Filed 12/23/15 Miller v. Canary Asset Management CA2/8
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT
KURT MILLER, B258413
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BC508679)
v.
CANARY ASSET MANAGEMENT,
INC.,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of Los Angeles County.
Malcolm Mackey, Judge. Affirmed.
Law Offices of Andrew D. Weiss and Andrew D. Weiss for Plaintiff and
Appellant.
Halavais & Associates, Coby Halavais and Thomas Kemerer, for Defendant and
Respondent.
_______________________________
This case concerns a property in Gardena and multiple promissory notes secured
by deeds of trust recorded against the property. Kurt Miller, the holder of the junior deed
of trust, filed suit against Canary Asset Management, Inc., doing business as C&H Trust
Deed Service (C&H), the trustee, and Maria Macias, the holder of the senior deed of
trust, after foreclosure proceedings were initiated. Following Macias’s deposition, C&H
canceled the scheduled foreclosure sale and rescinded the Notice of Default. C&H
subsequently filed a motion for summary judgment. The trial court granted the motion.
Miller appeals from the judgment of dismissal. We affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
In 2003, Macias sold a property to Jose and Rosalba Rodriguez. An auto repair
shop was located on the property. The Rodriguezes executed a note and deed of trust,
agreeing to pay Macias $500,000. The note was to mature in 2018 (Rodriguez Note). In
2004, the Rodriguezes sold the property to Maria Oliva. Oliva financed the purchase
with a loan from the Rodriguezes of $700,000, secured by a deed of trust on the property
(Oliva Note). Under the terms of the Oliva Note, if the Rodriguezes defaulted on any of
the payments due under the terms of the Rodriguez Note, Oliva had the option to make
the payments instead; the amounts paid were to be credited to the Oliva Note. Miller
later purchased the Oliva Note and deed of trust from the Rodriguezes. Miller and Oliva
made payments under the Rodriguez Note to Macias or her attorney.
In February 2013, Macias retained C&H in connection with the Rodriguez Note
and deed of trust. Macias signed a document authorizing C&H to initiate foreclosure
proceedings. C&H issued and recorded a notice of default and election to sell under deed
of trust. Macias executed a substitution of trustee naming C&H as the trustee; C&H
recorded the substitution.
In May 2013, shortly before C&H issued a notice of trustee’s sale, Miller filed suit
against Macias and C&H, alleging claims for negligence, fraud, breach of contract and
the implied covenant of good faith and fair dealing, and seeking to void or cancel the
notice of default and election to sell under the deed of trust. Miller alleged that when he
was considering purchasing the Oliva Note in 2007, he met with Macias and learned from
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her that the payments due under the Rodriguez Note were current. Miller made payments
on the Rodriguez Note to Macias’s attorney, then, upon her request, directly to Macias.
Miller alleged that he, Rodriguez, or Oliva continued making payments under the
Rodriguez Note. The complaint further alleged that Macias agreed to reduce the
principal balance of the Rodriguez Note for certain amounts, such as the price of a truck
Macias bought from Oliva and her husband, Jose Portillo, and the cost of car repairs
Oliva and Portillo performed for Macias.
According to the complaint, Macias told Portillo she felt Rodriguez had not paid
her the fair market value of the property. Macias told Portillo she had consulted an
attorney to determine how to regain ownership of the property so that she might realize
more profit from a subsequent sale. Macias then hired C&H to foreclose on the property,
without contacting Rodriguez or Miller, and without informing them of any problem with
the payments under the Rodriguez Note. The complaint asserted Rodriguez and Miller
had not defaulted and the notice of default was wrongly recorded.
The complaint alleged no one at C&H notified Rodriguez or Miller of the
foreclosure, and neither received a notice of default and election to sell. Portillo
informed Miller of the notice of default, which had been sent to the auto shop on the
property. When Portillo requested an accounting of the balance due to Macias, the
response C&H provided was inaccurate and did not reflect payments made or various
reductions to the principal balance. According to the complaint, Miller and Macias met
to discuss the inaccuracies and Miller’s request that Macias stop the foreclosure
proceedings. Macias agreed that some portions of the accounting she had provided to
C&H were wrong, but she disagreed with Miller as to the correct balance due under the
Rodriguez Note. Macias agreed to prepare a new accounting summary, but then failed to
do so. Portillo’s attorney contacted C&H to ask about the new accounting. C&H’s
president said Macias had not contacted him or provided any new information, and he
knew nothing about a new accounting Macias had told Miller she would prepare, or the
inaccuracies Macias admitted to Miller. Miller attempted to contact Macias, but she did
not take or return his calls.
3
It is undisputed that during Macias’s deposition, “it became apparent that [Macias]
had failed to keep accurate payment records and that the information she had provided to
[C&H] was incomplete and inaccurate.” C&H cancelled the scheduled foreclosure sale,
recorded a Notice of Rescission of the Notice of Default, and resigned as trustee.
C&H then filed a motion seeking summary judgment. C&H argued it had
statutory immunity pursuant to Civil Code section 2924,1 and could not be held liable as
alleged in the complaint because it did nothing more than initiate and prosecute a non-
judicial foreclosure at the instruction and request of Macias. The motion pointed out the
complaint included no allegations relating to C&H’s conduct in the negligence or fraud
causes of action. The remaining causes of action seeking to enjoin the foreclosure
proceedings were moot as C&H had already rescinded the Notice of Default. C&H also
contended it had no contractual relationship with Miller, thus the contractual claims
against it could not stand.
Miller opposed the motion, asserting there were triable issues of fact regarding
whether C&H was immune from liability under section 2924. Miller pointed to Macias’s
limited fluency in English and portions of her deposition in which she claimed not to
have seen the first three pages of the foreclosure instructions and expressed a lack of
knowledge about foreclosure sales. Based on this evidence, Miller asserted there was a
triable issue as to whether C&H had relied in good faith on the information Macias
provided. Miller also relied on Macias’s deposition testimony that she did not want to
sell the property and had retained C&H to help “clarify” the payments due under the
Rodriguez Note, to argue there was a triable issue of fact as to whether C&H acted
outside of the scope of the authority Macias granted it. Miller further asserted C&H was
negligent in including an unsecured loan in the payoff demand and notice of default.
Miller contended features of the unsecured loan agreement should have raised suspicions,
such as the fact that the note (in Spanish) was signed by Oliva and Portillo, not
1 All further statutory references are to the Civil Code unless otherwise noted.
4
Rodriguez. Miller argued the inclusion of an unsecured debt in the amounts identified as
in default removed C&H’s actions from the protection of section 2924.
In a declaration supporting the opposition to the motion for summary judgment,
Miller asserted he never received a notice of default, although he learned of its issuance
in late April 2013, when he was visiting Portillo’s auto repair shop at the property.2
In its reply, C&H argued Miller had not established C&H owed him any duty of
care, and also that he failed to present any evidence of causation or damages to support a
negligence claim.
The trial court granted the motion for summary judgment. A judgment of
dismissal was entered. Miller’s appeal timely followed.
DISCUSSION
On appeal, Miller contends the trial court should have denied C&H’s motion for
summary judgment because: 1) he raised triable issues of fact regarding whether C&H
relied in good faith on the information Macias provided to initiate foreclosure
proceedings; 2) C&H was not entitled to statutory immunity because the Notice of
Default and Notice of Sale were based in part on an unsecured debt and because Macias
had not authorized foreclosure proceedings; 3) C&H was not entitled to statutory
immunity for acts it performed before it became a trustee; 4) there were triable issues of
fact on the negligence claim arising from evidence that C&H acted beyond the scope of
its authority, C&H’s alleged failure to establish it mailed a copy of the notice of default
and notice of sale to Miller, the faulty accounting, the lack of evidence that Miller was
served with a copy of the substitution of trustee, and the inclusion of unsecured debt in
the payoff demand amount; and 5) C&H failed to establish it had no duty to Miller as a
junior lienholder. We affirm the judgment.
2 The complaint alleged Miller learned of the notice of default in mid-March 2013,
when Portillo contacted him after receiving a copy of the notice at the auto shop.
5
I. The Trial Court Properly Granted the Motion for Summary Judgment
A. Standard of Review
“ ‘ “ ‘A trial court properly grants a motion for summary judgment only if no
issues of triable fact appear and the moving party is entitled to judgment as a matter of
law. (Code Civ. Proc., § 437c, subd. (c); [citation].) The moving party bears the burden
of showing the court that the plaintiff “has not established, and cannot reasonably expect
to establish,” ’ the elements of his or her cause of action. [Citation.]” [Citation.]’ ”
(Ennabe v. Manosa (2014) 58 Cal.4th 697, 705.) “Upon such a showing, ‘the burden
shifts to the plaintiff . . . to show that a triable issue of one or more material facts exists as
to that cause of action. . . .’ [Citation.]” (Nalwa v. Cedar Fair, L.P. (2012) 55 Cal.4th
1148, 1154.) “ ‘We review the trial court’s decision de novo, liberally construing the
evidence in support of the party opposing summary judgment and resolving doubts
concerning the evidence in favor of that party.’ [Citation.]” (Ennabe, supra, 58 Cal.4th
at p. 705.)
B. Miller Could Not Defeat Summary Judgment By Relying on
Unpleaded Negligence Theories
In his opposition to the motion for summary judgment, Miller acknowledged most
of his causes of action against C&H were moot, and he explicitly limited his opposition
to the negligence cause of action. He then asserted there were triable issues of fact
regarding C&H’s statutory immunity because it acted outside of the scope of authority
designated by Macias; the notice of default and notice of sale were based in part on an
unsecured debt; and C&H failed to comply with certain notice provisions. However,
none of these theories were pleaded in the complaint in connection with the negligence
claim. The complaint based the negligence cause of action solely on Macias’s alleged
conduct—it did not mention C&H at all.
The complaint contained a standard allegation that the two defendants were acting
as the agents and employees of each other and “defendants were acting within the course
and scope of their agency and employment.” But the negligence cause of action was
limited to Macias’s duty to exercise reasonable care and skill in maintaining loan records.
6
The complaint alleged Macias breached that duty in servicing the relevant loans by
“failing to properly and accurately credit payments made by or on behalf of Miller toward
the loan, preparing and filing false documents, and foreclosing on the Subject Property
without having the legal authority and/or proper documentation to do so.” The cause of
action for negligence identified no allegedly negligent actions by C&H.
Similarly, the complaint’s recitation of facts did not advance a theory that C&H’s
actions in issuing and recording the notice of default went beyond what Macias
authorized. On the contrary, the complaint explicitly alleged Macias hired C&H to
foreclose on the property. It also alleged that after the notice of default was issued,
Portillo’s attorney contacted C&H and received a schedule of accounting that was
incorrect; Miller then met with Macias to seek a correct accounting but she did not agree
with him about the balance due under the Rodriguez Note. According to the complaint,
C&H later informed Portillo’s attorney it had not received any corrected accounting from
Macias and had not been informed of any inaccuracies. When Miller called Macias on
the issue, she did not return his calls.
Nothing in these allegations identified a theory that Macias did not wish to
foreclose, or that C&H did not in good faith rely on information received from Macias—
information which turned out to be wrong. The complaint did not mention the inclusion
of an unsecured debt in the default amount. C&H’s alleged failure to serve Miller with
copies of the notice of default, and its alleged lack of authority because of the absence of
a signed substitution of trustee, formed the basis of Miller’s claims seeking to invalidate
the impending foreclosure sale. Yet he abandoned these claims after C&H rescinded the
notice of default and canceled the scheduled sale. These allegations in the complaint
were not connected to the negligence cause of action, which described only Macias’s
conduct. Further, while the complaint identified the legal duty Macias purportedly owed
Miller, it did not similarly identify a legal duty C&H owed Miller.
“[T]he pleadings set the boundaries of the issues to be resolved at summary
judgment. [Citations.] A ‘plaintiff cannot bring up new, unpleaded issues in his or her
opposing papers. [Citation.]’ [Citations.] A summary judgment or summary
7
adjudication motion that is otherwise sufficient ‘cannot be successfully resisted by
counterdeclarations which create immaterial factual conflicts outside the scope of the
pleadings; counterdeclarations are no substitute for amended pleadings.’ [Citation.]
Thus, a plaintiff wishing ‘to rely upon unpleaded theories to defeat summary judgment’
must move to amend the complaint before the hearing.” (Oakland Raiders v. National
Football League (2005) 131 Cal.App.4th 621, 648.)
Miller’s complaint did not allege facts seeking to hold C&H liable for negligence.
Further, the complaint did not allege facts or legal theories asserting C&H acted outside
of the authority Macias granted it. Indeed, the complaint alleged that C&H was an agent
of Macias and was at all times acting within the course and scope of that agency. This
allegation cut against the arguments in opposition to the motion for summary judgment—
namely that C&H had no authority from Macias to issue and record a notice of default
and notice of trustee’s sale. (Ram v. OneWest Bank, FSB (2015) 234 Cal.App.4th 1, 14
(Ram) [rejecting argument that defendant was unauthorized to issue notice of default
because substitution of trustee had not been recorded; complaint alleged defendant was
agent of beneficiary, and plaintiff could not “have it both ways”].)
Miller could not defeat summary judgment by alleging a new theory of liability as
to C&H. He did not seek to amend the complaint before the hearing on the motion.
Thus, the trial court could properly grant summary judgment to C&H because Miller
failed to raise any triable issue of material fact, as determined by the scope of the
pleadings.
C. Miller Failed to Raise a Triable Issue of Material Fact as to the
Applicability of Section 2924, subdivisions (b) and (d).
Further, even were Miller’s unpleaded theories considered, the trial court could
still properly grant the motion. C&H established Miller could not prevail on a negligence
claim because its conduct was protected by section 2924, subdivisions (b) and (d). Miller
failed to show a triable issue of material fact existed on that dispositive issue.
8
i. The trustee in nonjudicial foreclosures
The court in Kachlon v. Markowitz (2008) 168 Cal.App.4th 316 (Kachlon),
summarized the role of the trustee in nonjudicial foreclosures:
“Under a deed of trust containing a power of sale . . . the borrower, or ‘trustor,’
conveys nominal title to property to an intermediary, the ‘trustee,’ who holds that title as
security for repayment of the loan to the lender, or ‘beneficiary.’ [Citations.] The
trustee’s duties are twofold: (1) to ‘reconvey’ the deed of trust to the trustor upon
satisfaction of the debt owed to the beneficiary, resulting in a release of the lien created
by the deed of trust, or (2) to initiate nonjudicial foreclosure on the property upon the
trustor’s default, resulting in a sale of the property. [Citations.] The beneficiary may
make a substitution of trustee . . . to conduct the foreclosure and sale.
“When the trustor defaults on the debt secured by the deed of trust, the beneficiary
may declare a default and make a demand on the trustee to commence foreclosure.
[Citation.] The Civil Code contains a comprehensive statutory scheme regulating
nonjudicial foreclosure. Generally speaking, the statutory, nonjudicial foreclosure
procedure begins with the recording of a notice of default by the trustee. (§ 2924, subd.
(a)(1).) After the expiration of not less than three months, the trustee must publish, post,
and mail a notice of sale at least 20 days before the sale, and must also record the notice
of sale at least 14 days before the sale (§§ 2924, subd. (a)(1), (2) & (3), 2924f, subd.
(b)(1); [citations].) [¶] The trustee in nonjudicial foreclosure is not a true trustee with
fiduciary duties, but rather a common agent for the trustor and beneficiary. [Citation.]
The scope and nature of the trustee’s duties are exclusively defined by the deed of trust
and the governing statutes. No other common law duties exist. [Citations.]” (Kachlon, at
pp. 334-335, fn. omitted, italics added.)
ii. Limited Liability of the Trustee in Non-Judicial Foreclosure Proceedings
Two provisions limit the liability of trustees in nonjudicial foreclosure
proceedings. Under section 2924, subdivision (b): “In performing acts required by this
article, the trustee shall incur no liability for any good faith error resulting from reliance
on information provided in good faith by the beneficiary regarding the nature and the
9
amount of the default under the secured obligation, deed of trust, or mortgage. In
performing the acts required by this article, a trustee shall not be subject to Title 1.6c
(commencing with Section 1788) of Part 4 [regarding fair debt collection practices].”
Further, under section 2924, subdivision (d): “All of the following shall constitute
privileged communications pursuant to Section 47: (1) The mailing, publication, and
delivery of notices as required by this section. (2) Performance of the procedures set
forth in this article. (3) Performance of the functions and procedures set forth in this
article if those functions and procedures are necessary to carry out the duties described in
Sections 729.040, 729.050, and 729.080 of the Code of Civil Procedure [relating to
property sold subject to the right of redemption].”
These provisions are consistent with the nonjudicial foreclosure statutes’
“carefully crafted balancing of the interests of beneficiaries, trustors, and trustees . . . .
Trustees, the middlemen, need to have clearly defined responsibilities to enable them to
discharge their duties efficiently and to avoid embroiling the parties in time-consuming
and costly litigation.” (I.E. Associates v. Safeco Title Ins. Co. (1985) 39 Cal.3d 281,
288.)
iii. Miller failed to raise a triable issue of fact as to C&H’s immunity
under section 2924
Miller argues he raised a triable issue of fact regarding whether C&H was entitled
to the protection afforded by section 2924, subdivision (b). Miller asserts there was
evidence from which a trier of fact could conclude C&H’s error was not in “good faith.”
We disagree.
In support of the motion for summary judgment, C&H asserted the following facts
as undisputed: Macias signed and provided to C&H a completed “Foreclosure
Instruction, Declaration of Default and Demand for Sale and Trustee-Beneficiary
Agreement.” The agreement contained representations from the beneficiary, such as that
a default had occurred and information was accurately related to C&H on the form; the
beneficiary elected to cause the trust property to be sold to satisfy the obligations secured
by the deed of trust; and the beneficiary authorized C&H to sign and record a notice of
10
default and to conduct a trustee’s sale. C&H produced the agreement, bearing Macias’s
signature. C&H also asserted it was undisputed that Macias gave C&H copies of the note
and deed of trust for which she wished to initiate foreclosure proceedings. By declaration
of C&H’s president, it offered evidence that C&H requested additional records, Macias
provided them, and based on that information, C&H issued and recorded a notice of
default and election to sell under deed of trust. C&H’s president also declared that in
preparing the notice of trustee’s sale, C&H “relied on the debt information provided to it
by [Macias] and her affirmation that said information was true and correct as stated on
the Request for Sale Instructions form.”
Miller offered no evidence to dispute the declaration indicating C&H received
information from Macias and relied on that information to issue and record the notice of
default and election to sell. Miller’s response to this evidence was to object based on a
lack of foundation. However, his objections were not in proper form, as they were not in
a separate document but were instead inserted in the response to C&H’s separate
statement of undisputed material facts. (Hodjat v. State Farm Mutual Automobile Ins.
Co. (2012) 211 Cal.App.4th 1, 7-8 (Hodjat); Cal. Rules of Court, rule 3.1354(b).)
Moreover, even to the extent these objections were considered despite their improper
form, we must presume they were overruled. Under Code of Civil Procedure section
437c, subdivision (c), “the trial court must consider all evidence unless an objection to it
has been raised and sustained. . . . It follows that the reviewing court must conclude the
trial court considered any evidence to which it did not expressly sustain an objection.”
(Reid v. Google, Inc. (2010) 50 Cal.4th 512, 526-527, fn. omitted (Reid).)
Miller has not raised any issue on appeal regarding these purported objections.
(Reid, supra, at p. 534 [presumptively overruled objections can still be raised on appeal,
but burden is on the objector to renew the objections in the appellate court].) Thus we,
like the trial court, consider C&H’s evidence. In addition, some of Miller’s arguments on
appeal are based on allegations in the complaint. This is insufficient to raise a triable
issue of material fact. “The plaintiff may not rely on the allegations in his pleadings but
must set forth the specific facts showing the triable issue of material fact. (§ 437c, subd.
11
(p)(2).)” (Hodjat, supra, 211 Cal.App.4th at p. 7.) Miller did not set forth specific facts
or evidence to dispute C&H’s evidence that it relied on information and representations
received from Macias to issue and record the notice of default.
Further, Miller did not effectively dispute C&H’s evidence that in preparing the
Notice of Trustee’s Sale,3 C&H “relied on the debt information provided to it by
[Macias] and her affirmation that said information was true and correct as stated on the
Request for Sale Instructions form.” Miller produced no evidence suggesting C&H did
not rely on Macias’s representations and information, or that it was bad faith for C&H to
rely on Macias’s representations and information. Miller offered excerpts from Macias’s
deposition testimony in which she testified she did not understand that C&H was going to
sell the property and she did not want to sell the property. Yet, there was no dispute that
Macias signed the foreclosure instructions document and provided it to C&H. Macias
testified she had seen the foreclosure instructions document before and the signatures
were hers. C&H sent her the document, she signed it at her own home, and she read it
“a little,” but she did not understand it. She said she did not see the first pages of the
document and did not remember whether those pages were attached to the signature page.
But the page she signed included the term “nonjudicial foreclosure,” it required her to
certify that she had read and understood the agreement, and it counseled her to consult an
attorney if there was anything about the effects of the nonjudicial foreclosure she did not
understand.
In addition, when asked at her deposition if she ever authorized C&H to hold a
foreclosure sale for her property, Macias answered “yes.” When next asked what she
understood a foreclosure sale to be, she answered, “I don’t know.” The next questions
and answers were: “Q: A moment ago you told me you authorized them to hold a
foreclosure sale. Why did you authorize them to hold a foreclosure sale? A: I don’t
3 Again, we note the complaint does not mention the Notice of Trustee’s Sale; it
was recorded on May 13, 2013, three days after Miller filed his lawsuit. Without
amending the complaint, Miller could not defeat the motion for summary judgment based
on theories not alleged in the complaint, as explained above.
12
know. Q: Did someone suggest to you that you hire C&H Trust Deed Service to
foreclose on the property? A: No.” Liberally construing the evidence in Miller’s favor,
we could conclude Macias did not see the entire foreclosure instructions document, she
did not intend to effect a sale of the property, and she did not understand what she was
setting in motion by hiring C&H and authorizing foreclosure proceedings. But this
evidence does not suggest or establish that C&H did not in good faith rely on the
document Macias signed or the information she provided to C&H. The evidence did not
indicate C&H had any reason to believe Macias did not want to foreclose, or that it could
not rely on her representations regarding the underlying debt.
Miller was unable to dispute C&H’s evidence that it relied on Macias’s
information to prepare, issue, and record the notice of default and election to sell. The
evidence that Macias did not see the first pages of the foreclosure instructions, or her
claimed lack of knowledge about what a foreclosure sale was, does not create a triable
issue of fact on whether C&H’s reliance on her authorization and information was in
good faith.
Similarly, Miller failed to raise a triable issue of fact on malice. Under section
2924, subdivision (d), C&H’s act of recording the notice of default was a privileged
communication. Unless C&H acted with malice it is immune from liability under the
common interest privilege. (Kachlon, supra, 168 Cal.App.4th at p. 343.) As explained in
Kachlon, “ ‘[M]ere negligence in making “a sufficient inquiry into the facts on which the
statement was based” does [not], of itself, relinquish the privilege. “Mere inadvertence or
forgetfulness, or careless blundering, is no evidence of malice.” [Citation.] [¶] While
“[the] concept of negligence is inherent in the issue of probable cause” [citation], the
decisions long ago recognized that to constitute malice the negligence must be such as
“evidenced a wanton and reckless disregard of the consequences and of the rights and of
the feelings of others” [citation].’ [Citations.]” (Kachlon, supra, at p. 344.)
C&H bore its burden to show Miller could not establish it acted with malice in
recording the notice of default. It offered evidence that it relied on the information
Macias provided and that Macias authorized the company to initiate foreclosure
13
proceedings. Further, C&H offered evidence it had no prior relationship with Macias or
Miller.
No evidence Miller proffered to oppose the motion for summary judgment
suggested C&H acted “with ill will or with reckless disregard for the truth of the notice of
default.” The evidence upon which Miller relied indicated Macias approached C&H, a
trust deed service company, for help with the Rodriguez loan; she signed a document
authorizing C&H to proceed with a foreclosure; but she did not “see” the first three
pages, and did not understand it. There was no evidence C&H was aware of or had any
reason to know of Macias’s claimed ignorance of the meaning of the document she
signed at her own home and returned to the company. While she said she did not know
what she understood a foreclosure sale to be; she hired C&H to clarify payments; and she
did not intend to sell the property, she also testified she authorized C&H to hold a
foreclosure sale. While this evidence could suggest a miscommunication between C&H
and Macias, it does not suggest C&H acted with malice.
The trial court properly granted summary judgment on the ground that there were
no triable issues of fact on the applicability of section 2924, subdivisions (b) and (d).
Under those provisions and the undisputed facts which provided no evidence of bad faith
or malice, C&H could not be held liable for following what reasonably appeared to be
Macias’s instructions to initiate foreclosure proceedings. Nor could C&H be held liable
for the errors in Macias’s information—including the inclusion of an unsecured debt in
the loan payoff amount—which led to the inaccurately filed notice of default.4
4 We reject the argument that subdivisions (b) and (d) of section 2924 did not apply
because the notice of default and notice of trustee’s sale included an unsecured debt.
This error appears to be well within the scope of section 2924, subdivision (b), which
explicitly contemplates errors in the nature and amount of the default under the secured
obligation, deed of trust, or mortgage. Further, there was no evidence this mistake was
the result of ill will, or C&H’s reckless disregard for the truth of the notice of default.
14
D. No triable issue of material fact regarding C&H’s pre-trustee acts
Miller additionally asserts that even if section 2924, subdivision (b) applied to
shield C&H from liability for acts taken as trustee, the provision would not apply to
C&H’s acts before becoming the trustee. The only act complained of is the signing and
recording of the notice of default, based on the lack of a formal substitution of trustee
until February 21, 2013. But, as explained in Ram, “several statutory provisions
contemplate that an entity may be substituted as trustee even where substitution is not
‘recorded’ or ‘effected’ until after the notice of default is recorded, so long as notice is
given to the trustor/borrowers.” (Ram, supra, at p. 12.)
In light of these provisions, specifically section 2934a, subdivision (c),5 which
contemplates the validity of a substitution of trustee that is effected after a notice of
default is recorded, it would be absurd to interpret section 2924, subdivision (b), as
applying to protect the trustee from liability in its performance of statutorily-required acts
only when a substitution of trustee is effected or recorded before the notice of default has
been recorded. (Mt. Hawley Ins. Co. v. Lopez (2013) 215 Cal.App.4th 1385, 1414 [we
interpret the statute as a whole to make sense of the statutory scheme, and we interpret
provisions so as to avoid absurd results].) Indeed, Miller cites no authority for this
proposition. He has not raised a triable issue of material fact suggesting that section
2924, subdivision (b) did not shield C&H from liability related to the issuance and
recording of the notice of default because the substitution of trustee was only executed
later.
5 Section 2934a concerns the procedures for a substitution of trustee. Under
subdivision (c): “If the substitution is effected after a notice of default has been recorded
but prior to the recording of the notice of sale, the beneficiary or beneficiaries or their
authorized agents shall cause a copy of the substitution to be mailed, prior to, or
concurrently with, the recording thereof, in the manner provided in Section 2924b, to the
trustee then of record and to all persons to whom a copy of the notice of default would be
required to be mailed by the provisions of Section 2924b. An affidavit shall be attached
to the substitution that notice has been given to those persons and in the manner required
by this subdivision.”
15
Further, even if C&H could not be deemed the trustee when it issued and record
the notice of default because of the lack of a signed substitution of trustee, C&H’s actions
were valid because it was acting as Macias’s agent. (Ram, supra, at pp. 13-14; § 2924,
subd. (a)(1) [authorizing a notice of default to be recorded by the trustee, mortgagee,
beneficiary, or any of their authorized agents].) While Miller contends that as a common
agent, C&H could not benefit from the protections of section 2924, subdivision (b), even
were that the case, section 2924, subdivision (d) would still apply. (Kachlon, supra, 168
Cal.App.4th at p. 344 [provision protects beneficiaries when they also act as trustees in
the enforcement of the power of sale in the deed of trust].) And, as explained above,
Miller has not raised a triable issue of fact as to malice.
E. No Triable Issue of Material Fact as to Alleged Failure to Provide
Required Notice to Miller
Finally, Miller has not raised a triable issue of material fact regarding his claim of
negligence due to C&H’s alleged failure to serve him with a copy of the substitution of
trustee, the notice of default, and the notice of trustee’s sale, as required by statute.
Assuming, without deciding, that Miller effectively controverted C&H’s evidence that
notice was mailed as required by law, C&H established any negligence claim failed for
lack of injury. Injury and causation are required elements of a negligence claim.
(Tribeca Companies, LLC v. First American Title Ins. Co. (2015) 239 Cal.App.4th 1088,
1114.) In this case, according to the complaint and the evidence, Miller received actual
notice (from Portillo) of the notice of default around one or two months after it was
recorded, and he knew of C&H’s involvement at that time.6
6 Miller’s appellate briefing essentially acknowledges that any failure to mail him a
copy of the Notice of Trustee’s Sale caused no legal injury. His opening brief on appeal
explains the notice of sale allows a junior lienholder to “assess the available equity in the
property and determine whether to take steps to cure the default and protect its junior
position. That is, in fact, exactly what Respondent did in this case. . . .” (Italics added.)
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Based on this actual knowledge, Miller was able to assess the notice of default.
He then attempted to negotiate or clarify matters with Macias and successfully restrained
the foreclosure proceedings. As C&H argued in the trial court, the complaint does not
identify any injury Miller suffered as a result of C&H’s alleged failure to mail him notice
of the issuance and recording of default or the substitution of trustee. Miller’s appellate
briefing similarly fails to offer any theory to explain how C&H’s alleged failure to give
the statutorily-required notice to him caused him injury, as required to establish a claim
for negligence. (See e.g., Falcochia v. Saxon Mortgage, Inc. (E.D.Cal. 2010) 709
F.Supp.2d 860, 870 [harmless violation of section 2924b was not actionable].)
Miller failed to raise an issue of material triable fact to as to the negligence claim
against C&H. The trial court properly granted summary judgment.
DISPOSITION
The judgment is affirmed. Respondent shall recover its costs on appeal.
BIGELOW, P.J.
We concur:
RUBIN, J.
GRIMES, J.
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