Opinion
C080840
10-10-2017
WELLS FARGO BANK, N.A., Plaintiff and Respondent, v. MARK WEINER et al., Defendants and Appellants.
NOT TO BE PUBLISHED California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 34201300139161CUCLGDS)
The dispositive issue on appeal is whether there is substantial evidence to support the trial court's factual finding that plaintiff Wells Fargo Bank, N.A. (Wells Fargo) did not receive a letter revoking defendants Mark and Nancy Weiner's personal guaranty of their business line of credit prepared and mailed by their assistant. The record contains sufficient and credible evidence to support the trial court's finding that Wells Fargo rebutted the presumption of receipt of the letter created by Evidence Code section 641. Defendants' motion to vacate the judgment pursuant to Code of Civil Procedure section 663, based on the same grounds they lost on at trial, is not appealable and, since we affirm the judgment, the attorney fee award will remain intact.
Further undesignated statutory references are to the Evidence Code. --------
FACTS
Defendant Mark Weiner finished law school, acquired a real estate license, and ran a business that owned and operated mobile home parks. In 1996 he and his wife personally guaranteed a business line of credit they obtained from Wells Fargo. The guaranty, which appeared immediately above their signature lines, states: "By signing below, the signer(s) agrees on behalf of the company named above to the terms and conditions of the Customer Agreement that will be sent and in their individual capacities jointly and severally unconditionally guarantee and promise to pay upon demand to Bank, all indebtedness of the company named above at any time owing under the BusinessLine. The signer(s) waives any right to require Bank to proceed against the company, and authorizes Bank, without notice, demand or consent of any kind to renew, alter, compromise, extend, accelerate or otherwise change any of the terms or increase the amount of the company's BusinessLine and agrees to pay attorneys' fees and all other costs and expenses which may be incurred in the enforcement of this guaranty."
By 2008 defendants had borrowed $94,137.97 of the $100,000 line of credit. On June 16, 2008, Mark Weiner made a payment of $93,383. He asked his assistant, Don Lee, to review five or six loans to ascertain whether he was personally liable on each of the loans. Lee, who had also attended law school but was not a lawyer, advised him that all the loans contained personal guaranties. According to Lee, because he was the better wordsmith and draftsman, Mark Weiner directed him to write a letter revoking only the continuing line of credit at Wells Fargo. Lee's letter, in its entirety, stated:
"To whom it may concern:
"Mark and Nancy Weiner hereby revoke their personal guaranty as to the line of credit extended to Village Concepts, Inc. on or about August 17, 1996 by Wells Fargo Bank as to all future draws on this line of credit and such revocation per Civil Code Section 2815 shall be effective as of September 1, 2008."
The purported revocation did not contain a loan number, defendants' social security numbers, or Village Concepts, Inc's tax identification number. The letter was dated August 1, 2008.
Lee testified he mailed copies of the letter from a post office near where he lives to two different addresses provided by Wells Fargo on August 4, 2008.
Nineteen days after the purported revocation was to take effect, defendants borrowed $99,500 against their line of credit. Village Concepts, Inc. failed to pay this obligation and eventually went into bankruptcy. Wells Fargo sought to collect the debt on the personal guaranties provided by defendants.
Mark Weiner again turned to Lee for advice and for his ghostwriting services. On January 28, 2013, Weiner signed a letter written by Lee raising only two possible defenses to the overdrawn and overdue obligation: (1) that the line of credit had been paid off years earlier, and (2) that the line of credit was for no more than $50,000. Although Lee purportedly wrote the letter revoking the personal guaranty, he did not mention or allude to any revocation in the January letter to Wells Fargo.
Wells Fargo filed a complaint against defendants alleging one cause of action for breach of defendants' personal guaranty. Defendants demurred. Their demurrer did not raise the issue of the revocation of the guaranty.
During a bench trial, defendants produced evidence, via assistant Lee, that the revocation was mailed. Wells Fargo presented evidence it was never received.
Two witnesses testified for Wells Fargo. Neither were clerks who received or logged incoming mail for the bank. Neither were personally familiar with the facilities where the mail was processed. Neither could testify with complete certainty that Wells Fargo did not receive defendants' letter.
In response to defendants' objection to the sufficiency of Wells Fargo's evidence, the court explained: "[T]here is no authority indicating that such 'affirmative' testimony is necessary to rebut the presumption. Indeed, a simple denial of receipt has been described as sufficient to rebut the presumption."
More significant is the evidence Wells Fargo did produce. John Williams is a Loan Adjuster II, who had been employed by the bank for almost seven years and was the "person most knowledgeable for Business Direct files on litigation matters." Business Direct is a "division of Wells Fargo that provides . . . lines of credit to smaller businesses . . . with a personal guarantee." He had qualified over 200 times to testify to the "bank's policies, procedures, the documents themselves." He testified that the Wells Fargo records he used to testify are prepared close in time to when the events transpire, are maintained by authorized employees of the bank, and are reliable. As the person most knowledgeable about Business Direct files, he researched the bank's record-keeping system for evidence the bank had received the revocation of the guaranty. He checked all of the Wells Fargo systems, but found nothing. Williams also testified that if the bank had received a revocation, the account would have been closed immediately so it could no longer be drawn upon.
Wells Fargo senior counsel, Anne Schauerman, is charged with filing collection lawsuits. She received a letter from Mark Weiner in which "he was trying to figure out a way not to pay this debt." She acknowledged that Weiner was asserting two different grounds as a basis not to pay the debt, but there was no mention of revocation or any letter earlier invoking his right to revoke the personal guaranty. Rather he asserted he had paid it off, even though it was a revolving debt in which money was borrowed and paid off multiple times, and that his line of credit was only for $50,000, even though the contract language contemplates the bank is going to increase the amount over time. She testified she never had any substantive conversation with Mark Weiner where he said anything about a revocation of the guaranty. She heard nothing about the revocation until months and months later. Based on her review of all the bank documents, she filed the verified complaint for breach of the guaranty.
After hearing Wells Fargo's testimony at trial, the trial court found that while defendants mailed the letter of revocation, Wells Fargo established the revocation was never received.
In its statement of decision, the court wrote: "At trial, Plaintiff presented evidence that it never received the revocation of the guaranty that Mr. Lee testified that he sent on behalf of the Weiners. Plaintiff's witnesses, Mr. Williams and Mrs. Schauerman, testified that if the revocation had been received, it would have been Plaintiff's policy and practice to shut down the line of credit so that it could no longer be drawn upon. This did not occur here and the bank never did anything that acknowledged receipt of the letters revoking the guarantees. Plaintiff's witnesses also testified that a search of all of its systems and written records did not reveal any record of any revocation ever having been received. Plaintiff's witnesses also testified that Defendants never asserted 'revocation' as a defense until approximately ten months after Plaintiffs collection activity began, i.e., in October 2013. Plaintiff argues that this timing tends to discredit representations that the revocation was actually mailed in August of 2008."
The court further explained: "Plaintiff's evidence goes beyond a simple denial of receipt. Plaintiff has put on evidence that none of its computer systems or records reflect receipt of a revocation. The court also gives weight to Plaintiff's representation that its policy would have required it to have immediately closed the line of credit if a revocation had been received. Logically, this self-interested practice protects Plaintiff, such that if a revocation had been received, Plaintiff's not observing that practice would put Plaintiff's loaned funds at risk. The fact that the line of credit remained open even after the revocation was mailed supports Plaintiff's position that the revocation was never actually received. . . . [¶] . . . Having considered the entire record and having weighed all of the above-described evidence, the court finds that the revocation—although mailed—was never actually received by Plaintiff. Accordingly, the revocation was not effective."
DISCUSSION
Without a single case to cite in which the evidence presented to rebut the presumption that something mailed is received was found insufficient, defendants attempt to extract a new rule of law from three cases in which there was substantial evidence the document at issue was not received. The new rule they propose to quantify the evidence necessary to overcome the presumption is unsupported by the relevant statutes, cases, commentary, and public policy. It was rejected repeatedly by the trial court and we reject it here. Nor can defendants evade the deferential standard of review by proposing an unsupported and unsupportable new rule of law.
"In reviewing a judgment based upon a statement of decision following a bench trial, [the Court of Appeal applies] a substantial evidence standard of review to the trial court's findings of fact. [Citation.] Under this deferential standard of review, findings of fact are liberally construed to support the judgment and we consider the evidence in the light most favorable to the prevailing party, drawing all reasonable inferences in support of the findings." (Thompson v. Asimos (2016) 6 Cal.App.5th 970, 981.) "It is a question of fact for the trial court to determine whether the presumption that the letter duly mailed was received by the addressee was overcome by the evidence introduced by the addressee that it was not received." (Tremayne v. American SMW Corp. (1954) 125 Cal.App.2d 852, 854 (Tremayne).) Thus, we are on a hunt for substantial evidence to support the trial court's factual finding that Wells Fargo did not receive defendants' written revocation. But first we begin with the statutory landscape.
Section 641 creates a rebuttable presumption that "[a] letter correctly addressed and properly mailed is presumed to have been received in the ordinary course of mail." Section 604 explains the effect of the presumption on the burden of producing evidence. Section 604 provides: "The effect of a presumption affecting the burden of producing evidence is to require the trier of fact to assume the existence of the presumed fact unless and until evidence is introduced which would support a finding of its nonexistence . . . ."
In Slater v. Kehoe (1974) 38 Cal.App.3d 819, the court explains the ephemeral nature of the presumption. "If a party proves that a letter was mailed, the trier of fact is required to find that the letter was received in the absence of any believable contrary evidence. However, if the adverse party denies receipt, the presumption is gone from the case. The trier of fact must then weigh the denial of the receipt against the inference of receipt arising from proof of mailing and decide whether or not the letter was received." (Id. at p. 832, fn. 12.)
Defendants compile the evidence admitted in Tremayne, supra, 125 Cal.App.2d 852, Bonzer v. City of Huntington Park (1993) 20 Cal.App.4th 1474 (Bonzer), and Bunner v. Imperial Ins. Co. (1986) 181 Cal.App.3d 14 (Bunner) as a template for the evidence necessary to rebut the presumption a duly mailed document is received. None of these cases attempt to define or quantify the evidence needed to rebut the presumption. Rather they are mere exemplars of cases in which the Courts of Appeal found substantial evidence to support the factual findings that the presumption had been rebutted.
Bonzer, in particular, includes testimony by an employee quite similar to the testimony Well Fargo's employees offered. In Bonzer, the Court of Appeal did not hold that a minimum number of declarants was required to rebut the presumption or that a specific affirmative type of evidence was required. Interestingly, the court did recount that an employee who did not personally handle the mail was asked to search the records to determine if there was any suggestion that the notice had been received. (Bonzer, supra, 20 Cal.App.4th at p. 1480.) She found no notice and no indication it had been received. (Ibid.) The employee's testimony was very similar to the Wells Fargo evidence admitted at trial. Here, as in Bonzer, an employee, Williams, was asked to examine the business records of Wells Fargo to determine whether a revocation of the personal guaranty had been found. He found nothing.
We agree with Wells Fargo that the absence of a record can be as probative as when a record exists. More to the point, defendants' citation to Bonzer belies their central thesis that a later search and examination by an employee not normally tasked with receiving the mail does not constitute sufficient evidence to rebut the presumption that the document was actually received. Defendants point out, however, that in Bonzer five other employees also testified and these employees had much greater familiarity with the manner in which mail was received, handled, and documented. We reject the inference that evidence cannot be substantial if it is not the best evidence that might have been offered. While it is true there was an abundance of evidence offered in Bonzer to rebut the presumption, the over abundance of evidence in Bonzer does not mean that less evidence is not substantial enough to meet the substantial evidence test. Defendants fail to appreciate the limited scope of appellate review and the expansive definition of substantial evidence to support a factual finding.
In Tremayne, the credit and office manager testified to the procedure that was followed in receiving mail at the company. (Tremayne, supra, 125 Cal.App.2d at p. 854.) He explained how the postman delivered the mail to the telephone operator who delivered it to his secretary who then delivered it, opened and in piles, to him. (Ibid.) He further testified the office had not received the letter, as here, canceling the personal guaranty. (Ibid.) The manager's testimony, the court found, constituted substantial evidence to support the trial court's finding that the cancellation notice had not been received and the debtor's guaranty was a continuing one. (Ibid.) The manager's testimony also focused on the policies and procedures the business normally followed in receiving its mail. The court made no pretense that a certain type or quantity of evidence was required. Rather the court found the missing document had not been received because the manager would have seen it if it had.
Nor does Bunner dictate a different result. Bunner is an insurance case involving an entirely different statutory scheme. Nevertheless, the statute at issue (Ins. Code, § 1063.7) also creates a rebuttable presumption of compliance by the mere proof of mailing to the insured's last address. (Bunner, supra, 181 Cal.App.3d at p. 23.) The California liquidator of the insolvent insurer mailed notice of an orthopedic surgeon's right to file a claim to an old address and the surgeon testified he did not receive the notice. (Id. at p. 18.) The Court of Appeal concluded that "proof of mere compliance with the terms of [Insurance Code] section 1063.7—part of a protective statute that must be liberally construed and which significantly does not contain language creating a conclusive presumption of compliance with [Insurance Code] section 1063.7 by mere proof of mailing to the insured's last known address—creates a rebuttable presumption that notice was received. Where the insured is able to satisfactorily demonstrate to the trier of fact that such notice was not received, the appellate court cannot disturb such a factual finding if supported by substantial evidence in the record." (Bunner, at p. 23.)
In short, section 604 explicitly states that the presumption only lasts "unless and until evidence is introduced which would support a finding of its nonexistence." The statute does not include any limitation or qualification of the evidence and Slater v. Kehoe, supra, 38 Cal.App.3d 819, as well as the Law Revision Commission, states that the mere denial of receipt is enough to rebut the presumption. The cases cited by defendants are but mere illustrations of evidence these courts found constituted substantial evidence to support a factual finding the document was not received and evidence that is similar to the evidence presented by Wells Fargo.
Nevertheless, defendants renew the objection they raised at trial to the testimony of Williams and Schauerman to policies and procedures utilized by Wells Fargo when neither Williams nor Schauerman personally handled the mail at the San Jose facility in August of 2008 when Lee mailed the letter of revocation on defendants' behalf. We agree with Wells Fargo that Williams was qualified to testify Wells Fargo did not receive the letter. He testified that if the letter had been mailed, it would have been received by the San Jose facility and forwarded to the appropriate department for processing. It thereafter would have been preserved in defendants' line of credit account. But neither Williams, nor Schauerman, could locate the letter in defendants' line of credit account file. And, finally, Williams testified that if Wells Fargo had received the revocation letter, it would have immediately closed defendants' line of credit to prevent any further draws. The testimony establishes that both witnesses were familiar with the manner in which the mail was processed and the information was stored and what the bank would have done had it received such a letter. There is no requirement that to rebut the presumption, the witnesses had to personally handle the mail, that a certain number of witnesses needed to testify, or that Wells Fargo needed to produce an employee who could specifically describe the incoming mail-handling procedures in place at the San Jose and/or Sacramento facilities to which the loan revocation letters were mailed.
This case is simple because we need only find substantial evidence to support the trial court's factual finding. We are not at liberty to reweigh the evidence or to make our own credibility findings. Wells Fargo, through Williams and Schauerman, denied receipt of the letter. The presumption of receipt, therefore, evaporated in the trial court. The court thereafter weighed the conflicting evidence and decided the issue in favor of Wells Fargo. Williams' and Schauerman's testimony, despite the fact they had not personally handled the mail and could not describe the mail intake procedures in place in 2008 at the mailing destinations, constitutes substantial evidence to support the trial court's finding the letter of revocation was not received.
Defendants raised the same issue in their motion to vacate the judgment. Where, as here, the motion to vacate raises the identical issue raised in the appeal from the judgment itself, it is nonappealable. (City of Los Angeles v. Glair (2007) 153 Cal.App.4th 813, 822-823, overruled in part on other grounds in Ryan v. Rosenfield (2017) 3 Cal.5th 124.) " 'To hold otherwise would effectively authorize two appeals from the same decision.' " (Scognamillo v. Herrick (2003) 106 Cal.App.4th 1139, 1146.)
Defendants urge us to reverse the attorney fee award if we reverse the judgment. They raise no separate grounds for reversing the award. Since they have failed to convince us to reverse the judgment, the attorney fee award is proper and will not be reversed.
DISPOSITION
The judgment is affirmed. Wells Fargo shall recover its costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1) & (2).)
RAYE, P. J. We concur: BLEASE, J. HULL, J.