. Herson's sole interest was to earn the $5,000 with no right of possession or title. The arrangement was predicated upon the assumption that the then holder of the trust deed would not foreclose, pending completion of the sale with Lawford.

When the lender declined to delay the foreclosure, the agreement was modified and Herson was to procure the money and bid in the first trust deed on Woods' behalf, and then complete the refinancing previously agreed upon and hold the title for the use and benefit of Woods and Woods' nominees. As additional consideration to the $5,000, Herson was to receive 10% Interest on monies advanced.

Herson did in fact bid in the name of himself and another as trustee but denied the agreement and claimed to be the true owner. Further he refused to negotiate with Lawford as agreed and sought to sell the property to Woods at a sum that would give him an additional profit of $20,000.

The second cause of action incorporated allegations of the first cause of action and alleged that, by reason of the aforesaid, and Herson's failure to negotiate with Lawford and allow the completion of the escrow and contract, Herson interfered with the contract and prevented its completion, and Lawford was threatening to sue for breach of contract and to attach the funds in escrow.

Based upon the allegations of the two causes of action Woods sought specific performance through execution of a deed conveying the property to them (first cause of action); and actual damages--to be determined--plus punitive damages of $1,000,000 (second cause of action).

ARGUMENT

Woods' principal issue on appeal is that only findings 1, 2, 3, 4 and 6 were necessary to support the conclusion and judgment and the other findings determining title went beyond the jurisdiction of the trial court in the unlawful detainer action and therefore could not have been considered in the motion for summary judgment.

It is evident after a comparison of the affirmative defense in the unlawful detainer action and the first cause of action in the present case, that the parties, facts, and issues are the same and were litigated in the unlawful detainer action. Clearly this was not the customary unlawful detainer proceeding that is summary in nature. The trial lasted several days, and prior to the trial extensive depositions were taken by all parties.

The original statute establishing the unlawful detainer action, Code of Civil Procedure section 1161, concerned itself primarily with a typical landlord-tenant situation and was designed to give the landlord a summary method for evicting a tenant who was behind in his rent, or had breached a covenant of the lease. In 1929, Code of Civil Procedure section 1161a was adopted to permit a buyer of property at a sale in accordance with section 2924 of the Civil Code to also have the benefit of the unlawful detainer remedy. Cheney v. Trauzettel, 9 Cal.2d 158, 69 P.2d 832 delineated how far the unlawful detainer court could proceed in trying title in such an action if raised by the defendant. The court stated [39 Cal.App.3d 743] at page 160, 69 P.2d at page 833, 'Matters affecting the validity of the trust deed or primary obligation itself, or other basic defects in the plaintiff's title, are neither properly raised in this summary proceedings for possession, nor are they concluded by the judgment.'

Concerning the question of res judicata, the court in Gonzales v. Gem Properties, Inc., 37 Cal.App.3d 1029, on page 1035, 112 Cal.Rptr. 884, on page 888, analyzed key cases touching on this problem as follows:

'Since Cheney, the cases have held that, in an unlawful detainer proceeding, the court must make a limited inquiry into the basis of the plaintiff's title when acquired through proceedings described in Code of Civil Procedure section 1161a. (Abrahamer v. Parks, 161 Cal.App.2d 82, 296 P.2d 341; Kartheiser v. Superior Court, 174 Cal.App.2d 617, 345 P.2d 135.) Some of the cases have determined that a municipal trial court has a duty to hear equitable defenses offered by the defendant. (Altman v. McCollum, 107 Cal.App.2d Supp. 847, 236 P.2d 914; Kessler v. Bridge, 161 Cal.App.2d Supp. 837, 327...