Opinion
F076479
02-26-2020
CITY OF HURON, Plaintiff and Respondent, v. PYJKE COMPANY ONE, LLC, Defendant and Appellant.
Brumfield & Hagan, Christopher J. Hagan and Joseph A. Werner; Hagan Law Group and Joseph A. Werner for Defendant and Appellant. Costanzo & Associates and Neal E. Costanzo for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. 16CECG00184)
OPINION
APPEAL from a judgment of the Superior Court of Fresno County. Mark W. Snauffer, Judge. Brumfield & Hagan, Christopher J. Hagan and Joseph A. Werner; Hagan Law Group and Joseph A. Werner for Defendant and Appellant. Costanzo & Associates and Neal E. Costanzo for Plaintiff and Respondent.
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INTRODUCTION
Plaintiff and respondent City of Huron (City) initiated a judicial foreclosure action against defendant and appellant PYJKE Company One, LLC (PYJKE). At the bench trial, PYJKE pointed out City had collaterally assigned a deed of trust to the California Department of Housing and Community Development (HCD) and therefore lacked standing to seek foreclosure. City presented a letter purporting to evince HCD's consent to the action. Over PYJKE's objections, the superior court admitted the letter into evidence. Subsequently, the court concluded City had standing and was owed $1.5 million pursuant to a promissory note secured by two deeds of trust. PYJKE was ordered to sell its real property to pay off the debt.
On appeal, PYJKE contends: (1) the superior court erroneously admitted the aforementioned letter into evidence; and (2) City did not have standing to bring the judicial foreclosure action. For the reasons set forth below, we reject these claims and affirm the judgment.
PYJKE also offers a new argument on appeal. " 'As a general rule an appellate court will consider only such points as were raised in the trial court, and this rule precludes a party from asserting, on appeal, claims to relief not asserted or asked for in the court below.' [Citations.]" (Cinnamon Square Shopping Center v. Meadowlark Enterprises (1994) 24 Cal.App.4th 1837, 1844.) Because the argument was never raised at trial, PYJKE forfeited it on appeal.
City filed a motion to dismiss PYJKE's appeal. In light of our resolution of this appeal on the merits, we deny the motion as moot.
STATEMENT OF FACTS
In 2012, HCD and City entered into an agreement under which the former would grant the latter up to $1.5 million to construct low- and moderate-income housing units by January 17, 2015. If City failed to meet the deadline, however, it would have to return any expended funds plus interest. The deadline was later extended to January 17, 2016.
City purchased an 11.58-acre parcel, which was subdivided into 88 lots. Thirty of these lots ("Lots 1-30") were appropriated for affordable single-family dwellings. The remaining 58 lots ("Outlots A and B") were set aside for subsequent phases. City engaged PYJKE to construct the single-family dwellings. Contractual terms required PYJKE to complete the first 10 units by October 15, 2014; the next 10 units by October 15, 2015; and the final 10 units by October 15, 2016. On February 28, 2014, PYJKE acquired title to Lots 1-30 and Outlots A and B.
A promissory note dated February 28, 2014, and signed by Dan Pike, PYJKE's "Managing Member," read:
Pike passed away on August 28, 2016.
"For value received, PY[JK]E . . . promise[s] to pay to City . . . the sum of *** One Million Five Hundred Thousand and 00/100 Dollars *** with no interest; principal payable on or before October 15, 2016 . . . .Two deeds of trust dated February 28, 2014, and signed by Pike identified PYJKE as trustor, a title company as trustee, and City as beneficiary. The first deed of trust conveyed Lots 1-30. The second deed of trust conveyed Outlots A and B.
"Should default be made in payment of any installment when due the whole sum of principal shall become immediately due at the option of the holder of this note. Principal payable in lawful money of the United States. If action be instituted on this note, I promise to pay such sum as the Court may fix as attorney's fees. This note is secured by a deed of trust." (Some capitalization omitted.)
By way of a "Collateral Assignment of Deed of Trust" dated February 28, 2014, City "collaterally assign[ed] and transfer[ed] to" HCD "all collateral rights and interest of collateral assignor in and to note secured by" the deed of trust that conveyed Lots 1-30. (Boldface & some capitalization omitted.) An allonge to the promissory note read:
"Pursuant to Collateral Assignment of Deed of Trust recorded March 4, 2014 . . . , said promissory note to which this allonge is attached . . . was collateral[l]y assigned to [HCD]." (Some capitalization omitted.)
PYJKE failed to complete the first and second set of units by October 15, 2014, and October 15, 2015, respectively, and "abandoned th[e] project entirely." As a result, City terminated its contract with PYJKE on December 18, 2015. Approximately $1.3 million had been expended by this date. City initiated a judicial foreclosure action on January 21, 2016, after PYJKE refused to transfer title to Lots 1-30 and Outlots A and B. In addition, PYJKE did not pay off the promissory note by October 15, 2016.
By the time of the bench trial, only about $30,000 in funds remained.
At the outset of the July 7, 2017 bench trial, City waived its right to recover a deficiency judgment and asked the court to "enter a judgment that allows for a sale without the rights of rejection." PYJKE's counsel Christopher Hagan then argued:
"I think what the evidence is going to show is that City . . . is, in fact, not a secured creditor of the subject property, and the Court has before it by way of stipulation of the parties . . . a collateral assignment of deed of trust. And it's dated February 28, 2014. And by the execution of that collateral assignment what . . . [C]ity has done is they have assigned all rights, interests and otherwise in the property to HCD. [¶] So in summary, the legal issue is the fact that . . . [C]ity has no standing to seek judicial foreclosure. HCD . . . is a necessary party to the action. They're not here. They are the party that has standing to seek foreclosure based upon the collateral assignment."
Jack Castro, City's manager, testified he sent a request to HCD for written consent to proceed with the foreclosure action. City introduced Exhibit No. 18, a letter from HCD dated July 5, 2017. The heading listed the agency's name, i.e., "DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT [¶] LEGAL AFFAIRS DIVISION," mailing and e-mail addresses, and phone and fax numbers and bore its insignia. The body of the letter read:
"Dear Mr. Castro:
"In accordance with your request, please be advised that . . . HCD . . . has no objection to and consents to the . . . proceeding with [City's] efforts to
obtain a judgment . . . with the understanding that such efforts are being made for the ultimate benefit of HCD.The letter was signed by an attorney, Demetrios Vryonis.
"The foregoing consent shall be limited solely and exclusively to obtaining such judgment. If such judgment is obtained, . . . City is not authorized to take, and shall not take, any further actions with respect to this matter, including without limitation initiating any foreclosure or other enforcement proceedings, until HCD expressly authorizes otherwise in writing. HCD hereby expressly reserves and retains any and all of its rights, remedies and claims related to this matter, including without limitation, any and all of its rights, interests and claims in and to the real property described as . . . Lots 1-30 and Out[lots] . . . A and B."
Hagan objected to Exhibit No. 18, in part, on the grounds of authentication and hearsay. The court overruled the objections and admitted the letter into evidence. It reasoned:
"I think there's sufficient foundation to allow it subject to cross-examination obviously on the issue of authority, but it seems clear to me that it's on official letterhead signed by counsel and it's very explicit in terms of its direction as to what . . . [C]ity is allowed to do and not do.On cross-examination, the following colloquy transpired between Hagan and Castro:
"The legal issue presented that is going to need to be addressed is whether this constitutes consent for . . . [C]ity to foreclose despite the fact that there was that collateral assignment. And so I think this is valid evidence on the subject, so I will allow it. [¶] . . . [¶]
". . . I don't think it's hearsay because it's offered to show the consent of the - it's an operative document or contract, if you will, at least that's the way I see it. I don't think it's a hearsay issue. Foundationally it's more of an issue. Whether or not this attorney can speak for the state of California I don't know, but I'm going to assume that he did unless it's shown otherwise. . . ."
"[Hagan:] You understand that Mr. [Vry]onis is an attorney for the state; is that true?
"[Castro:] Yes, I understand.
"Q. Is your understanding solely based upon the fact that the bottom of this letter purportedly bearing his signature has the word 'attorney' under it?
"A. Yes.
"Q. What level attorney is he with the state?
"A. You know, there's several attorneys at the state and I have no clue what level they are.
"Q. I'm asking specifically with respect to Mr. [V]ryonis, what level attorney was he?
"A. I don't understand the question.
"Q. What are his duties and responsibilities? Do you know?
"A. I have no idea. They never reveal their responsibilities.
"Q. Does he have some management level authority, if you know, with the state?
"A. I have no clue." (Boldface omitted.)
In an August 10, 2017 statement of decision, the court found City had standing. It detailed:
"[City] proved by a preponderance of the evidence that . . . HCD . . . authorized, in writing, [City] to proceed with the foreclosure action, for the mutual benefit of [City] and HCD."In an August 10, 2017 judgment, the court concluded PYJKE owed City $1.5 million pursuant to the secured February 28, 2014 promissory note and ordered the sale of Lots 1-30 and Outlots A and B. It also specified City "shall not . . . obtain any writ of execution or proceed with the sale of the property as authorized by this judgment of foreclosure, unless and until it obtains the consent of HCD to that sale."
DISCUSSION
I. The superior court did not abuse its discretion when it admitted Exhibit No. 18 into evidence
a. Standard of review
"We review the trial court's evidentiary rulings on authentication, foundation, and hearsay for an abuse of discretion." (People v. Rodriguez (2017) 16 Cal.App.5th 355, 373.) "Specifically, we will not disturb the trial court's ruling 'except on a showing the trial court exercised its discretion in an arbitrary, capricious, or patently absurd manner that resulted in a manifest miscarriage of justice.' [Citation.]" (People v. Goldsmith (2014) 59 Cal.4th 258, 266 (Goldsmith).)
b. Analysis - authentication
" 'A document is not presumed to be what it purports to be . . . .' [Citation.]" (People v. Smith (2009) 179 Cal.App.4th 986, 1001 (Smith).) "Authentication of a writing is required before it may be received in evidence" (Evid. Code, § 1401, subd. (a)) and "is to be determined by the trial court as a preliminary fact" (Goldsmith, supra, 59 Cal.4th at p. 266). "Authentication of a writing means (a) the introduction of evidence sufficient to sustain a finding that it is the writing that the proponent of the evidence claims it is or (b) the establishment of such facts by any other means provided by law." (§ 1400.) " 'As long as the evidence would support a finding of authenticity, the writing is admissible. The fact conflicting inferences can be drawn regarding authenticity goes to the document's weight as evidence, not its admissibility.' [Citation.]" (Goldsmith, supra, at p. 267.)
Subsequent statutory citations refer to the Evidence Code.
"[S]ections 1410 through 1421 list various methods of authentication of documents—e.g., by the testimony of a subscribing witness or a handwriting expert—but these methods are not exclusive. [Citations.] 'California courts have never considered the list set forth in . . . sections 1410-1421 as precluding reliance upon other means of authentication.' [Citation.]" (Smith, supra, 179 Cal.App.4th at p. 1001; see Cal. Law Revision Com. com., 29B Pt. 5 West's Ann. Evid. Code (2015 ed.) foll. § 1410, p. 217 ["[I]t would be impossible to specify all of the varieties of circumstantial evidence that may be sufficient in particular cases to sustain a finding of the authenticity of a writing."].) "For example, a writing can be authenticated by circumstantial evidence and by its contents." (People v. Skiles (2011) 51 Cal.4th 1178, 1187.) The requisite preliminary showing may also be supplied by a presumption. (See §§ 1450-1454; see also § 1450 ["The presumptions established by this article are presumptions affecting the burden of producing evidence."].)
"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 which case the trier of fact shall determine the existence or nonexistence of the presumed fact from the evidence and without regard to the presumption. Nothing in this section shall be construed to prevent the drawing of any inference that may be appropriate." (§ 604.)
Here, Castro testified he asked HCD for written consent to pursue the foreclosure action. (See § 1420 ["A writing may be authenticated by evidence that the writing was received in response to a communication sent to the person who is claimed by the proponent of the evidence to be the author of the writing."].) City presented Exhibit No. 18, whose letterhead displayed HCD's name, contact information, and insignia. The body of the letter acknowledged Castro's request; consented to City's attempt to obtain a judgment of judicial foreclosure "for the ultimate benefit of HCD"; circumscribed City's authority to take any action following said judgment without HCD's written permission; and reserved and retained "any and all of [HCD's] rights, interests and claims in and to" Lots 1-30 and Outlots A and B. (See People v. Skiles, supra, 51 Cal.4th at p. 1187 [writing can be authenticated by its contents].) Finally, the letter was signed by Vryonis, an HCD Legal Affairs Division attorney. (See § 1453, subd. (b) ["A signature is presumed to be genuine and authorized if it purports to be the signature, affixed in his official capacity, of . . . [¶] . . . [¶] . . . [a] public employee of any public entity in the United States."]; see Craig v. Brown & Root, Inc. (2000) 84 Cal.App.4th 416, 421 ["Although the presumption disappears where . . . it is met with contradictory evidence, inferences may nevertheless be drawn from the same circumstances that gave rise to the presumption in the first place."].) We cannot conclude the court exercised its discretion in an arbitrary, capricious, or patently absurd manner when it found Exhibit No. 18 authentic.
c. Analysis - hearsay
" 'Hearsay evidence' is evidence of a statement that was made other than by a witness while testifying at the hearing and that is offered to prove the truth of the matter stated." (§ 1200, subd. (a).) "Except as provided by law, hearsay evidence is inadmissible." (Id., subd. (b).)
"Documents not offered for the truth of the matter asserted are, by definition, not hearsay." (Jazayeri v. Mao (2009) 174 Cal.App.4th 301, 316.) "Where ' "the very fact in controversy is whether certain things were said or done and not . . . whether these things were true or false, . . . in these cases the words or acts are admissible not as hearsay[,] but as original evidence." ' [Citation.]" (Ibid.) "Written or spoken words offered as original evidence rather than for their truth are generally referred to as 'operative facts.' " (Smith, supra, 179 Cal.App.4th at p. 1003.)
Here, Exhibit No. 18 was offered to evince HCD's consent to City's judicial foreclosure action. " '[W]ords of consent . . . are not hearsay because they are not offered to prove the truth of any matter asserted in the . . . statements. The words of consent are relevant as words of authorization. They are, therefore, nonhearsay and they become relevant to the issue of consent . . . merely from the fact that the words are spoken.' " (People v. Nelson (1985) 166 Cal.App.3d 1209, 1215.) Therefore, the court did not abuse its discretion when it determined Exhibit No. 18 did not constitute inadmissible hearsay.
II. City had standing to bring the judicial foreclosure action
"The accepted view is that the assignor may sue with the consent of the assignee . . . ." (Reidy v. Young (1931) 119 Cal.App. 322, 324; accord, Taylor v. Sanford (1962) 203 Cal.App.2d 330, 347; Mathis v. Shamoon (1952) 114 Cal.App.2d Supp. 829, 830; see Greco v. Oregon Mut. Fire Ins. Co. (1961) 191 Cal.App.2d 674, 687 ["[I]f an assignee consents that the suit be brought by his assignor, an objection that the plaintiff[, i.e., the assignor,] is not the real party in interest will not be ground for reversal because the defendant is fully protected from future action, and the purpose of any objection to the suit upon that ground has been served."].) In view of Exhibit No. 18, it is clear City had standing to bring the judicial foreclosure action in superior court.
DISPOSITION
The judgment is affirmed. Costs on appeal are awarded to plaintiff and respondent City of Huron.
/s/_________
DETJEN, J. WE CONCUR: /s/_________
HILL, P.J. /s/_________
FRANSON, J.