Opinion
NOT TO BE PUBLISHED
APPEAL from judgments of the Superior Court of San Diego County, No. 37-2008-00066823-CU-FR-EC Eddie Sturgeon, Judge.
McINTYRE, J.
Joshua Anders and his wife, Susana, appeal from judgments entered in favor of Rebecca Sirois in her action against them for nonpayment of a promissory note. Defendants contend the trial court abused its discretion when it forced their new counsel to trial without allowing him to move to set aside deemed admissions. They also assert the trial court erred in: (1) finding that the action was not barred by the anti-deficiency statute (Code Civ. Proc., § 580b; undesignated statutory references are to this code); (2) enforcing settlement agreements against Joshua; (3) concluding the loan was not usurious; and (4) finding Susana liable under the tort claims alleged against her.
We conclude the trial court erred when it found that the loan was not usurious, and reverse the award of interest in the judgments. We also conclude that the evidence did not support the judgment in favor of Sirois and against Susana on the tort claims, and reverse the judgment against Susana as to these causes of action. Otherwise, we reject defendants' arguments and affirm the judgments as modified.
FACTUAL AND PROCEDURAL BACKGROUND
Sirois loaned defendants $68,000 at an annual interest rate of 15 percent. The promissory note was secured by a deed of trust on a home located at 4715 Divine Way in La Mesa, California (the Divine Way property). Although the record has no evidence of this, the parties' arguments suggest the home was foreclosed upon by the first trust deed holder. In September 2008, Sirois filed this action against defendants based on their nonpayment of the promissory note, alleging causes of action for: breach of written contract; account stated; open book account; common counts; fraud; fraudulent misrepresentation and concealment; negligent misrepresentation; and negligence. The following month, defendants' counsel answered the complaint. In February 2009, defendants filed substitution of attorney forms, whereby their counsel withdrew and they became parties in propria persona.
On June 12, 2009, the trial court granted Sirois's motion for an order establishing her requests for admissions. That same day, Sirois and Joshua executed a stipulated judgment and two written settlement agreements whereby Sirois agreed to dismiss the action in exchange for a total payment of $68,000. The settlement agreements included a signature line for Susana, and noted that she and Joshua would be jointly and severally liable; however, Susana did not sign the settlement agreements or the stipulated judgment. Joshua never made the payments required by the settlement agreements.
On July 24, 2009, defendants appeared for trial with attorney David Mongan, who had substituted into the action as their counsel of record. Counsel requested a four-to-six week continuance and an order setting aside the deemed admissions, but the trial court denied both requests. The matter proceeded to trial, and the court heard limited testimony from Sirois and Joshua. It also took judicial notice of the deemed admissions. The court later considered motions regarding the enforceability of the settlement agreements and application of section 580b. The trial court ultimately enforced the settlement agreements against Joshua, denied defendants' usury defense, and ruled that section 580b did not apply because defendants did not use the loan to purchase a home. The court entered a judgment against Joshua in the amount of $109,405, and a separate judgment against Susana in the amount of $112,946.50. Defendants timely appealed.
DISCUSSION
I. Trial Continuance and Deemed Admissions
Defendants assert the trial court abused its discretion when it denied their motion to continue the trial date; thus, denying them the opportunity to file a motion to set aside the deemed admissions.
In civil cases, continuances are disfavored, the assigned trial dates are firm, and parties and their counsel must regard the trial date as certain. (Cal. Rules of Court, rule 3.1332(a) & (c); further rule references are to the California Rules of Court.) A party seeking a continuance must make the request by a noticed motion or an ex parte application, with supporting declarations, as soon as reasonably practical once the need for the continuance is discovered. (Rule 3.1332(b).) The trial court must consider "all... [relevant] facts and circumstances" (rule 3.1332(d)) and "may grant a continuance only on an affirmative showing of good cause requiring the continuance." (Rule 3.1332(c).) We review the court's ruling on the motion to continue for an abuse of discretion. (Forthmann v. Boyer (2002) 97 Cal.App.4th 977, 984.) "The trial court's exercise of that discretion will be upheld if it is based on a reasoned judgment and complies with legal principles and policies appropriate to the case before the court." (Ibid.)
In the interests of justice, we requested the superior court file and take judicial notice thereof. (Evid. Code, § 452, subd. (d).) On November 21, 2008, Sirois served the requests for admissions on defendants' prior counsel of record. On April 10, 2009, Sirois served on defendants her motion for an order establishing admissions at the address listed in their February attorney substitution forms. On June 12, 2009, the trial court granted Sirois's motion for an order establishing her requests for admissions. On July 24, 2009, defendants appeared for trial with counsel and sought a continuance.
Counsel, however, filed no declarations to support the requested continuance. (Rule 3.1332(b).) Furthermore, the record does not show any circumstances that would have prevented defendants from seeking a continuance weeks or months earlier. Defendants' reason for the requested continuance, to file a motion to set aside the deemed admissions, does not change the analysis.
While we sympathize with defendants having to navigate the legal system without counsel, they had a duty to educate themselves about the case against them and the procedures they needed to follow to protect their interests. (Nwosu v. Uba (2004) 122 Cal.App.4th 1229, 1247 [parties representing themselves are " 'to be treated like any other party and [are] entitled to the same, but no greater consideration than other litigants and attorneys.' "].) Almost two months elapsed between the time Sirois served her motion to establish admissions and the granting of the motion; thus, defendants had sufficient time to obtain and respond to the discovery request. Joshua appeared at the June 12 hearing when the court granted the order deeming admissions. Accordingly, defendants knew about the order and could have sought relief from that order and requested a trial continuance before trial began the following month.
In summary, the trial court did not abuse its discretion when it denied defendants' motion to continue the trial date, and denied them the opportunity to file a motion to set aside the deemed admissions. Rather, this case exemplifies the observation made by the court in Monastero v. Los Angeles Transit Co. (1955) 131 Cal.App.2d 156, 162: "Experience in trial of cases indicates that all too often litigants who appear in propria persona deliberately attempt to capitalize upon their own ignorance or appearance of ignorance."
II. Application of Section 580b
A. Facts
The deemed admissions established that defendants did not purchase the Divine Way property to live there, and that they never resided at the property. At trial, however, Joshua testified that he obtained funding on Sirois's loan in September 2007, and that he moved into the Divine Way home in December 2007. He claimed that he used the loan money at the home for electrical, plumbing and roofing work.
After close of the evidence, defense counsel argued that section 580b was a complete defense because defendants established at trial that they used the loan proceeds to finish the Divine Way home to make it livable, and that defendants later lived in the home. The trial court did not rule on the defense, and requested additional briefing from the parties. The parties presented additional briefing, and Sirois presented new evidence regarding application of section 580b. Defendants objected to the new evidence. After hearing argument on the matter, the court ruled that section 580b did not apply because defendants did not use the loan to purchase a home.
B. Analysis
Section 580b provides in part: "No deficiency judgment shall lie in any event... under a deed of trust or mortgage... on a dwelling for not more than four families given to a lender to secure repayment of a loan which was in fact used to pay all or part of the purchase price of that dwelling occupied, entirely or in part, by the purchaser." Relying on Prunty v. Bank of America (1974) 37 Cal.App.3d430 (Prunty), defendants assert the trial court erred when it concluded that section 580b did not apply because they used the loan proceeds to make the home livable. Sirois asserts Prunty is inapposite because none of the loan documents state that defendants used the loan proceeds for the purchase of the subject home, for construction, or construction improvements.
As a threshold matter, section 580b does not apply based on the defendants' admission that they never lived in the home. Even assuming we ignored this defect, we agree with Sirois that the reasoning in Prunty does not apply.
The Prunty court included construction loans within the definition of purchase money transactions, provided that the funds were used for building the borrower's personal residence on real property already owned by him. (Prunty, supra, 37 Cal.App.3dat p. 442.) As another court noted: "Prunty arguably fell within section 580b following a 1963 amendment [to section 580b] adding the protection afforded a 'dwelling, ' and was likely aimed at eliminating the inequitable situation where the purchaser of real property with an existing house was protected by section 580b and the purchaser of real property who later built a house on the lot was not. [Citation.]" (Union Bank v. Anderson (1991) 232 Cal.App.3d941, 948.) The protections of section 580b do not apply, however, where an individual obtains a loan not to finance the purchase of a dwelling, but to finance the construction of a swimming pool months after they had bought the dwelling and moved in. (Allstate Savings and Loan Ass'n v. Murphy (1979) 98 Cal.App.3d761, 763 (Allstate).)
Here, evidence before the trial court established that defendants purchased the Divine Way property in July 2007, before they obtained the loan from Sirois in September 2007. Joshua testified that he used the loan proceeds for repairs to the home. As the Allstate court noted, construction loans for improvements or repairs are not within the description of loans protected by the purchase-money deficiency prohibition of section 580b. (Allstate, supra, 98 Cal.App.3dat pp. 763-764.) Accordingly, the trial court did not err when it refused to apply the protection of section 580b.
III. Enforcement of Settlement Agreements
Joshua asserts the trial court erred when it enforced the settlement agreements against him because Sirois failed to file a noticed motion as required by section 664.6. He also claims the court improperly rewrote the agreements by enforcing them against only two parties because the documents anticipated a global settlement between three parties, whereby he and Susana would be jointly and severally liable. We disagree.
Section 664.6 grants a trial court the authority to enforce settlement agreements through a motion proceeding without the need to file a new lawsuit. (In re Marriage of Assemi (1994) 7 Cal.4th 896, 905, 911; see § 664.6.) "It is for the trial court to determine in the first instance whether the parties have entered into an enforceable settlement. [Citation.] In making that determination, 'the trial court acts as the trier of fact, determining whether the parties entered into a valid and binding settlement. [Citation.]'... The trial court's factual findings on a motion to enforce a settlement pursuant to section 664.6 'are subject to limited appellate review and will not be disturbed if supported by substantial evidence.' [Citation.]" (Osumi v. Sutton (2007) 151 Cal.App.4th 1355, 1360.) "Consistent with the venerable substantial evidence standard of review, and with our policy favoring settlements, we resolve all evidentiary conflicts and draw all reasonable inferences to support the trial court's finding that these parties entered into an enforceable settlement agreement and its order enforcing that agreement." (Ibid.)
"A settlement agreement is a contract, and the legal principles which apply to contracts generally apply to settlement contracts." (Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 810.) "[T]he trial court is under a duty to render a judgment that is in exact conformity with an agreement or stipulation of the parties. 'If interpretation of a stipulation is in order the rules applied are those applied to the interpretation of contracts. [Citations.] It is not the province of the court to add to the provisions thereof [citations]; to insert a term not found therein [citations]; or to make a new stipulation for the parties.' " (Jones v. World Life Research Institute (1976) 60 Cal.App.3d836, 840.)
On the day of trial, the court indicated it would enforce the settlement agreements. Thereafter, the court scheduled a noticed motion to address the enforceability of the settlement agreements. The court held a hearing on the motion, took the matter under submission, and stated that it would conduct a trial for Joshua if it found the settlement agreements unenforceable. Ultimately, the trial court concluded that the settlement agreements between Joshua and Sirois were enforceable. Joshua had an ample opportunity to address the issue; thus, it is irrelevant whether the motion sought enforcement of the settlement agreements, or to set aside the agreements.
The parties do not dispute the terms of the settlement agreements; rather, the sole issue is whether the agreements and stipulated judgment signed by Joshua and Sirois are valid because the documents included a signature line for Susana, and stated that the judgment would be joint and several against Joshua and Susana.
We reject Joshua's assertion that the settlement is unenforceable because the parties anticipated a global settlement. As a threshold matter, the declarations filed with the motion provide no insight into this issue, nor do they explain why Susana did not sign the documents. Accordingly, there was no evidence for the court to interpret in deciding the enforceability of the settlement agreements. Simply put, by signing the documents, Joshua and Sirois expressed their mutual intent to settle the dispute. Joshua's statement that he signed the documents believing he had no defense is insufficient to show lack of consent.
Because Susana did not sign the documents, the statement in the documents that the judgments be joint and several is rendered meaningless. It appears the parties and Sirois's counsel simply forgot to strike out the "joint and several" language from the documents. (Heidlebaugh v. Miller (1954) 126 Cal.App.2d 35, 38 ["If necessary to carry out the intention of a contract, words may be transposed, rejected, or supplied, to make its meaning more clear."].) This oversight does not invalidate the agreements. In any event, as discussed above, the trial court properly enforced the deemed admissions. (Ante, Part III.) Accordingly, even if we invalidated the stipulated judgment and settlement agreements, it is not reasonably probable that Joshua would have obtained a better result at trial.
IV. Application of Usury Law
A. Facts
The deemed admissions established that defendants' loan "was brokered through Centre City Financial Corporation." The loan documents included an "Agreement to Procure Lender" which stated that defendants engaged broker Centre City Financial Corporation to obtain a lender for the loan, listed a brokerage commission for obtaining a lender, and "Bernard Richter" as the person who authorized the loan for Centre City Financial Corporation. The promissory note listed Sirois as the lender, and the interest rate at 15 percent.
At trial, Sirois testified that she was not a licensed real estate broker, and denied knowing who "arranged" the loan on her behalf. Joshua testified that he contacted Sirois's son about a loan, and that he had never met Sirois. Joshua claimed that Sirois specified the terms of the note. Without explanation, the trial court ruled that the loan was not usurious.
B. Analysis
California's usury law limits the interest rate which may be charged on loans in writing for "use primarily for personal, family, or household purposes" to 10 percent per annum. (Calif. Const., art. XV, § 1, subd. (1).) However, exempted from the interest rate limitation are "any loans, made or arranged by any person licensed as a real estate broker by the State of California and secured in whole or in part by liens on real property, ..." (Id. at § 1, subd. (2).)
To clarify the scope of the real estate broker exemption, the Legislature enacted Civil Code section 1916.1. (Winnett v. Roberts (1986) 179 Cal.App.3d909, 920 (Winnett).) The elements of the real estate broker exemption are: (1) a loan or forbearance; (2) made or arranged for compensation; (3) by a real estate broker licensed in California; and (4) secured directly or collaterally, in whole or in part, by real property. (Civ. Code, § 1916.1.) A loan is "made" when the broker is the lender. (Winnett, supra, 179 Cal.App.3dat p. 917.) A loan is "arranged" by a person licensed as a real estate broker if the broker "acts for compensation or in expectation of compensation for soliciting, negotiating, or arranging the loan for another, ...." (Civ. Code, § 1916.1.) If a loan is found to be usurious, the creditor "is entitled to repayment of the principal sum only. He is entitled to no interest whatsoever." (Winnett, supra, 179 Cal.App.3dat p. 921.)
Defendants assert the loan was usurious because the real estate broker exemption does not apply. They claim that although Centre City Financial Corporation "brokered" the loan, there was no evidence showing that Centre City Financial Corporation is a licensed real estate broker. Citing the loan documents, Sirois maintains that Bernard Richter, a licensed California real estate broker with Centre City Financial Corporation, handled and processed the loan. Although the "Agreement to Procure Lender" lists "Bernard Richter" as the person who authorized the loan for Centre City Financial Corporation, the loan documents do not show that Richter is a licensed California real estate broker.
Because the evidence does not support application of the real estate broker exemption, the trial court erred when it concluded that the loan was not usurious. Because the loan is usurious, the award of interest included in the judgments must be reversed. (Winnett, supra, 179 Cal.App.3dat p. 921.)
V. Susana's Tort Liability
The complaint included causes of action for fraud, fraudulent misrepresentation and concealment, negligent misrepresentation and negligence. Each tort claim was based on the alleged misrepresentations that defendants held title jointly, and that the deed of trust securing the loan would be recorded in second position. The trial court found Susana liable on each tort cause of action.
Susana asserts the judgment against her on the tort claims must be reversed because there is no evidence that Sirois reasonably relied on the misrepresentations, or that they caused any harm. Sirois did not address these contentions in her respondent's brief. Our review of the record reveals that Sirois relied on the deemed admissions to prove her tort claims. The admissions established that defendants: (1) did not inform Sirois of any other second trust deed on the property; (2) told Sirois orally and in writing that she would be the second lien holder; and (3) informed Sirois that they owned the property as joint tenants.
The essential elements for an action sounding in fraud are a false representation as to a material fact, knowledge of its falsity, intent to defraud, justifiable reliance and resulting damage. (Roberts v. Ball, Hunt, Hart, Brown & Baerwitz (1976) 57 Cal.App.3d104, 109.) Here, the deemed admissions proved that Susana made two false representations of fact; however, they did not establish the remaining elements of a fraud claim. Nor did the trial testimony establish these elements. As to her negligence cause of action, Sirois presented no evidence showing that Susana's misrepresentations regarding owning the property as a joint tenant with Joshua and recording the loan in second position caused her any damages. (Vasquez v. Residential Investments, Inc. (2004) 118 Cal.App.4th 269, 278 [causation and resulting damages are necessary elements of a negligence claim].) Accordingly, the judgment in favor of Sirois and against Susana on the tort causes of action must be reversed.
DISPOSITION
The judgment in favor of Sirois and against Susana Anders on the causes of action for fraud, fraudulent misrepresentation and concealment, negligent misrepresentation and negligence is reversed. The award of interest is reversed. In all other respects, the judgment is affirmed as modified. The judgment in favor of Sirois and against Joshua Anders is affirmed as modified to remove the award of interest.
The matter is remanded to the trial court to recalculate the amount of the judgments in accordance with this disposition. In all other respects, the judgment is affirmed. The parties are to bear their own appellate costs.
WE CONCUR: McCONNELL, P. J., IRION, J.