Opinion
NOT TO BE PUBLISHED
Appeal from judgments of the Superior Court of Orange County, Gregory H. Lewis, Judge.
Tisdale & Nicholson, Guy C. Nicholson and Linda J. Kim for Defendants and Appellants.
Costell & Cornelius Law Corporation, Jeffrey Lee Costell, Alexandre Ian Cornelius, Lewis B. Adelson, and Elliot Glusker for Plaintiff and Respondent.
OPINION
IKOLA, J.
Defendant Timothy D. Imirie, individually and as trustee of the Timothy D. Imirie Trust, appeals from a judgment for plaintiff Sunwest Bank (Sunwest). The court granted summary adjudication to Sunwest on its breach of guaranty cause of action. Defendant contends Sunwest lost standing by assigning the guaranty. He also claims the antideficiency laws bar Sunwest from recovering under the guaranty.
We affirm. Sunwest maintained its standing because the assignment was made during this litigation, if at all. And the antideficiency laws do not protect guarantors unless the guaranty is secured; this one was not. Defendant fails to raise any triable issues of material fact regarding these issues, so the court properly granted summary adjudication and entered judgment against defendant.
FACTS
Sunwest sued defendant for breach of guaranty in November 2008. It alleged defendant had guaranteed, individually and as a trustee, payment of an approximately $3.3 million construction loan from Sunwest to Pierbowl Holding Corporation (Pierbowl) for the construction of a four-unit condominium complex in San Clemente. Sunwest further alleged Pierbowl and defendant had failed to pay off the loan.
Sunwest also named Pierbowl as a defendant and purported to assert a second cause of action, which appears to be a prayer for various forms of relief.
Sunwest moved for summary judgment or adjudication. It supported its motion with authenticated copies of: (1) the loan agreement and promissory note between Sunwest and Pierbowl; (2) its deed of trust on the property securing the loan; and (3) defendant’s guaranties in favor of Sunwest. Sunwest also offered a declaration from one of its officers, Brad Hoover. The officer generally described the loan transaction. He stated neither Pierbowl nor defendant repaid the loan when it became due in July 2008. He further stated Sunwest commenced a nonjudicial foreclosure on the property, which it bought at an October 20, 2009, trustee’s sale for a $3 million credit bid. Sunwest sought to recover the deficiency, which, including accrued interest, totaled over $675,000. Last, Sunwest offered an appraiser’s declaration, opining the fair market value of the four condominiums at a bulk sale was between $2.23 million and $3 million.
Defendant offered his own evidence to oppose the motion. He asked the court to take judicial notice of recorded documents including (1) an assignment of deed of trust, whereby Sunwest assigned Pierbowl’s deed of trust to Glamore Homes, Inc. (Glamore), on October 15, 2009, and (2) the trustee’s deed upon sale, whereby Sunwest granted the property to Glamore “as the highest bidder at the [October 20, 2009 trustee’s] sale.” Defendant also offered his declaration, in which he states Sunwest required him to execute the guaranties as part of the loan transaction. Finally, defendant offered the declaration of his counsel. Counsel opined the deed of trust secured defendant’s guaranties, noting some other lenders’ deeds of trust expressly disclaim to secure any related guaranties. And counsel noted the appraiser had also valued the property at over $4 million if sold at a retail sale instead of a bulk sale.
Sunwest offered new evidence in reply. In a supplemental declaration, the Sunwest officer stated Glamore is a wholly-owned subsidiary of Sunwest. Sunwest assigned the deed of trust to Glamore in anticipation of the nonjudicial foreclosure, so that after the sale, the property would be held by Glamore. He explained this is a common practice in the lending industry. He clarified Sunwest did not assign the guaranties to Glamore; Sunwest maintained its rights under those separate obligations.
The court granted defendant’s request for judicial notice, overruled both parties’ evidentiary objections, and granted summary adjudication to Sunwest. After Sunwest voluntarily dismissed its other claims, the court entered judgment for Sunwest.
Defendant suffered no prejudice from the admission of Sunwest’s new evidence in reply because, as will be shown, summary adjudication does not depend on that evidence. It is immaterial whether Sunwest owns Glamore, why Sunwest assigned the deed of trust to Glamore, or how Sunwest subjectively reads the relevant documents.
DISCUSSION
“In moving for summary judgment, a ‘plaintiff... has met’ [its] ‘burden of showing that there is no defense to a cause of action if’ [it] ‘has proved each element of the cause of action entitling’ [it] ‘to judgment on that cause of action. Once the plaintiff... has met that burden, the burden shifts to the defendant... to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto.’” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 849; accord Code Civ. Proc., § 437c.) We “independently examine the record to determine whether triable issues of material fact exist.” (Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 767.)
All further statutory references are to the Code of Civil Procedure unless otherwise stated.
Defendant does not dispute many of the material facts. He concedes he entered into the guaranties with Sunwest, he breached the guaranties when the loan was not repaid, and a deficiency arose after the trustee’s sale. Defendant instead asserts Sunwest could not enforce the guaranties against him for two main reasons. First, he contends Sunwest lost standing to enforce the guaranties because it assigned the deed of trust to Glamore. Second, he contends the antideficiency laws protect him from a deficiency judgment. Neither contention has merit.
We turn first to Sunwest’s standing. The parties dispute whether Sunwest necessarily assigned the guaranties to Glamore when it assigned the deed of trust to Glamore. Sunwest asserts a guaranty is “‘a separate and independent obligation’” from the debt it secures. (Talbot v. Hustwit (2008) 164 Cal.App.4th 148, 151 (Talbot).) It contends the guaranties are “special, ” in that each “names a definite person as its obligee, and it may be enforced only by that person.” (Niederer v. Ferreira (1987) 189 Cal.App.3d 1485, 1501.) Defendant counters the guaranties are “general, ” in that each “does not name a specific obligee” and so each “passes with the transfer of the note, the payment of which it guarantees, whether or not the guaranty is specifically mentioned in the transfer.” (Ibid.) Defendant notes the general rule that “whatever operates as an assignment of the debt will operate, prima facie at least, as an assignment of the guaranty, on the theory that it is, like a mortgage, an incident thereof, so that whoever may enforce the debt may enforce the guarantee.” (Thorpe v. Story (1937) 10 Cal.2d 104, 119.)
The guaranties provide the obligee is “Lender, ” which it defines as “SUNWEST BANK, its successors and assigns.”
Whether Sunwest assigned the guaranties to Glamore is not material to its standing. Even if that assignment happened by operation of law, as defendant asserts, it would have occurred when Sunwest assigned the deed of trust to Glamore on October 15, 2009 — well after Sunwest commenced this action. Ordinarily, after an assignment, “the assignor is no longer the real party in interest and therefore lacks standing to sue.” (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2010) ¶ 2:25, p. 2-13.) But “[d]ifferent rules apply where a lawsuit was already on file when the transfer was made. In such cases, the court may permit the assignee to be substituted in place of the assignor; or the action may be continued in the name of the assignor.” (Id., ¶ 2:27, p. 2-13.) “An action or proceeding does not abate by the transfer of an interest in the action or proceeding or by any other transfer of an interest. The action or proceeding may be continued in the name of the original party....” (§ 368.5.)
Defendant concedes this statute preserves Sunwest’s standing, but complains Sunwest relies upon it for the first time on appeal. He notes Sunwest did not raise the assignment below and instead claimed it, not Glamore, foreclosed upon and purchased the property. “Parties have been permitted to raise new issues on appeal where the issue is purely a question of law on undisputed facts.” (Sheller v. Superior Court (2008) 158 Cal.App.4th 1697, 1709.) And “[t]he rule against raising new theories on appeal is limited by the rule that an appealed judgment or order will be affirmed if it is correct on any theory.... Thus, respondent can assert a new theory on appeal in order to establish that the judgment was correct on that theory....” (Eisenberg et al., Cal. Practice Guide: Civil Appeals & Writs (The Rutter Group 2010) ¶ 8:241, p. 8-160.) Sunwest may invoke section 368.5 now because its application raises a legal question that turns only on defendant’s own version of the facts — that Sunwest must have assigned the guaranties when it assigned the deed of trust in October 2009. And on this theory, defendant raises no triable issue of any material fact.
We need no additional briefing. (See § 437c, subd. (m)(2).) Defendant addressed Sunwest’s theory in his reply brief without asserting he needed any additional evidence. (See Flores v. Enterprise Rent-A-Car Co. (2010) 188 Cal.App.4th 1055, 1072, fn. 10; Bains v. Moores (2009) 172 Cal.App.4th 445, 471, fn. 39.)
Next, we turn to the antideficiency laws. “California’s antideficiency statutes [citations], enacted during the Depression, limit or prohibit lenders from obtaining personal judgments against borrowers where the lender’s sale of real property security produces proceeds insufficient to cover the amount of the debt.” (Talbot, supra, 164 Cal.App.4th at p. 151; accord §§ 580a, 580b, 580d, 726.)
Guarantors are not automatically protected by the antideficiency laws. (Talbot, supra, 164 Cal.App.4th at p. 151.) “[T]he protections afforded to debtors under the antideficiency legislation do not directly protect guarantors from liability for deficiency judgments. [Citation.] Accordingly, if a guarantor expressly waives the protections of the antideficiency laws, a lender may recover the deficiency judgment against the guarantor even though the antideficiency laws would bar the lender from collecting that same deficiency from the primary obligor.” (Cadle Co. II v. Harvey (2000) 83 Cal.App.4th 927, 932.) Here, defendant expressly waived in the guaranties any “rights and defenses based upon Section 580a, 580b, 580d, or 726 of the Code of Civil Procedure” — i.e., the antideficiency laws.
Defendant laments that California law allows lenders to make below-market credit bids after nonjudicial foreclosures and pursue guarantors for the deficiencies they artificially created. (See, e.g., Dreyfuss v. Union Bank of California (2000) 24 Cal.4th 400, 409.) “[W]e believe any change in the law affecting liability of guarantors for deficiency judgments should originate with the Legislature, which is better able to measure the impact of altering commercial arrangements by taking into account the views of experts and affected parties.” (Talbott, supra, 164 Cal.App.4th at p. 152, fn. 2.)
Defendant unpersuasively contends he is a primary obligor protected by the antideficiency laws, not a guarantor, because his guaranties are secured by the deed of trust. He reasons as follows. The deed of trust provides it secures “PAYMENT OF THE INDEBTEDNESS....” It defines “Indebtedness” as “all principal, interest, and other amounts, costs and expenses payable under the Note or Related Documents....” It defines “Related Documents” as “all promissory notes, credit agreements, loan agreements, environmental agreements, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents... executed in connection with the Indebtedness.” Defendant asserts the guaranties were “executed in connection with the Indebtedness, ” and therefore must be Related Documents. He concludes the money payable under the guaranties is part of the Indebtedness, and so payment of the guaranties is secured by the deed of trust.
Lenders cannot obtain deficiency judgments on obligations secured by deeds of trust without going through judicial foreclosure and proving the outstanding debt exceeded the fair market value of the property. (§ 580a.)
It falls to us to independently construe the deed of trust and guaranties to see whether the one secures the others, as the parties offered no conflicting extrinsic evidence on their interpretation. (See Parsons v. Bristol Development Co. 62 Cal.2d 861, 865.) We will construe their plain language reasonably, giving effect to each and avoiding absurdity. (Civ. Code, §§ 1638, 1643.)
How Sunwest’s officer privately understood the documents is irrelevant; we ignore his opinions. (Winet v. Price (1992) 4 Cal.App.4th 1159, 1166, fn. 3.)
The only reasonable, effective, nonabsurd interpretation of the deed of trust and guaranties is that each secures the construction loan — but the deed of trust does not secure the guaranties. Several provisions of those documents support our construction. The deed of trust does not expressly provide it secures the guaranties. Instead, it states that it secures “PAYMENT OF THE INDEBTEDNESS, ” and further provides “[Pierbowl] shall pay to [Sunwest] all amounts secured by this Deed of Trust as they become due....” The guaranties cannot be “amounts secured by this Deed of Trust” because Pierbowl has no obligation to pay the guaranties. And while the deed of trust defines Indebtedness to include money payable under the “Note” and “Related Documents, ” it omits guaranties from its definition of “Related Documents.” Finally, the guaranties do not state they are secured by the deed of trust.
Defendant gets no help from a deed of trust clause providing that a guarantor’s default constitutes a default under the deed of trust. That provision repeatedly distinguishes a guaranty from the secured “Indebtedness.” It refers to “any Guarantor of any of the Indebtedness” and “any Guaranty of the Indebtedness.”
Defendant’s interpretation subverts any reasonable structure of the secured transaction here, rendering his guaranties cold comfort to Sunwest. Defendant concedes Sunwest loaned money to Pierbowl, and that the loan is secured by the deed of trust and defendant’s guaranties. Defendant goes on to claim Sunwest is also protected from defendant’s breach of the guaranties by... the deed of trust again. So in defendant’s view, if Pierbowl defaults on the loan and defendant breaches the guaranties, Sunwest’s remedy is to foreclose on the property pursuant to the deed of trust — which it could have done anyhow upon Pierbowl’s default. And when Sunwest forecloses, it cannot turn to the guaranties to recover any deficiency because, in defendant’s view, his guaranties are secured by the deed of trust and thus protected by the antideficiency laws. In sum, if defendant is correct that the deed of trusts secure the guaranties, then the guaranties are meaningless, at least in a common nonjudicial foreclosure.
This anomaly, in which the guaranties have meaning only in the infrequently utilized judicial foreclosure, is avoided by a simple conclusion: in the relevant documents, “Indebtedness” refers primarily to the construction loan — and excludes defendant’s guaranties of that loan. The deed of trust does not secure the guaranties. Instead, the guaranties provide independent additional security for the same “Indebtedness.”
Our commonsense result effectuates the parties’ intent, as reflected in the way they structured this transaction. While the relevant documents may have invited defendant’s claims by being less than models of clarity, ultimately they do not support defendant’s construction.
DISPOSITION
The judgment is affirmed. Sunwest shall recover its costs on appeal.
WE CONCUR: RYLAARSDAM, ACTING P.J., O’LEARY, J.