From Casetext: Smarter Legal Research

Peak Foreclosure Servs. v. Bayview Loan Servs.

COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION THREE
Jan 21, 2020
B283867 (Cal. Ct. App. Jan. 21, 2020)

Opinion

B283867

01-21-2020

PEAK FORECLOSURE SERVICES, Plaintiff and Respondent, v. BAYVIEW LOAN SERVICES, LLC., Defendant and Respondent; DEL REY CLEANERS, INC. et al., Defendants and Appellants.

Fangary Law Group and Hany S. Fangary for Defendants and Appellants Del Rey Cleaners, Inc. and Margo Moschel. Krishel Law Firm and Daniel L. Krishel for Plaintiff and Respondent Peak Foreclosure Services. Robinson, Chavez, Gardner & Kincannon, Jeffrey B. Gardner and Laura J. Petrie for Defendant and Respondent Bayview Loan Services, LLC.


NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Los Angeles County Super. Ct. No. BS157001) APPEAL from an order of the Superior Court of Los Angeles County, Ramona G. See, Judge. Affirmed. Fangary Law Group and Hany S. Fangary for Defendants and Appellants Del Rey Cleaners, Inc. and Margo Moschel. Krishel Law Firm and Daniel L. Krishel for Plaintiff and Respondent Peak Foreclosure Services. Robinson, Chavez, Gardner & Kincannon, Jeffrey B. Gardner and Laura J. Petrie for Defendant and Respondent Bayview Loan Services, LLC.

____________________

This proceeding involves a dispute between the debtor, Del Rey Cleaners, Inc., and 310 Culver LLC (310 Culver) over the right to the proceeds of a nonjudicial foreclosure sale. 310 Culver filed a separate lawsuit to rescind the trustee's deed upon sale and obtain restitution of the purchase price. The trustee who had conducted the foreclosure sale commenced this proceeding by depositing the surplus proceeds from the foreclosure sale with the trial court and asking for a resolution of the claims to the money (Civ. Code, § 2924j). These actions were declared related. Meanwhile, the trial court in the other lawsuit to which Del Rey Cleaners, Inc. was not a party, approved a stipulated judgment of rescission of the foreclosure sale and restitution of the purchase price to 310 Culver. Returning to the instant proceeding, the court declared it moot and later restored the sale proceeds to 310 Culver. Del Rey Cleaners, Inc. appeals from that restoration order. We affirm.

All further statutory references are to the Civil Code unless otherwise indicated.

Del Rey Cleaners, Inc.'s notice of appeal also names Margo Moschel as an appellant. Margo Moschel is the executor of the Estate of Barry Moschel of which Del Rey Cleaners, Inc. is the only remaining asset. For ease and clarity, we refer to Margo Moschel and Del Rey Cleaners, Inc. collectively as Del Rey. --------

BACKGROUND

I. The nonjudicial foreclosure sale

The property at the center of this controversy is located in Los Angeles and was owned by Del Rey, who operated a dry cleaning business there. Del Rey defaulted on its mortgage payments to Bayview Loan Servicing, LLC. (Bayview), and so the latter hired Peak Foreclosure Services, Inc. (Peak) to exercise the power of sale in the trust deed. Peak conducted the nonjudicial foreclosure sale in January 2015. Platinum Finance Properties, Inc., Natural Sequence, LLC, and HVH, Inc. purchased the property for $367,810.11 more than the amount of Del Rey's indebtedness and transferred the property to 310 Culver. II. The rescission action, case No. YC070575

310 Culver sued Peak and Bayview on May 8, 2015 to rescind the trustee's deed upon sale and for restitution of the purchase money. The basis of the lawsuit was that the sellers had failed to disclose that the property was subject to a cleanup and abatement order issued in August 2014 by the California Regional Water Quality Control Board for the Los Angeles region (the Board). III. Pemoll LLC's lawsuit, case No. BC588525

In July 2015, Pemoll, LLC (Pemoll), the lienholder junior to Bayview, filed a separate action alleging that Peak failed to distribute a portion of the surplus funds to Pemoll in satisfaction of its junior lien. IV. The section 2924j proceeding at issue in this appeal, case No. BS157001

As a result of these two lawsuits, a dispute arose over the right to the surplus funds from the foreclosure sale and so Peak filed a petition to determine the unresolved claims under section 2924j, subdivisions (c) and (d). Peak amended its petition on July 30, 2015, naming Del Rey among others as claimants, and on August 6, 2015, deposited $370,139.58 with the clerk of the trial court. Peak sent the required notices to Bayview, Del Rey, Pemoll, and 310 Culver under section 2924j, subdivision (d).

Pemoll, 310 Culver, and the Board filed section 2924j claims with the trial court in September and October 2015. Bayview asserted in its filing only that if 310 Culver's trustee's deed upon sale were rescinded in the rescission action, then the full amount of the deposited sale-proceeds should be turned over to 310 Culver. Accordingly, Bayview asked the court not to distribute any of the deposited surplus money until resolution of the rescission action.

In October 2015, the trial court deemed the section 2924j proceeding, Pemoll's lawsuit, and the rescission action to be related and transferred them to one judge. V. Litigation in the section 2924j proceeding

On May 6, 2016, 310 Culver moved the trial court in the section 2924j proceeding to approve a settlement of the rescission action. The motion indicated that all parties had reached a "universal settlement" calling for rescission of the trustee's deed upon sale, 310 Culver's purchase of Pemoll's trust deed, return of the purchase money to 310 Culver, and dismissal of the rescission action and the Pemoll lawsuit.

The trial court denied 310 Culver's motion without prejudice. The court explained that the motion, brought in the section 2924j proceeding, sought approval of a settlement agreement that encompassed the two other lawsuits, which fell outside the narrow scope of the section 2924j proceeding to determine unresolved claims to money. The motion for approval of the settlement agreement should have been filed in the case actually being settled, the court instructed. The court denied Del Rey's objections to the settlement on the ground that Del Rey "has no standing upon which to object to the motion brought in the [section 2924j proceeding] where it ha[d] not filed any claim."

Del Rey's corporate status was suspended between December 24, 2015 and August 18, 2016. Four months later, in December 2016, Del Rey finally filed its section 2924j claim.

On February 24, 2017, 310 Culver filed a notice with the trial court in the section 2924j proceeding that it and Bayview had reached a settlement of the rescission action and had entered into a stipulation for judgment. 310 Culver asked the court to stay further section 2924j proceedings pending final disposition of the rescission action.

In the section 2924j proceeding, Del Rey objected to the stipulation for judgment of the rescission action. It also applied ex parte to schedule a hearing under section 2924j. Del Rey argued that the trial court had been required to schedule a hearing to consider all section 2924j claims no later than October 30, 2015, which meant that the court was obligated to schedule that hearing before ruling on the settlement in the rescission action. Alternatively, Del Rey argued, the trial court should schedule a hearing on Del Rey's as-yet-unfiled motion to consolidate the three lawsuits.

The trial court in the rescission action approved the stipulation for entry of judgment on February 28, 2017, entered judgment of rescission and restitution in favor of 310 Culver, and canceled the trustee's deed upon sale. The judgment stated that pursuant to section 1058.5, subdivision (b), "recordation of a Notice of Rescission of the Trustee's Deed upon Sale 'shall restore the condition of record title to the real property described in the trustee's deed and the existence and priority of all lienholders to the status quo prior to the recordation of the trustee's deed upon sale.' "

Del Rey moved to consolidate the three related actions the following day.

On March 21, 2017, the trial court in the section 2924j proceeding heard Del Rey's motion to consolidate the three actions, and 310 Culver's motions to stay the section 2924j proceeding pending disposition of the related actions and to strike Del Rey's claim. The court explained that it had already signed the stipulation for entry of judgment to rescind the trustee's deed and that the settlement of the rescission action placed all parties back into the positions they had been in before the sale. The court noted 310 Culver's and Peak's acknowledgment that the parties in the Pemoll lawsuit had also settled and were merely waiting the trial court's signature of approval. Therefore, the court ruled, "there are no surplus funds to be distributed. Thus, the three related matters . . . are moot."

310 Culver then moved for a release of the section 2924j funds on deposit on the ground that the trial court had rescinded the trustee's deed in the rescission action and so the funds on deposit belonged to 310 Culver. Del Rey opposed the motion. On May 2, 2017, the trial court filed its order granting 310 Culver's motion to release the funds and directing the clerk to distribute all funds on deposit, with all accrued interest, to 310 Culver. Del Rey filed its timely appeal from the May 2, 2017 order.

DISCUSSION

I. Appeal

Del Rey appeals from an order signed by the trial court granting the motion of 310 Culver to release the funds on deposit. That order did not dismiss the section 2924j proceeding. However, it did finally dispose of the rights of the parties and left nothing for future consideration except the fact of compliance or noncompliance, and so that order qualifies as an appealable judgment. (See Code Civ. Proc., §§ 577 & 581d; Passavanti v. Williams (1990) 225 Cal.App.3d 1602, 1606.)

Del Rey's contentions on appeal can be grouped into three categories: (1) the trial court refused to set a hearing to determine the parties' entitlement to the surplus funds under section 2924j, and 310 Culver was not entitled to any surplus funds; (2) the foreclosure sale could not be and should not have been rescinded; and (3) the trial court denied Del Rey due process by failing to rule on its motion to consolidate the three actions thereby precluding it from challenging the rescission. II. The section 2924j proceeding was rendered moot by the judgment of rescission.

Paragraph 2 of section 2924j, subdivision (d) reads: "Within 90 days after deposit with the clerk, the court shall consider all claims filed at least 15 days before the date on which the hearing is scheduled by the court, the clerk shall serve written notice of the hearing by first-class mail on all claimants identified in the trustee's declaration at the addresses specified therein." (Italics added.) The statute does not "preclude any person from pursuing other remedies or claims as to surplus proceeds." (§ 2924j, subd. (b).)

Citing section 2924j, subdivision (d), Del Rey contends that the trial court "refused" to schedule a hearing to consider the claims in the section 2924j proceeding.

Ninety days from the date the surplus funds were deposited with the trial court was November 4, 2015. Had the trial court set a hearing at that time, it would not have considered Del Rey's interest because Del Rey had not filed a claim by then.

In any event, section 2924j is silent about the consequence of the trial court's failure to consider claims within the period outlined in subdivision (d). We conclude that the 90-day timeframe for conducting the hearing is not mandatory. Statutory time limitations are directory rather than mandatory or jurisdictional, absent express contrary legislative intent. (Osman v. Superior Court (2005) 134 Cal.App.4th 32, 37.) Certainly, Del Rey has pointed to no legislative intent to wrest from the trial court its inherent power to manage its own calendar. (See Blech v. Blech (2019) 38 Cal.App.5th 941, 955.) Hence, the trial court had authority to consider section 2924j claims beyond the 90-period delineated in that statute.

Moreover, the trial court in the section 2924j proceeding reasonably waited until the rescission action was finally resolved. It was aware of the competing claims for the funds of Pemoll, Bayview, Del Rey, the Board, and 310 Culver, and of the other two lawsuits that impinged on the section 2924j proceeding. The court repeatedly continued the case management conference in the section 2924j proceeding starting in October 2015. By February 2017 when Del Rey first moved the trial court to set the hearing under section 2924j, 310 Culver had notified the court twice about settlement of the rescission action and the stipulated settlement was already under consideration by the court. Resolution of the rescission action necessarily put an end to the section 2924j proceeding because the stipulated judgment restored all of the sale proceeds to 310 Culver. The stipulated judgment in the rescission action thus rendered the section 2924j proceeding moot. There was no error.

Del Rey contends that 310 Culver had no right to the surplus funds because that entity is not one of the parties statutorily entitled to distribution of the proceeds of a trustee's sale under section 2924k. However, release of the funds to 310 Culver was not based on section 2924k, but on the rescission of the trustees' deed upon sale. Rescission "puts the rescinding party in the status quo ante, returning him to his economic position before he entered" into the sale. (Runyan v. Pacific Air Industries, Inc. (1970) 2 Cal.3d 304, 316, fn. 15; Sharabianlou v. Karp (2010) 181 Cal.App.4th 1133, 1145; see § 1058.5, subd. (b).) Thus, the proceeds belonged to 310 Culver. III. Del Rey has no standing to challenge the rescission

Del Rey contends that a foreclosure sale, governed by a comprehensive statutory scheme, constitutes a final adjudication of the rights of borrowers and lenders and cannot be rescinded. It adds that rescission of a contract based on unilateral mistake is unavailable to a party who assumed the risk of mistake in entering into the contract. Del Rey concludes its brief by arguing that it "submit[s] that there was no justification for the trial court's order approving rescission of the sale of the Property, and that Appellants were entitled to recovery of the surplus funds."

Del Rey cannot be heard to challenge the rescission judgment on any ground because that judgment was entered in an entirely different case to which Del Rey was not a party. Even if Del Rey were a party to the rescission action, the judgment of rescission, being a stipulated judgment pursuant to the settlement of the parties to that action and resolving all of the outstanding issues, is not appealable. " 'As a general proposition, a party may not appeal a consent judgment.' " (City of Gardena v. Rikuo Corp. (2011) 192 Cal.App.4th 595, 600.) No recognized exception applies in this case. (See ibid.) More important, Del Rey did not appeal from the rescission order. Its notice of appeal is limited to the order entered on May 2, 2017 granting 310 Culver's motion for release of the funds. For the foregoing reasons, Del Rey has no standing to challenge the rescission. IV. Del Rey did not appeal from the order denying its consolidation motion.

Del Rey contends that the trial court's refusal to consolidate the three actions denied it due process by preventing it from challenging the rescission. However, we have no jurisdiction to review the order denying consolidation. As we noted, Del Rey's notice of appeal was limited to the order filed on May 2, 2017, which order addressed 310 Culver's motion for release of the funds on deposit only.

DISPOSITION

The order is affirmed. Bayview Loan Services, LLC and Peak Foreclosure Services, Inc. are awarded their costs on appeal.

NOT TO BE PUBLISHED.

DHANIDINA, J. We concur:

LAVIN, Acting P. J.

EGERTON, J.


Summaries of

Peak Foreclosure Servs. v. Bayview Loan Servs.

COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION THREE
Jan 21, 2020
B283867 (Cal. Ct. App. Jan. 21, 2020)
Case details for

Peak Foreclosure Servs. v. Bayview Loan Servs.

Case Details

Full title:PEAK FORECLOSURE SERVICES, Plaintiff and Respondent, v. BAYVIEW LOAN…

Court:COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION THREE

Date published: Jan 21, 2020

Citations

B283867 (Cal. Ct. App. Jan. 21, 2020)