Padilla v. Wells Fargo CA4/1

Filed 1/5/16 Padilla v. Wells Fargo CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

CARLOS E. PADILLA, D067521

Plaintiff and Appellant,

v. (Super. Ct. No. 37-2014-00016399-
CU-OR-CTL)
WELLS FARGO, N.A. et al.,

Defendants and Respondents.

APPEAL from a judgment of the Superior Court of San Diego County, John S.

Meyer, Judge. Affirmed in part and reversed in part; remanded with directions.

Law Office of Ronald H. Freshman and Ronald H. Freshman for Plaintiff and

Appellant.

Severson & Werson, Kerry W. Franich, Andrew L. Minegar and Jan T. Chilton,

for Defendants and Respondents.

Carlos Padilla brought an action against several financial institutions after his

home was sold in a nonjudicial foreclosure sale. The court sustained defendants'

demurrer without leave to amend, finding Padilla had no standing to bring the claims
because the claims were assets of his bankruptcy estate. The court dismissed the matter

without prejudice because Padilla could potentially obtain relief from the bankruptcy

court. On appeal, Padilla challenges the court's dismissal ruling. We determine this

challenge is without merit.

Padilla also contends the court erred in ordering him to make monthly payments to

defendant Wells Fargo Bank, N.A. (Wells Fargo) as a condition of granting Padilla's

motion to consolidate the case with a related unlawful detainer action. We conclude the

court had no authority to order the payments to be made directly to a party before liability

was determined. Accordingly, we reverse and remand for the limited purpose of vacating

this order and ordering Wells Fargo to reimburse Padilla for the payments made under the

court's prior ruling. In all other respects, we affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

In 2005, Padilla obtained a $540,000 secured loan from Wells Fargo to purchase a

home in Chula Vista (the Property). The deed of trust named Wells Fargo as beneficiary

and Fidelity National Title Insurance Company as trustee. At some point, Padilla stopped

paying the monthly mortgage payments.

In December 2012, Wells Fargo's agent, NDEx West, LLC (NDEx), recorded a

notice of default on Padilla's loan. The next month, Wells Fargo recorded a notice of

assignment of Padilla's deed of trust to an entity identified as "U.S. Bank National

Association, as trustee for Wells Fargo Asset Securities Corporation, Mortgage Pass-

Through Certificates, Series 2006-AR2" (collectively referred to as U.S. Bank; the latter

entity referred to as Asset Corporation). (Capitalization omitted.) Wells Fargo, as the

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servicing agent for U.S. Bank, then recorded a substitution of trustee document, stating

NDEx is the new trustee on Padilla's deed of trust.

In March 2013, NDEx recorded a notice of trustee's sale, scheduling a nonjudicial

foreclosure sale of the Property for April 15, 2013. Three days before the sale was to

take place, Padilla (represented by counsel) filed a Chapter 7 bankruptcy petition. In the

bankruptcy petition, Padilla identified Wells Fargo as a creditor with an undisputed

secured interest in the Property. He also filed a form stating he was claiming the

Property as exempt, and he intended to "Surrender[ ]" the Property.

Based on the bankruptcy filing, the foreclosure sale was postponed.

In July 2013, the bankruptcy court granted Padilla a discharge, which eliminated

Padilla's legal obligation to pay certain of his debts. Three months later, in September

2013, Padilla's bankruptcy case was closed.

Four months later, in January 2014, the substituted trustee on Padilla's deed of

trust (NDEx) conducted a foreclosure sale of the Property. At the sale, U.S. Bank

purchased the Property through a credit bid of the amount owing on the loan ($435,000).

About three months later, in April 2014, Wells Fargo (as "Attorney in Fact" for U.S.

Bank) brought an unlawful detainer action against Padilla, seeking unpaid rent and to

remove him from the Property now owned by U.S. Bank.

Less than one month later, Padilla brought an action against Wells Fargo, NDEx,

U.S. Bank, and Asset Corporation (collectively defendants), alleging defendants

committed fraud at the inception of the loan, violated statutory and common law duties

by misrepresenting information regarding the loan and the identity of the note holder, and

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engaged in misleading and improper transfers and assignments of the loan and deed of

trust.

Padilla immediately moved to consolidate this civil action with the unlawful

detainer action and to stay the unlawful detainer proceedings. Wells Fargo opposed the

consolidation and stay, arguing the request was "a delaying tactic." Wells Fargo asserted

that Padilla had never tendered the amount to pay off the loan and was not paying for his

continued use and possession of the Property. Wells Fargo alternatively argued that if the

court granted the consolidation motion, the court should require Padilla to obtain a bond

because a consolidation would preclude Wells Fargo from exercising its statutory rights

to the speedy unlawful detainer remedy.

After a hearing, the court agreed to consolidate the matters, but scheduled an

additional hearing on Wells Fargo's bond request.

In its supplemental briefing, Wells Fargo argued that under the preliminary

injunction statute (Code Civ. Proc., § 529), the court should require Padilla to pay Wells

Fargo a monthly amount equivalent to the property's fair market rental value or to post a

bond for that amount pending the resolution of the civil action. Wells Fargo submitted

evidence showing the Property's monthly rental value was $2,900.

Padilla countered that the court had no authority to order monthly rental payments

or a bond because a consolidation order is not comparable to an injunction. Padilla also

argued that even if the court had this authority, Wells Fargo had not yet established its

entitlement to possession or payment. Padilla maintained that at most he should pay the

prior mortgage payment ($1,250) rather than a rental payment, and the payments should

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be placed into the court's trust account "for forwarding to the legal, valid creditor entitled

to his payments at the conclusion of the litigation."

After a hearing, the court granted Wells Fargo's request that it condition the

consolidation order on Padilla paying a fair rental value for his continued use of the

Property and ordered these payments to be made directly to Wells Fargo's attorney. The

court stated: "[Padilla] has failed to make any mortgage payment for several years.

Wells Fargo has paid the property taxes and insurance premiums. [Padilla] has

admittedly attempted to avoid foreclosure by filing for bankruptcy. [Padilla] filed this

wrongful foreclosure action in what appears to be an attempt to delay the unlawful

detainer action. [¶] . . . [¶] . . . [T]he Court conditions its order of consolidation on . . .

Padilla making monthly rent payments in the amount of $2,900 per month. . . . Payments

shall be made to counsel for Wells Fargo. If any payment is not [timely] paid . . . ,

counsel for Wells Fargo may appear ex parte to seek reconsideration of the consolidation

order."

Padilla then filed a lengthy amended complaint, asserting nine statutory and

common law causes of action.1 Padilla identified numerous alleged wrongful acts,

including: (1) Wells Fargo discriminated against him in the loan and foreclosure

transactions because he "is a Hispanic man of Mexican . . . origin"; (2) the loan was an

illegal " 'table funded' " transaction; (3) defendants improperly assigned and transferred

1 The causes of action were: cancellation of instruments; negligence; slander of
title; violation of Business and Professions Code section 17200; accounting; violation of
the California Homeowners Bill of Rights; fraud; wrongful foreclosure; and violation of
Civil Code section 51.
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interests in the Property and none of the defendants had valid rights in the note, deed of

trust, or the Property; and (4) defendants misrepresented and/or omitted material facts in

the various statutory notices and other documents. Padilla alleged he had filed his

Chapter 7 bankruptcy petition "in an attempt to find resolution for the loan." Padilla

attached to the complaint the various recorded title documents, including the grant deed,

promissory note, deed of trust, notice of default, substitution of trustee, notice of trustee's

sale, and trustee's deed upon sale.

Defendants demurred to the complaint on various grounds including: (1) Padilla's

claims were barred by his bankruptcy petition; (2) Padilla's causes of action claiming

defendants lacked authority to issue the statutory notices and/or conduct the foreclosure

sale are unsupported by California law; and (3) Padilla failed to allege he is willing and

able to tender the amount owed on the loan. Defendants requested the court take judicial

notice of various recorded title and loan documents (most of which were attached to

Padilla's complaint), and of the bankruptcy filing and orders.

In opposition, Padilla argued his causes of action were valid under California law

and his bankruptcy filing did not bar the current action. Padilla also objected to the court

taking judicial notice of the recorded documents, but did not object to the court

considering the bankruptcy documents.

In its tentative ruling, the court found Padilla's claims were barred because the

claims "appear to be assets of the bankruptcy estate" and Padilla "does not deny this."

The court stated: "[t]he appropriate action would be for plaintiff to re-open his

bankruptcy case and get a determination from the bankruptcy court [that the claims have

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been abandoned]." The court also found that "based on a review of the confusing,

convoluted and overly-pled First Amended Complaint, it is not clear that" Padilla's

allegations support a valid claim under California law. The court concluded: "[P]laintiff

is directed to seek leave of the Bankruptcy Court before proceeding further with the

claims asserted in the First Amended Complaint. This matter is stayed until leave is

granted by the Bankruptcy Court and/or until further order of this Court." The court

additionally granted defendants' judicial notice request.

The court then held a hearing. A transcript of this hearing was not included in the

appellate record. After the hearing, the court issued a signed minute order stating it was

"vacat[ing]" its tentative ruling and dismissing the case without prejudice. The order

stated the court grants defendants' "request to dismiss the civil matter" and "orders the

civil case dismissed without prejudice." The court also ordered "the Unlawful Detainer

case [to] be deconsolidated."

Defendants later voluntarily dismissed the unlawful detainer action for reasons

that are not apparent on the record.

DISCUSSION

I. Appealability

Defendants contend the court's minute order is not appealable because the court

never entered a "final judgment" and because the court dismissed the action "without

prejudice." The argument is without merit. Because the minute order was signed by the

court, it constitutes a final appealable judgment. (Code Civ. Proc., § 581d; Cano v.

Glover (2006) 143 Cal.App.4th 326, 328, fn. 1.) Additionally, although the dismissal

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was without prejudice, this judgment is appealable because the dismissal was

involuntary; it disposed of all claims; and it was entered by the court without any

agreement by the parties as to future litigation or a waiver of the limitations period. (See

Davis v. Southern California Edison Co. (2015) 236 Cal.App.4th 619, 622, fn. 3; Topa

Ins. Co. v. Fireman's Fund Ins. Companies (1995) 39 Cal.App.4th 1331, 1336.)

II. Demurrer Review Standards

In reviewing a judgment after a demurrer is sustained without leave to amend, we

examine whether the complaint alleged facts sufficient to state a cause of action under

any legal theory. (Koszdin v. State Comp. Ins. Fund (2010) 186 Cal.App.4th 480, 487.)

We assume the truth of the alleged facts and all facts that may be reasonably inferred

from the allegations, but do not assume the truth of contentions, deductions, or legal and

factual conclusions. (Evans v. City of Berkeley (2006) 38 Cal.4th 1, 6.) We also consider

documents properly subject to judicial notice. (See Schifando v. City of Los Angeles

(2003) 31 Cal.4th 1074, 1081.) We apply a de novo review standard, and are not bound

by the court's stated reasons. (Walgreen Co. v. City and County of San Francisco (2010)

185 Cal.App.4th 424, 433.)

III. Padilla Lacks Standing to Assert Claims Owned by the Bankruptcy Estate

The court dismissed the action without prejudice based on its finding that Padilla

had no standing to assert the claims unless and until he reopened the bankruptcy

proceeding and obtained an abandonment of the claims from the bankruptcy trustee.

Padilla challenges this ruling. The challenge is without merit.

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 A. Generally Applicable Law

Upon filing a bankruptcy petition, the debtor's legal and equitable interests in his

or her property become the property of the bankruptcy estate. (M & M Foods, Inc. v.

Pacific American Fish Co., Inc. (2011) 196 Cal.App.4th 554, 562 (M & M Foods); see

State Farm Life Ins. Co. v. Swift (In re Swift) (5th Cir. 1997) 129 F.3d 792, 795 (Swift).)

This property includes accrued causes of action. (M & M Foods, at p. 562.) A Chapter 7

bankruptcy transfers a debtor's legal rights and interests in any accrued cause of action to

the bankruptcy trustee, and the debtor's rights in these claims are extinguished. (Ibid.)

The Bankruptcy Code places an affirmative duty on debtors to accurately schedule

their assets and liabilities. (Cusano v. Klein (9th Cir. 2001) 264 F.3d 936, 945-946

(Cusano); M & M Foods, supra, 196 Cal.App.4th at p. 563.) If a debtor fails to identify

an asset, including a cause of action, that asset remains with the bankruptcy estate and

does not revert to the debtor upon the bankruptcy discharge or closing. (M & M Foods,

supra, 196 Cal.App.4th at pp. 563-564; see Cusano, at pp. 945-946; Dunmore v. United

States (9th Cir. 2004) 358 F.3d 1107, 1112; Calabrese v. McHugh (D.Conn. 2001) 170

F.Supp.2d 243, 256.) The debtor may regain ownership of a prepetition legal claim if the

bankruptcy trustee abandons the claim. (M & M Foods, at p. 563.) But

" ' "[a]bandonment requires affirmative action or some other evidence of intent by the

trustee.". . . [T]he notice and hearing requirements of [the federal bankruptcy statute]

must be observed for an "abandonment" to occur. . . .' " (Bostanian v. Liberty Savings

Bank (1997) 52 Cal.App.4th 1075, 1086-1087 (Bostanian).)

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 Accordingly, a prepetition cause of action is the property of the bankruptcy estate,

and, absent abandonment or other similar disposition, only the trustee in bankruptcy has

standing to pursue it. (M & M Foods, supra, 196 Cal.App.4th at pp. 562-564; Bostanian,

supra, 52 Cal.App.4th at p. 1087.) If the causes of action alleged in a civil complaint

arose prepetition but were not included in the plaintiff's bankruptcy schedules, they

belong to the bankruptcy estate, not to the party. (Ibid.) A plaintiff who asserts a claim

that remains with the bankruptcy estate lacks standing to bring the claim, and thus the

plaintiff's complaint " 'is vulnerable to a general demurrer on the ground that it fails to

state a cause of action.' " (Schauer v. Mandarin Gems of Cal., Inc. (2005) 125

Cal.App.4th 949, 955.)

B. Analysis

Padilla acknowledges he did not identify his claims against defendants in his

bankruptcy petition and that the bankruptcy trustee did not abandon any of the claims.

He argues he nonetheless has standing to bring the claims because they accrued after the

bankruptcy estate closed. The argument is without merit.

A cause of action belongs to the debtor at the time of the bankruptcy filing (and

thus is transferred into the bankruptcy estate) if the cause of action had "accrued" at the

time. (Swift, supra, 129 F.3d at p. 795; see Cusano, supra, 264 F.3d at p. 947.) To

determine accrual for this purpose, the courts look to the applicable state law. (Cusano,

at p. 947.) Under California law, "[a] cause of action accrues 'when [it] is complete with

all of its elements'—those elements being wrongdoing, harm, and causation." (Pooshs v.

Philip Morris USA, Inc. (2011) 51 Cal.4th 788, 797.) Under this rule, a cause of action

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can accrue even if a party is ignorant of the fact that he has a cause of action or if a

statute of limitations tolling rule applies. (See Rose v. Dunk-Harbison Co. (1935) 7

Cal.App.2d 502, 505-506; Cusano, at p. 947; Swift, at pp. 795-796; In re Pacific Cargo

Services, LLC (B.A.P. 9th Cir., Feb. 19, 2015) 2015 WL 728048, at *5-*6.) The fact a

statute of limitations has not yet commenced does not necessarily bear on whether the

cause of action accrued for purposes of determining the scope of the bankruptcy estate.

(See Cusano, at pp. 947-948.)

On our detailed review of Padilla's amended complaint, we conclude that each of

his nine causes of action accrued before he filed his April 2013 bankruptcy petition and

thus became part of his bankruptcy estate.

The first cause of action sought to cancel loan and foreclosure documents based, in

part, on defendants' alleged violation of statutory duties regarding the 2005 promissory

note. Each of those instruments was recorded before Padilla filed his April 2013

bankruptcy petition, and Padilla's cancellation claim was based on alleged wrongful

conduct and injury occurring long before the bankruptcy filing. The second and third

causes of action for negligence and slander of title were based NDEx's various notices

and on the transfer and/or recording of the assignment from Wells Fargo to U.S. Bank.

These transfers and filings occurred before Padilla's bankruptcy filing; thus at least a

portion of the alleged injury occurred at that time. The fourth and ninth causes of action

asserting consumer statutory causes of action were predicated on misconduct that

allegedly occurred when Padilla obtained the loan in 2005, such as collecting improper

broker fees, inflating Padilla's income, and failing to provide a Spanish translation of the

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loan documents. The fifth and sixth causes of action for an accounting and violation of

the Homeowners Bill of Rights were also based on prepetition misconduct and injury.

Wells Fargo allegedly improperly held itself out to be the loan originator, servicer and

beneficiary; and defendants allegedly included improper or inaccurate information in the

notice of default, including an improper unpaid balance due on the note. The seventh and

eighth causes of action for fraud and wrongful foreclosure were based on alleged

misrepresentations in the December 2012 notice of default and January 2013 assignment

of the deed of trust.

In arguing his claims accrued post-bankruptcy, Padilla focuses on the fact the

foreclosure sale took place after his bankruptcy case closed. But the allegations in

Padilla's amended complaint and the documents attached to his complaint reflect that he

incurred the other claimed losses before this date. For example, Padilla allegedly

suffered damages from defendants' origination and servicing of the loan (occurring long

before the bankruptcy petition was filed) and in initiating and pursuing the foreclosure

proceedings (occurring several months before the bankruptcy petition was filed). For

purposes of the bankruptcy estate issue, each of Padilla's causes of action accrued before

he filed the bankruptcy petition.

Padilla contends he had standing to assert the claims alleged in his amended

complaint because he was unaware of the claims until after the bankruptcy estate closed.

However, an accrued cause of action becomes property of the bankruptcy estate even if

the debtor was unaware of the claim when it filed for bankruptcy protection. (See Miller

v. Pac Shore Funding (Bankr. N.D.Md. 2002) 287 B.R. 47, 50 ["Property of the debtor

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does not escape the bankruptcy estate merely because the debtor is unaware of its

existence."].)

We also reject Padilla's argument that the bankruptcy petition did not preclude his

claims because all defendants "were not creditors in the Chapter 7 bankruptcy" and/or

were not listed as creditors in the petition. In determining Padilla's standing, the question

is whether Padilla or the bankruptcy trustee owns the claims he is now attempting to

assert. Whether each defendant was a named creditor in the bankruptcy proceeding is not

material to this issue.

Under Code of Civil Procedure section 367, every action must be prosecuted in the

name of the real party in interest. Padilla was not the real party in interest in this case and

thus was not the proper party to pursue the claim. Accordingly, the court properly

sustained defendants' demurrer.2

C. Dismissal Without Prejudice

Padilla does not contend the court should have given him an opportunity to amend

the complaint to overcome the standing defect. But he argues the court abused its

discretion in refusing to adhere to its tentative decision to stay the matter. The argument

is unavailing.

A court must liberally permit amendment to allow a plaintiff to correct any defects

in a pleading. (Chapman v. Skype (2013) 220 Cal.App.4th 217, 226.) Under this rule, a

2 Based on our determination, we do not reach defendants' alternate argument that
Padilla was estopped from asserting the claims based on his representation in his
bankruptcy petition that the secured debt to Wells Fargo was undisputed.
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trial court has the discretion to stay a matter for the plaintiff to seek to perfect his

standing and to amend the complaint after doing so. (Cloud v. Northrop Grumman Corp.

(1998) 67 Cal.App.4th 995, 1005.) But the court is not required to do so. When a

plaintiff lacks standing to bring the action, the complaint is subject to a demurrer and the

court may enter a judgment of dismissal with prejudice. (See Reynolds v. City of

Calistoga (2014) 223 Cal.App.4th 865, 876; The H.N. and Frances C. Berger Foundation

v. Perez (2013) 218 Cal.App.4th 37, 42-43; see also Hudis v. Crawford (2005) 125

Cal.App.4th 1586, 1592 [" 'lack of standing' is a jurisdictional defect"].) If the plaintiff

comes forward with facts showing he or she can cure the standing problem in a timely

manner, the court should generally allow the plaintiff to amend the complaint and/or

provide a brief stay to allow the plaintiff to address the deficiencies. (See Cloud, supra,

67 Cal.App.4th at pp. 1004-1011.) But in this case there is no evidence in the record that

Padilla communicated to the court that he intended to timely reopen the bankruptcy case

to request that the trustee abandon the claim and that he was likely to obtain an

abandonment of his claims against defendants.

Further, Padilla did not designate the reporter's transcript of the demurrer hearing,

and therefore the record does not contain the facts and arguments motivating the court to

modify its tentative decision. On this silent record, we are required to presume that the

trial court had a reasonable basis to change its earlier tentative ruling and order a

dismissal without prejudice rather than a stay. (See Gonzalez v. Rebollo (2014) 226

Cal.App.4th 969, 977; Wagner v. Wagner (2008) 162 Cal.App.4th 249, 259; Stevens v.

Stevens (1954) 129 Cal.App.2d 19, 20.)

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 On our review of the appellate record, we have found no indication that Padilla

represented to the court that he was intending to seek to reopen the bankruptcy case to

obtain an abandonment of the claim or that he intended to take any other action during

the stay. On this record and given the undisputed facts that Padilla was living in a home

that he no longer owned and had stopped making the court-ordered monthly rental

payments, and his admissions that he was a debtor who had owed outstanding amounts

on the promissory note, the court did not abuse its discretion in concluding the better

approach was to dismiss the action without prejudice.

Padilla contends he suffered undue prejudice from the court's decision to dismiss

the case, rather than to stay the matter. In support, he identifies only two items of

prejudice: (1) he would "incur his filing costs again"; and (2) he "lost $5,800" in rental

payments made to Wells Fargo. These factors do not show the court abused its

discretion. First, Padilla (and/or his attorney) were responsible for ensuring he had

proper legal standing to bring the claims. To the extent he did not perfect this standing,

the minimal cost of another filing is fair and does not constitute an undue burden. If

Padilla later prevails on his claims, these filing fees may be recoverable. Moreover,

Padilla's superior court filing fees are de minimis when compared with the cost of

bringing an appeal to challenge the court's order dismissing the matter without prejudice.

Instead of appealing the court's decision, Padilla could have immediately sought relief

from the bankruptcy court. Only he (or his attorney) is to blame for this waste of

resources. Additionally, with respect to the rental payments, we are reversing that order

and therefore the claimed prejudice has been eliminated.

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 We also reject Padilla's argument the court erred in refusing to grant him leave to

amend to add facts to clarify his claims challenging defendants' right to enforce the

secured promissory note and deed of trust. Because Padilla lacked standing, the court

properly dismissed the action regardless of the substantive merits of the claims.

D. Judicial Notice

Padilla contends the court erred in dismissing the action because the court

improperly took judicial notice of the recorded title and loan/deed of trust documents.

A court may take judicial notice of the dates, parties, and legally operative

language of recorded documents. (See Fontenot v. Wells Fargo Bank, N.A. (2011) 198

Cal.App.4th 256, 265.) Padilla recognizes this rule, but argues a court has no authority to

"take judicial notice of disputed facts stated in public records." We agree with this

general proposition, but it has no applicability here. There is no showing the court

improperly took judicial notice of any disputed facts, or assumed the truth of any

challenged fact. Padilla attached the title/loan documents to his complaint, and cites to

the documents in the factual section of his opening appellate brief to establish the basic

chronology of the relevant events. We consider them for the same limited purposes.

There was no error.

Further, to the extent Padilla argues the court erred in judicially noticing the

bankruptcy petition, the argument is without merit. In the proceedings below, Padilla did

not oppose the court taking judicial notice of the bankruptcy documents. Thus, Padilla

forfeited the argument. (Shuster v. BAC Home Loans Servicing, LP (2012) 211

Cal.App.4th 505, 512, fn. 4.) In any event, the court did not abuse its discretion in

16
considering the petition. The court could properly take judicial notice of the fact the

bankruptcy petition was filed and the related orders; and there is no indication the court

assumed the truth of a disputed fact within these bankruptcy documents.

IV. Court's Monthly Payments Order

Padilla contends the court erred in conditioning the consolidation order on his

paying Wells Fargo (as attorney in fact for U.S. Bank) a monthly rental payment of

$2,900.

A trial court has broad discretion to consolidate actions involving common legal or

factual questions. (Code Civ. Proc., § 1048, subd. (a)3; Todd-Stenberg v. Dalkon Shield

Claimants Trust (1996) 48 Cal.App.4th 976, 978-979.) A consolidation may be

particularly appropriate when an unlawful detainer proceeding and an unlimited action

are simultaneously pending and both raise the same complex title issues. (Martin-Bragg

v. Moore (2013) 219 Cal.App.4th 367, 385 (Martin-Bragg).) The court may stay the

unlawful detainer action until the title issues are resolved in the unlimited action, or it

may consolidate the actions. (Ibid.)

But because a stay and/or a consolidation has the potential to interfere with

legislative intent and strong public policy that an unlawful detainer action be heard in a

expeditious and summary manner, the Legislature has provided unlawful detainer

plaintiffs with a protective remedy if a case is continued or stayed beyond the strict

statutory deadlines. (§ 1170.5, subd. (c); see Martin-Bragg, supra, 219 Cal.App.4th at p.

3 All further statutory references are to the Code of Civil Procedure.
17
393.) Under section 1170.5, a court has discretion to order the unlawful detainer

defendant to pay monthly rent to the court or into an escrow account during the delay of

the unlawful detainer trial. This code section states: "If [the unlawful detainer] trial is

not held within the time specified in this section, the court, upon finding that there is a

reasonable probability that the plaintiff will prevail in the action, shall determine the

amount of damages, if any, to be suffered by the defendant by reason of the extension,

and shall issue an order requiring the defendant to pay that amount into court as the rent

would have otherwise become due and payable or into an escrow designated by the court

for so long as the defendant remains in possession pending the termination of the action."

(§ 1170.5, subd. (c), italics added.)

Under this code section, the court must determine the payment amount based on

the unlawful detainer plaintiff's "verified statement of the contract rent" and the unlawful

detainer defendant's opposing evidence. (§ 1170.5, subd. (c).) If the party fails to make

the ordered payments, the sole statutory remedy is that the court shall terminate the

continuance or stay, and conduct the trial "within 15 days of the date payment was due."

(§ 1170.5, subd. (d); see Garcia v. Cruz (2013) 221 Cal.App.4th Supp. 1, 7.) "After trial

of the action, the court shall determine the distribution of the payment made into court or

the escrow designated by the court." (§ 1170.5, subd. (f), italics added.)

Although neither the parties nor the court specifically identified this statute when

the court considered the monthly payment issue, the court complied with many of the

statutory requirements. The court held a hearing before imposing the monthly rental

payment requirement, and gave both parties an opportunity to brief the issues and submit

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relevant evidence as to the appropriate rental amount. Further, the court's written

findings reflect that it considered whether there was a reasonable probability the Wells

Fargo defendants would prevail at trial, and found in the affirmative on this issue.

But the court violated one important provision in the statute—the payment is to be

made into a court account or an escrow account. (§ 1170.5, subds. (c), (e).) The court

instead ordered the payments to be made directly to the unlawful detainer plaintiff (Wells

Fargo acting as attorney in fact for U.S. Bank). This was unauthorized by the statutory

language and was beyond the court's authority. The sole purpose of the statutory

prejudgment payment procedure is to protect a property owner who is denied its

legislative right to a summary remedy. If the property owner prevails, it may be entitled

to the monthly rent collected during the delay period. But under the statutory scheme,

this compensation cannot be released to the property owner until and unless it prevails in

the unlawful detainer action.

Although a court may, in the interests of justice, impose conditions on granting a

consolidation or a continuance motion (§ 1048, subd. (a)); Cal. Rules of Court, rule

3.1332(d)(10)), defendants cite no authority allowing a court to order payments to be

made directly to one party before liability has been determined, and the applicable

unlawful detainer statutes limit the court's discretion in this regard. (§ 1170.5, subd. (c).)

Accordingly, the court's payment order must be reversed. This conclusion does not

preclude Wells Fargo (or any other proper entity) from later recovering outstanding rent

owed by Padilla under proper procedures. Based on our conclusion, we do not reach

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Padilla's additional argument challenging the evidence supporting the court's fair market

rent determination.

DISPOSITION

Judgment is reversed solely for the limited purpose of the court issuing an order

requiring defendant Wells Fargo to repay Padilla the amount he paid as fair market rent

pursuant to the prior court order. Padilla is not entitled to any related claimed costs or

fees on remand. In all other respects, we affirm the judgment. The parties to bear their

own costs on appeal.

HALLER, J.

WE CONCUR:

BENKE, Acting P. J.

IRION, J.

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