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Order reversing trial court
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~,I ,
• • CIV-130201-ACI-AS11 00016-AJ0-121602
. 11111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111
System Code: CIV
Case Number: AS1100016 -
Case Type: ACI
Action Code: AJO
Action Date: .02/01/13
Action Time: 12:16 .
Action Seq: 0002 .
Printed by: CSOLB
Scanned Document Coversheet
THIS COVERSHEET IS FOR COURT PURPOSES ONLY, AND THIS IS NOT
. ·A PART OF THE OFFICIAL RECORD. ·YOU WILL NOT BE CHARGED FOR
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Judgment With Opinion ·
. 11111111111111111111111111111111111111111111111111 ·. NEWFILE
-, ·.~ . t'> ~
'41,. )l·
0 SCANNE[f FillED
SUPERIOR COURT COUNTY OF SAN BERNARDINO
APPEl\LS DIViSION
FEB 1 2013
SUPERIOR COURT OF THE STATE OF CALIFO~N~~~"l Sog~~ COUNTY OF SAN BERNARDINO ' LYN OLBERG, DEPUIIJY
APPELLATE DIVISION
U.S. BANK, N.A., Case No: ACIAS 1100016 (Trial Court: UDRS 1 000279) Plaintiff and Respondent,
v.
HELENE CANTARTZOGLOU, Defendant and Appellant.
PER CUR!AM OP!N!ON
Appeal from judgment after court trial, San Bernardino Superior Court, Rancho Cucamonga District, Barry L. Plotkin, Judge. Reversed.
Care Law Group, Alan L. Geraci, Esq., for defendant and appellant.
AlvaradoSmith, S. Christopher Yoo, Esq., Thomas S. Van, Esq., for plaintiff and respondent.
THE COURT:
Facts
Appellant Helene Cantartzoglou appeals from a judgment in an
unlawful detainer action brought against her by respondent U.S. Bank
N.A., following a court trial. The unlawful detainer action was brought
pursuant to section 1161 a of the Code of Civil Procedure. In its verified
complaint, respondent alleged that, as trustee for a mortgage investment
trust, it had acquired title to appellants' property at a trustee's sale
following nonjudicial foreclosure proceedings under a Deed· of Trust
1
executed by appellant in March 2006 (the "DOT"), and that the foreclosure
sale was held in compliance with the statutory requirements. 1
In her answer to the complaint, appellant raised a number of
affirmative defenses, including (1) fraud in respondent's acquisition of title;
(2) violation of the statute of frauds; (3) respondent's failure to mitigate
damages; and (4) respondent's lack of ownership of the property. The
fraud defense was based on appellant's claim that the documents
evidencing various assignments of the DOT and substitutions of trustee
were fraudulent. The claim that U.S. Bank was not the actual owner of the
property was based on appellant's assertion that U.S. Bank was not
appellant's creditor at the time of the trustee's foreclosure sale, and
therefore could not have purchased valid title at that sale by way of a credit
bid.2
Respondent brought a motion to strike all four of the foregoing
affirmative defenses from appellant's answer, on the ground they
constituted an improper attempt to litigate title in an unlawful detainer
action.3 The court granted respondent's motion in its entirety, and ordered
those affirmative defenses stricken from the answer.4 Appellant does not
purport to challenge that ruling on appeal.
1 CT 17 2 CT27-32 3 CT 36-50 4 CT111-114
2
~. .-, '
Court trial was initially held on October 15, 2012. Appellant did not
appear, and the trial was held in her absence after the trial court
determined she had been given proper notice of the trial. At the
conclusion of the trial, the court entered judgment for possession in favor
of respondent. 5 Appellant subsequently brought a motion to set aside the
judgment under section 473 of the Code of Civil Procedure, and the trial
court granted that motion.6
A new trial was held on November 1, 2010, at which both appellant
and respondent appeared. At the outset of the trial, appellant argued, as
she had in her trial brief for the prior trial, that two Trustee's Deeds Upon
Sale had been recorded for the same property, thereby creating a question
about the validity of U.S. Bank's claim of ownership of the property. 7 It
appears undisputed that the trustee's foreclosure sale of appellant's
property was held on September 17, 2009. A Trustee's Deed Upon Sale
was recorded on September 25, 2009, conveying title to appellant's
property to LaSalle Bank (the "September Trustee's Deed"). Appellant
asserted that the recording of that deed extinguished the DOT originally
executed by appellant in March 2006. However, three months later, on
December 17, 2009, an Assignment of Deed of Trust was created (the
"Assignment"), purporting to assign the same March 2006 DOT to
5 CT 73-74 6 CT 79-86 7 RT 2-3
3
>I
respondent U.S. Bank. In addition, also on December 17, 2009, a second
Trustee's Deed Upon Sale was executed, purporting to transfer title to
appellant's property to U.S. Bank, as the foreclosing beneficiary under the
DOT (the "December Trustee's Deed").8
The trial court took judicial notice of the September Trustee's Deed
and the December Trustee's Deed, as well as the Assignment,9 and those
three documents are included in the clerk's transcript on appeal. 10 The
September Trustee's Deed reflects that title to the property was conveyed
to LaSalle Bank on September 17, 2009, after LaSalle Bank made a
successful credit bid for the property as the foreclosing beneficiary. That
deed also contains an attestation of compliance with all of the notice
requirements regarding the Notice of Default and the Notice of Sale. The
September Trustee's Deed was recorded on September 25, 2009. 11
The Assignment was executed on December 17, 2009, by LaSalle
Bank, "as trustee for Washington Mutual Pass-Through Certificates
WAML T Series 2006-AR4 Trust by JPMorgan Chase Bank, National
Association, Attorney in fact." The Assignment documented the
assignment of LaSalle Bank's beneficial interest under the DOT to U.S.
8 RT 2-3; CT 87-89 9 RT 24 1° CT 117-118 (September Trustee's Deed, trial exhibit 11); CT 121-122 (Assignment, trial exhibit 12); CT 124-125 (December Trustee's Deed, trial exhibit 13) 11 CT 117-118
4
I I
Bank, as trustee for the same Washington Mutual trust. The Assignment
was recorded on December 28, 2009. 12
Finally, the December Trustee's Deed documents the trustee's
conveyance of title to U.S. Bank, pursuant to a successful credit bid at the
trustee's sale on September 17, 2009. The document bears a notation
that it is being recorded "to change the grantee name on Trustee's Deed ?
upon sale document recorded on 9/25/09 instrument # 20090418964."
That document number matches the document number on the September
Trust Deed. The December Trustee's Deed is identical in every respect to
the September Trustee's Deed, with the exception of the name of the
grantee and the dates of execution and recordation. 13
The trial court heard testimony from two witnesses for respondent
U.S. Bank. The first was Lucas Kleiss, an employee of the real estate
broker representing respondent in the foreclosure transaction. He testified
that the foreclosure on appellant's property took place in September
2009. 14 In December 2009, a second Deed of Trust was recorded for the
same property, specifically stating on its face that its purpose was to
correct the name of the grantee in the original Trustee's Deed. 15
After the foreclosure on appellant's property, Mr. Kleiss caused a
3/90-Day Notice to Quit to be served on appellant. Appellant did not
12 CT 121 13 CT 124 14 RT 4 15 RT 5
5
> I
vacate the property, and Mr. Kleiss filed an unlawful detainer action. The
court rendered a verdict in favor of the plaintiff at the first trial because no
defense had been presented, but Mr. Kleiss later learned that appellant's
trial attorney had not been given notice of the trial, so the trial was being
held again. Appellant had not vacated the property in the intervening
time. 16
On cross-examination, appellant's counsel attempted to question Mr.
Kleiss further about the two Trustee's Deeds and the Assignment.
Respondent's attorney objected that, as a field inspector for respondent's
real estate broker, Mr. Kleiss had no foundation for testifying about the
recorded documents. Noting that respondent had not elicited any
testimony from Mr. Kleiss about the documents in its case-in-chief, the
court sustained respondent's objection to Mr. Kleiss's testimony on cross-
examination. 17
The next witness to testify for respondent Bank was Jay Arcement,
who testified to having served the 3/90-Day Notice to Quit on appellant by
posting it on appellant's property and mailing it to her by first class mail.
He further stated that the proof of service in the court file reflected that
form of service of the notice. 18
16 RT 5-6 17 RT 19-23 18 RT 25-26
6
) '
On cross-examination, Mr. Arcement testified that he had not been
to appellant's property before the day he posted the notice. He did not
attempt to contact anyone inside the dwelling, and he did not return to the
property after that visit. He mailed the Notice to Quit by regular mail, not
by certified mail, because certified mail is not required. Mr. Arcement was
retained by respondent Bank's attorneys as a process server. 19 The court
excused Mr. Arcement, and stated it was taking judicial notice of the proof
of service of the Notice to Quit. Respondent Bank rested, and appellant
began her own case-in-chief. 20
Appellant's first and only witness was her nephew, Edmond
Goubran, who began to testify about respondent's failure to properly serve
the Notice to Quit. However, before the witness could testify on that issue,
the court requested an offer of proof as to the relevance of the proposed
testimony. During the ensuing discussion, Mr. Goubran stated that
respondent had been asked during discovery to produce the proof of
service of the Notice to Quit because it had not been attached to the
complaint that was served, as required by section 1162 of the Code of Civil
Procedure. Respondent had served a response to the request, but Mr.
Goubran had not brought the response with him to trial, and respondent's
counsel also did not have a copy at trial. 21 The court noted that there was
19 RT 26-27 20 RT 28-29 21 RT32-33
7
' '
in fact no proof of service of the Notice to Quit attached to the unlawful
detainer complaint, and it had taken judicial notice of that proof of service
in error. Although the record contained sworn testimony from Mr.
Arcemont that he had in fact served the Notice to Quit, and had executed a
proof of service of that notice, there was no proof of service anywhere in
the court file. 22 The court then vacated its previous order taking judicial
notice of the proof of service.23
Appellant confirmed that she had raised the lack of proof of service
of the Notice to Quit in her answer to the complaint and in her trial brief,
and asserted it constituted a defect in the complaint. Thereupon, the court
concluded that appellant did not require any testimony on the issue of lack
of proper service of the notice, and dismissed Mr. Goubran. Appellant
then stated she had no further testimony to present. 24
At that point, the court suspended proceedings and requested
further briefing from respondent on the issues raised in appellant's trial
brief, as well as the alleged irregularities in the title documents and
plaintiff's claim that U.S. Bank was a "stranger" to the title.25
Respondent filed its response to appellant's trial brief, but that
response did not address the question of the validity of service of the
Notice to Quit, nor did respondent submit a copy of a valid proof of service
22 RT 35-37 23 RT 36 24 RT 37-38 25 RT 39
8
' .
of that notice. Respondent argued that (1) appellant was attempting to .
raise affirmative defenses that had been stricken from her answer by the
court; and (2) the December Trustee's Deed was exactly what it purported
to be-a document designed to correct an error in the identity of the
grantee reflected in the September Trustee's Deed. The reference in the
September Trustee's Deed to LaSalle Bank as the grantee was in error,
because LaSalle Bank had ceased to exist by September 2009. 26 The
December Trustee's Deed was not, and did not purport to be, a new
transfer of title. Respondent further argued that the December 2009
Assignment did not establish that appellant's DOT was not assigned to
U.S. Bank until after the trustee's sale had been held-it did nothing more
than reflect that the DOT had been assigned to U.S. Bank at some time in
the past, and the date of recordation did not equate to the date of the
assignment.27
In her reply brief, appellant repeated her argu-ments that (1)
respondent lacked capacity to prosecute the unlawful detainer action
because it was not registered to do business in San Bernardino County;
(2) respondent failed to properly serve the Notice to Vacate because the
process server did not attempt to contact anyone on the property before
posting and mailing the notice, and respondent failed to address this issue
26 CT 146; RT 43. At appellant's request, the trial court took judicial notice of a computer document from the website of the Federal Deposit Insurance Corp. (FDIC), stating that LaSalle Bank was an "inactive institution" that had been merged into Bank of America in October 2008. 27 CT 94-99
9
..
in its brief; (3) the sale of appellant's property at the trustee's sale on
September 17, 2009 extinguished her original DOT pursuant to Civil Code \
section 2910-consequently, LaSalle's assignment of that DOT to
respondent in December 2009 was invalid because there was no longer
any DOT to assign; and (4) respondent's admission that LaSalle Bank had
become defunct in 2008 established that the September 2009 Trustee's
Deed conveying title to LaSalle Bank and the December 2009 Assignment
of the DOT from LaSalle to respondent were both invalid, inasmuch as
both transactions involved an entity that did not exist. Even if the original
DOT had not been extinguished, and even if JPMorgan Chase actually
held a power of attorney authorizing it to execute the Assignment in
December 2009, that power of attorney expired when LaSalle Bank
became defunct in 2008. Consequently, the December Trustee's Deed,
purportedly correcting the September Trustee's Deed to reflect purchase of
title by U.S. Bank as the foreclosing beneficiary under the DOT, was also
invalid because U.S. Bank could not be the foreclosing beneficiary if the
Assignment was invalid.28
It was not until November 30 when respondent, in apparent
response to appellant's reply brief, filed an executed proof of service of the
Notice to Vacate, signed by Mr. Arcemont and attesting that he had served
the notice by "post and mail" on January 21, 2010. That document stated
28 CT 135-142
10
' .
there was "no person of suitable age or discretion to be found at any
known place or [sic] residence of [sic] place of business of said tenant(s)."
The proof of service attached to respondent's filing demonstrated that it
was served on appellant's counsel on November 29, just two days before
trial reconvened, by regular mail and by email. 29
At the reconvened trial on December 1, 2010, the trial court
indicated that the parties had rested at the conclusion of the previous
session, and that it would render judgment based on its review of the
written submissions. That review included "the history of the transfers of
the deed from the original lender who was Alliance Bank Corp. through
MERS and the historical transactions that resulted in the current state of
affairs."30
The court then recognized the rebuttable presumption that the
foreclosure sale had been conducted "regularly and fairly," and ruled that
appellant had failed to overcome that presumption. First, the trial court
interpreted appellant's argument regarding respondent's capacity to
maintain the unlawful detainer action in California court as a challenge to
the court's personal jurisdiction over respondent, and rejected that
argument on the basis of authority holding that a nonresident plaintiff who
files suit in California court submits to the personal jurisdiction of that court.
29 CT 152-154 30 RT 43
11
Thus, respondent's failure to qualify to do business in San Bernardino
County did not deprive the court of jurisdiction. 31
Next, the court took judicial notice of the fact that LaSalle Bank had
become inactive as of October 17, 2008, but rejected appellant's argument
that the DOT was therefore void. The court noted that "LaSalle Bank was
acting through successor banks and not in its former capacity at the
relevant times."32 Further, the court found appellant's argument involved
the question of "ownership," which fell within the scope of the affirmative
defenses previously stricken from appellant's answer. On the basis of
those findings, the trial court rendered a verdict in favor of respondent U.S.
Bank. 33 The court made no mention of the issue of service of the Notice to
Vacate or of the recently-filed proof of service, and neither of the parties
raised the matter.
31 RT 43 32 RT 43-44 33 RT 50
12
Discussion
Issues on Appeal
Appellant poses the following questions in her appeal:
1. Can an unregistered foreign corporation maintain an action in the
State of California?
2. Does a recorded Trustee's Deed Upon Sale extinguish a Deed of
Trust? If so, (a) does a subsequent assignment of that extinguished Deed
of Trust and a second recorded Trustee's Deed Upon Sale confer title to a
third party and convey standing to that party to prosecute an unlawful
detainer action under section 1161 a of the Code of Civil Procedure; and
(b) is an assignment in the name of a non-existent entity valid?
3. Is notice by a non-existent entity sufficient to satisfy the statutory
requirements of Civil Code section 2924b to exercise the power of sale in a
Deed of Trust?
4. Is a process server required under Code of Civil Procedure
section 1162 to attempt personal service of a Notice to Vacate before
posting and mailing the notice?
1. Can an unregistered foreign corporation maintain an action in the State of California?
Answer: yes, if that action is initiated to further the ownership of a
loan or the enforcement of a loan by trustee's sale or judiCial process, or
the acquisition of property by way of trustee's sale.
13
Under section 191 of the California Corporations Code, "any foreign
lending institution ... shall not be considered to be doing, transacting or
engaging in business in this state solely by reason of engaging in any or all
of the following activities. . . : (3) The ownership of any loans and the
enforcement of any loans by trustee's sale, judicial process or deed in lieu
of foreclosure or otherwise." (Corp. Code, § 191, subd. (d)(3).)
Moreover, section 191, subdivision (d)(6) also provides that a foreign
lending institution does not transact or engage in business in this state by
acquiring title to real or personal property covered by any mortgage or
deed of trust by trustee's sale, judicial sale, foreclosure or deed in lieu of
foreclosure, or the retention of title pending the orderly sale or other
disposition thereof.
Finally, subdivision (d)(7) extends that exemption to "the engaging in
activities necessary or appropriate to carry out any of the foregoing
activities." We have no doubt that respondent's initiating a legal action to
remove appellant from property to which respondent acquired title at a
trustee's sale conducted pursuant to the power of sale in a deed of trust, of
which respondent was the beneficiary, qualifies for both of the foregoing
exceptions listed in section 191 of the Corporations Code.
Appellant contends the trial court misconstrued her argument on this
point as an assertion that respondent's failure to register to do business in
California divested the trial court of personal jurisdiction over respondent,
14
and ruled on the basis of its misunderstanding of appellant's argument.
For purposes of this appeal, that contention, even if correct, is of no
consequence. It is a well-settled principle that a reviewing court should
uphold the decision of the lower court if it is correct for any reason, even if
the court's stated reason is erroneous. (D'Amico v. Board of Medical
Examiners (1974) 11 Cal. 3d 1, 18-19.) Because we conclude the trial
court's ruling was correct under section 191 of the Corporations Code, we
must uphold that ruling regardless of the court's stated reason.
2. Were the Assignment of Deed of Trust and the December Trustee's Deed Sufficient to Convey Title to Respondent, Such That Respondent Had Standing to Sue?
Answer: no.
Appellant contends, as she did in the trial court, that respondent
U.S. Bank was not the owner of title to her property, and therefore had no
standing to seek possession of the property in an unlawful detainer action.
We agree with appellant.
"A person who holds over and continues in possession of ... real
property after a three-day written notice to quit the property has been
served upon the person . . . may be removed therefrom . . . : Where the
property has been sold in accordance with Section 2924 of the Civil Code,
under a power of sale contained in a deed of trust executed by such
person, or a person under whom such person claims, and the title under
15
the sale has been duly perfected." (Code Civ. Proc., § 1161a, subd.
(b)(3).)
In its verified complaint, respondent alleged it had acquired plaintiff's
property by Trustee's Deed following a foreclosure sale, and thereafter
perfected its title.34 A copy of the Trustee's Deed was attached as an
exhibit to the complaint. 35 That exhibit is the December Trustee's Deed,
executed on December 17, 2009 and recorded on December 28, 2009,
and purporting to correct an error in the name of the grantee in an earlier
Trustee's Deed recorded on September 25, 2009. If valid, the effect of the
December Trustee's Deed was to establish that respondent, as the
beneficiary under plaintiff's DOT, purchased title to plaintiff's property at a
trustee's sale held on September 17, 2009 by trustee California
Reconveyance Company. Because respondent was the beneficiary under
the DOT at the time of the trustee's sale, its purchase of the property was
effected by means of a credit bid in the amount of $161,500.
In her verified answer, appellant denied the allegation that
respondent had purchased and perfected title in the property at the
trustee's sale. That denial put respondent's ownership of the property at
issue, thereby obligating respondent to prove its ownership at trial as an
element of its case. (See Code Civ. Proc., § 431.30, subd. (b)(1 ); see also
34 CT 17 35 CT 19-20
16
Advantec Group, Inc. v. Edwin's Plumbing Co. (2007) 153 Cai.App.4th
621, 627 [denial of a material allegation in a complaint places burden on
plaintiff to prove that-allegation].)
Appellant elaborated on her denial of respondent's ownership of the
property in her eighth affirmative defense, in which she alleged respondent
was not the creditor and therefore could not have obtained title to her
property by way of a credit bid at the trustee's sale. Therefore, respondent
was "a foreign third party with no rights to ownership and should be barred
from seeking relief under this action."36
As noted earlier, respondent moved to strike several affirmative
defenses from appellant's answer, including the eighth affirmative defense,
on the ground they constituted an improper attempt to litigate title in the
limited context of an unlawful detainer action. 37 For reasons not disclosed
in the record, appellant did not oppose respondent's motion, and the court
granted the motion in its entirety.38
We note that the court's order striking the eighth affirmative defense
had no effect on appellant's right to litigate the issue of respondent's title at
trial, because the eighth affirmative defense was, in fact, not an affirmative
defense at all. An affirmative defense is an allegation of new matter in the
answer that is not responsive to an essential allegation in the complaint. In
36 CT 31 37 CT 36-49 38 CT 51-56. The bench officer who granted the motion to strike is not the same as the one who presided over the trial.
17
other words, an affirmative defense is an allegation relied on by the
defendant that is not put in issue by the plaintiff's complaint. (State Farm
Mut. Auto. Ins. Co. v. Superior Court (1991) 228 Cai.App.3d 721, 725.)
Where the answer alleges facts showing that some essential allegation of
the complaint is not true, those facts are not "new matter," but only a
traverse. (Ibid.) Because respondent's acquisition and perfection of title to
appellant's property was an essential element of its unlawful detainer
action, appellant's allegation that respondent had not acquired and
perfected title was a denial of a material allegation, not an affirmative
defense. Granting respondent's motion to strike did not relieve respondent
of its affirmative burden of proving its ownership at the time of trial.
The evidence proffered by respondent to prove its ownership of the
property consisted of three documents: the September Trustee's Deed;
the Assignment; and the December Trustee's Deed. The September
Trustee's Deed (identified in the record as trial exhibit 11) documented
LaSalle Bank's purchase of appellant's property at a trustee's sale on .
September 17, 2009. Because LaSalle Bank was the beneficiary under
the DOT, it acquired title by way of a credit bid. 39 The September
Trustee's Deed was executed by an officer of the Trustee, California
39 The September Trustee's Deed states that LaSalle Bank was the foreclosing beneficiary, and later states: "Grantee, being the highest bidder at said sale, became the purchaser of said property for the amount bid being $161,500.00 in lawful money of the United States, or by credit bid if the Grantee was the beneficiary of the Deed of Trust at the time of said Trustee's Sale."
18
Reconveyance Co., on September 22, 2009, and recorded on September
The second document (identified in the record as trial exhibit 12) is
the Assignment, which documented LaSalle Bank's assignment of
appellant's DOT and the underlying note to respondent U.S. Bank. The
document was executed on December 17, 2009 by Deborah Brignac on
behalf of J PM organ Chase Bank, which in turn was acting as attorney-in-
fact for LaSalle Bank, acting as trustee for the investment trust that owned
the note. The Assignment was recorded on December 28, 2009.41
The third piece of evidence is the December Trustee's Deed (trial
exhibit 13), which purported to corr~ct the September Trustee's Deed by
replacing the name of LaSalle Bank with that of U.S. Bank. That document
was executed on December 17, 2009, by the same officer of California
Reconveyance Co. who had executed the September Trustee's Deed.
The net effect of this document was to retroactively cause U.S. Bank to be
the credit-bid purchaser and transferee of title to appellant's property at the
September 17, 2009 trustee's sale, and also to establish that U.S. Bank,
not LaSalle Bank, was the foreclosing beneficiary under the DOT at the
time of the sale.42 Respondent's explanation for the December Trustee's
Deed was that the September Trustee's Deed erroneously named LaSalle
4° CT 117-118 41 CT 121 42 CT 124-125
19
Bank instead of U.S. Bank, inasmuch as LaSalle Bank no longer existed
by the time of the trustee's sale.
"To establish that he is a proper plaintiff, one who has purchased
property at a trustee's sale and seeks to evict the occupant in possession
must show that he acquired the property at a regularly conducted sale and
thereafter 'duly perfected' his title."' (Stephens v. Hollis (1987) 196
Cai.App. 3d 948, 952.) "[W]here the plaintiff in the unlawful detainer action
is the purchaser at a trustee's sale, he or she 'need only prove a sale in
compliance with the statute and deed of trust, followed by purchase at
such sale, and the defendant may raise objections only on that phase of
the issue of title." (Old Nat'/ Fin. Servs. v. Seibert (1987) 194 Cai.App.3d
460, 465.) At trial, appellant asserted the evidence upon which respondent
relied to prove its title to the property was insufficient to meet its affirmative
burden. We agree.
Even giving retroactive effect to the December Trustee's Deed,
respondent's evidence was still only sufficient to establish that respondent
purported to purchase appellant's property by credit bid at the trustee's
sale on September 17, 2009. In order to do so, respondent was required
to be the beneficiary under the DOT. This is so because any proceeds
realized at the sale would be payable to the beneficiary, so it would be
useless and inefficient to require that beneficiary to tender cash that would
only be immediately returned to it. (Alliance Mortgage Co. v. Rothwell
20
(1995) 10 Cal.4th 1226, 1238; Cornelison v. Kornbluth (1975) 15 Cal.3d
590, 607.)
Here, respondent could not have been the foreclosing beneficiary at
the trustee's sale on September 17, 2009 because it was not assigned the
beneficial interest under the. DOT until three months later, on December
17. Moreover, that Assignment was not valid in any event, because it was
executed on behalf of JPMorgan Chase Bank, acting as agent (attorney-in
fact) for LaSalle Bank. However, on December 17, 2009, there was no
agency relationship between LaSalle Bank and JPMorgan Chase Bank,
because the principal, LaSalle Bank, no longer existed. Absent any
evidence that JPMorgan's agency relationship with LaSalle Bank was
coupled with any interest in the subject of the agency, the agency
relationship between LaSalle Bank and JPMorgan also ceased to exist
when LaSalle Bank ceased to exist in October 2008.43 (Civ. Code, § 2356, .
subd. (a).) Accordingly, JPMorgan had no authority or power to assign the
DOT and the note to respondent in December 2009, or, for that matter, at
any time after October 2008.
It follows, then, that if respondent was neither the beneficiary under
the DOT nor the owner of the underlying note at the time of the trustee's
sale, it could not have acquired title to appellant's property at that sale in
the manner asserted in the Trustee's Deed.
43 A fact judicially noticed by the trial court (see RT 43).
21
Respondent cites the recent decision in Fontenot v. Wells Fargo
Bank, N.A. (20 11) 198 Cai.App.4th 256 as support for its argument that it
was not enough for appellant to assert that the assignment of the DOT
(and/or the underlying debt) was invalid, and therefore respondent lacked
standing to bring the unlawful detainer action. As the Fontenot court
observed, assignments of debt, unlike assignments of the security interest,
are commonly not recorded. It was possible for the foreclosing party to
have received an assignment of the underlying debt "in an unrecorded
document that was not disclosed to plaintiff." Therefore, a plaintiff in a
wrongful foreclosure action based on the defendant's lack of authority to
foreclose on the note was required to allege not only that the assignment
was invalid, but also that the foreclosing defendant had not received an
assignment of the debt in any other manner. (/d. at pp. 271-272.)
Respondent's reliance on Fontenot is misplaced for a significant
reason. Fontenot was not an unlawful detainer action, brought by the post
foreclosure purchaser of a defaulted property. It was a wrongful
foreclosure action, brought by the homeowner against the foreclosing
entity. Accordingly, it was the homeowner, not the forecloser, who had the
burden of proving all of the elements of the claim. Thus, if the homeowner
wanted to assert the invalidity of the assignment of the debt, it was the
homeowner's burden to do so.
22
That is not the case here. Unlike the plaintiff in Fontenot, appellant
was the defendant in this action, and had no burden of proof-on the
contrary, the burden of proving all of the essential elements of the unlawful
detainer action rested squarely on respondent. Respondent chose to rely
on the two Trustee's Deeds and the Assignment to prove its ownership of
the property, and therefore its standing to bring the unlawful detainer
action. For the reasons discussed, that evidence was insufficient to meet
that burden, and respondent failed to prove all of the elements of its claim.
It was therefore not entitled to judgment.
3. Is notice by a non-existent entity sufficient to satisfy the statutory requirements of Civil Code section 2924b to exercise the power of sale in a Deed of Trust?
Although this may pose an interesting question, we find it is a
question that does not warrant consideration, because appellant has failed
to develop this issue in her brief, with citations to the record and to legal
authority. "[U]nless a party's brief contains a legal argument with citation
of authorities on the point made, the court may treat it as waived and pass
on it without consideration." (Trinkle v. California State Lottery (2003) 105
Cai.App.4th 1401, 1413.)
4. Is a process server required under Code of Civil Procedure section 1162 to attempt personal service of a Notice to Vacate before posting and mailing the notice?
23
Answer: yes, to the extent of attempting to ascertain whether any
proper recipient of personal service is present before utilizing an
alternative method of service.
Under section 1162 of the Code of Civil Procedure, a Notice to
Vacate may be served on a tenant: (a) by personal service; (b) if the tenant
is absent from his or her place of residence, and from his or her usual
place of business, by substitute personal service on a person of suitable
age and discretion, followed by mailing to the tenant and his or her place of
residence; or (3) if the place of residence and place of business cannot be
ascertained, or if a person of suitable age and discretion cannot be found
there, by affixing a copy of the notice to a conspicuous place on the
property, followed by mailing to the tenant at the same address. (Code
Civ. Proc., § 1162, subd. (a).) This last option is commonly referred to as
the "post and mail" approach.
Because unlawful detainer actions are purely a creation of statute,
and because they are summary proceedings designed to affect the
defendant's right of possession, and to afford the defendant fewer
procedural entitlements, the plaintiff must "clearly bring itself within the
purview of the unlawful detainer statutes." (Smith v. Municipal Court
(1988) 202 Cai.App.3d 685, 689, citing Markham v. Fralick (1934) 2 Cal.2d
221, 227 and Baugh v. Consumers Assoc., Ltd. (1966) 241 Cai.App.2d
672, 674-675.) In particular, a Notice to Vacate "is valid and enforceable
24
only if the lessor strictly complies with the specifically described notice
conditions" under section 1162. (Lamey v. Masciotra (1969) 273
Cai.App.2d 709, 713.)
An unlawful detainer complaint must "state specifically the method
used to serve the defendant with the notice or notices of termination upon
which the complaint is based." This requirement may be satisfied by either
(1) using and completing all of the items relating to service of the notice in
an appropriate Judicial Council form complaint; or (2) attaching a proof of
service of the notice to the unlawful detainer complaint. (Code Civ. Proc.,
§ 1166, subd. (a)(S).) In this case, because respondent did not utilize a
Judicial Council form complaint, it was required to attach a proof of service
·of the Notice to Vacate. It did not do so.
In her verified answer, appellant alleged she never received any
Notice to Vacate until she received the copy attached as an exhibit to the
unlawful detainer complaint. 44 She raised the issue again in her trial
brief,45 and again in her reply to respondent's trial brief.46 Further,
appellant attempted to introduce evidence to that effect at the first session
of trial, through the testimony of her nephew, Mr. Goubran.
"'[A] tenant is entitled to a three-day notice to pay rent or quit which
may be enforced by summary legal proceedings [citation], but this notice is
44 CT 28 45 CT 87-88, 91 46 CT 139
25
valid and enforceable only if the lessor strictly complies with the specifically
described notice conditions. [Citations.]' Stated another way, 'proper
service on the lessee of a valid three-day notice to pay rent or quit is an
essential prerequisite to a judgment declaring a lessor's right to
possession under section 1161, subdivision 2. [Citations.]' 'A lessor must
allege and prove proper service of the requisite notice. [Citations.] Absent
evidence the requisite notice was properly served pursuant to section
1162, no judgment for possession can be obtained. [Citations.]"' (Palm
Property Investments, LLC v. Yadegar (2011) 194 Cai.App.4th 1410, 1425,
quoting Kwok v. Bergren (1982) 130 Cai.App.3d 596, 600 and Liebovich v.
Shahrokhkhany (1997) 56 Cai.App.4th 511, 513; see also, Lamey v.
Masciotra, supra, 273 Cai.App. 2d at p. 713.) "When the fact of service is
contested, compliance with one of these methods [in section 1162] must
be shown or the judgment must be reversed." (Liebovich, supra at p. 514.)
It is true that section 1162 does not require a showing of reasonable
diligence by the process server in attempting personal service before
electing the alternative "post and mail" method of service. (Hozz v. Lewis
(1989) 215 Cai.App.3d 314, 317.) However, the statute contemplates at
least some attempt to determine whether anyone is present at the location
before resorting to the "post and mail" alternative. To conclude otherwise
would be to negate the provision in subdivision (a)(3) of section 1162,
which permits "post and mail" service of the Notice to Vacate "if such a
26
place of residence and business cannot be ascertained, or a person of
suitable age or discretion there can not be found." That condition is not
met if no attempt at all is made to ascertain whether any such person is
present on the property.
Had the Legislature not intended to require an attempt to determine
whether an appropriate recipient of personal service is not available before
resorting to the "post and mail" option, it would not have made that option
conditional upon such a finding-instead, it would simply have made "post
and mail" an equally acceptable alternative method of service. '"When
statutory language is thus clear and unambiguous there is no need for
construction, and courts should not indulge in it."' (Ornelas v. Randolph
(1993) 4 Cal.4th 1095, 1105, quoting Delaney v. Superior Court (1990) 50
~al.3d 785, 800, italics in Delaney.)
While the proof of service submitted by respondent the day before
the reconvened trial contained a sworn statement by Mr. Arcemont, under
penalty of perjury, that he had served the Notice to Vacate by "post and
mail" when no person of suitable age or discretion could be found at the
property, that proof of service did no more than create a rebuttable
presumption that service was proper. (Dill v. Berquist Construction Co.,
Inc. (1994) 24 Cai.App.4th 1426, 1441-1442.) In other words, the
presumption could be dispelled by evidence that the service was not
proper.
27
In this case, that contrary evidence took the form of the trial
testimony of Mr. Arcemont himself. He testified that he personally went to
the property and posted the Notice to Vacate, after which he mailed the
notice to appellant by first-class mail.47 On cross-examination, he
conceded he made only a single trip to the property, and made no attempt
to contact anyone in the residence before posting the notice. He posted
the notice in lieu of attempting to personally serve it because he believed
"the code allows for posting of the notice." When Mr. Arcemont was
specifically asked if he found anyone present at the residence, he did not
answer; instead, he simply responded that he posted the notice on the
property. 48 On redirect, he again confirmed that he posted and mailed the
notice because, to his knowledge, it was an "acceptable" method of service
under the statute.49 We find that testimony sufficient to refute the
attestation in the proof of service that there was "no person of suitable age
or discretion to be found" at defendant's place of residence, and to
establish that service of the Notice to Vacate was improper and invalid.
The authorities upon which respondent relied do not compel a
different conclusion. For example, in Hozz v. Lewis, supra, the court found
that the process server had no obligation to attempt to locate the
47 RT 26 48 RT 27: "Q: So you found no one there, is that correct?
49 RT 29
A: I post [sic] it on the exterior of the property. Q: Did you attempt to contact anyone inside the dwelling? A: No."
28
defendant at a second home. The Hozz court found service by "post and
mail" was proper, where the process server had first gone to the
defendant's residence, rang the bell and knocked at the door. When no
one answered, he posted the notice and mailed a copy to the defendant.
(Hozz, 215 Cai.App.3d at p. 316.)
In Nourafchan v. Miner (1985) 169 Cai.App.3d 746, the court held
that, where the defendant was undisputedly absent from the residence, the
plaintiff was not required to attempt to serve the defendant at his place of
business before resorting to the "post and mail" method of serving the
Notice to Vacate, where the plaintiff reasonably believed the defendant
had vacated his business address and was conducting his business from
his home.
Finally, in Highland Plastics, Inc. v. Enders (1980) 109 Cai.App.3d
Supp. 1, an appellate division decision from Los Angeles County, the court
concluded that service by "post and mail" was proper where the process
server went to the premises identified to him as the defendant's place of
residence and business, knocked at the door, and there was no response.
Although Highland Plastics is not binding authority, we note
respondent's willingness to rely on its reasoning and holding, and to ask
this court to do the same. With that in mind, we note the following
language in that decision: "This code section [1162] does not require a
showing of reasonable diligence · in attempting personal service before
29
I • ..
utiliz'ing the substituted service provisions, as required in section 415.20,
subdivision (b). The 'post and mail' provision of section 1162, subdivision
3 does require, however, that if the tenant cannot be located for personal
service that the person making this substituted service first determine
either that the tenant's '. . . place of residence and business cannot be
ascertained, or that a person of suitable age or discretion there cannot be
found .... "' (/d. at p. 6.) The Highland court concluded: "When defendant
could not be found, one of the two ways of substituted service of the notice
was proper and when a person of suitable age and discretion could not be
found, the 'post and mail' method of service could be accomplished." (/d.
at p. 7.) Despite the non-binding status of Highland Plastics, we further
note that both Hozz and Nourafchan cited that decision. And we recognize
the common thread in all three decisions: the process server actually
made an attempt to contact someone at the property before resorting to
the "post and mail" alternative form of service. That did not happen here.
On the basis of the foregoing authorities, we conclude respondent
was obligated to provide evidence to justify employing the "post and mail"
alternative to personal service of the Notice to Vacate, to the extent of
showing at least some attempt to ascertain whether defendant or some
other person upon whom personal service could be effected could be
found at the property before resorting to an alternative method of service.
Although the averment in the proof of service filed the day before trial
30
created a presumption that "post and mail" service was proper, the process
server's own testimony at trial was sufficient to rebut that presumption
because he testified that he made no effort whatsoever to satisfy the
prerequisite for utilizing that alternative method of service. Rather, he
used that method as a first resort. As Highland Plastics clearly explains, ·it
is a last resort.
Moreover, because respondent failed to establish proper service of
the Notice to Vacate when it was challenged by appellant at trial,
respondent was not entitled to judgment for possession. (Palm Property,
supra, 194 Cai.App.4th at p. 1425.) Accordingly, the judgment for
possession must be reversed. (Liebovich v. Shahrokhkhany, supra, 56
Cai.App.4th at p. 514.)
Disposition
The judgment is reversed.
cittBERG.OcHOA esiding Judge of the Appella
31
• • ~uperior <tourt ~tate of <talifornia
<tountp of ~an Jjernarbino Appellate Division
DECLARATION OF SERVICE BY MAIL
STATE OF CALIFORNIA
COUNTY OF SAN BERNARDINO vs. Case# ACIAS 1100016
Trial Court# UDRS 1000279
The undersigned hereby declares: I am a citizen of the United States of America, over the age of eighteen years, a resident of the above-named State, and not a party to nor interested in the
·proceedings named in the title of the annexed document. I am a Deputy Appellate Clerk of said County. I am readily familiar with the business practice for collection and processing of correspondence for mailing with the United States Postal Service. Correspondence would be deposited with the United States Postal Service that same day in the ordinary course of business. On the date of mailing shown below, I placed for collection and mailing following ordinary business practices, at the request and under the direction of the Superior Court in and for the State of
~ California and County above-named, whose office is at the Courthouse, San Bernardino, California, a sealed envelope which contained a true copy of each annexed document, and which envelope was addressed to the addressee, as follows:
JOSEPH L. DE CLUE, JR., ESQ. 17632 IRVINE BLVD., SUITE 265 TUSTIN, CA 92780 .
ALVARADO SMITH 1 MACARTHUR PLACE SUITE 200 SANTA ANA, CA 92707
cc: Honorable Judge BARRY L. PLOTKIN, Rancho Cucamonga Courthouse
Date and Place of Mailing: February 1, 2013, San Bernardino, California.
Document Mailed: PER CURIAM OPINION
I declare under penalty of perjury that the foregoing is true and correct.
Executed on February 1, 2013, at San Bernardino, California.
c~ 'S::J>~ ii Deputy Clerk CAROLN SOlBERG