Garrard v. Total Lender Solutions CA6
H047728
| Cal. Ct. App. | Apr 21, 2022Background
- In 2006 Carol Garrard (administrator for Alice Richardson’s estate) took a $265,000 loan secured by Laguna Street property; investors funded the loan, a broker later proved unlicensed, and the loan contained high interest/penalty terms.
- Investors nonjudicially foreclosed in ~2007; Garrards sued (2008) and settled in 2011 agreeing to rescind the trustee’s deed and reenter a new reduced note (Note #2); the rescission was recorded in 2013.
- Investors filed a 2014 action to enforce the alleged agreement to execute Note #2; the Garrards failed to answer and a 2015 default judgment declared Note #2 valid, ordered the Garrards to sign it, and said failure to sign would not invalidate it for purposes of nonjudicial foreclosure.
- Investors recorded default in 2016 and sold the property to Martin at trustee’s sale; Garrards then sued (2016) seeking to vacate the 2015 default judgment (invoking CCP §473(d), §580, usury and illegality) and to block foreclosure (invoking the “one action” rule, CCP §726), and amended complaints followed.
- The trial court (reviewing only the judgment roll) denied the Garrards’ motion to vacate the 2015 default judgment as not void on its face, and struck/ruled on portions of a motion for judgment on the pleadings; the appellate court affirmed the denial of the vacatur, dismissed as premature the appeal of the judgment-on-pleadings ruling, and declined to treat the nonappealable portion as a writ.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 2015 default judgment was void on its face under CCP §473(d) (notice/§580/usury/illegality) | The judgment exceeded or was not authorized by the complaint (violated §580), enforced an illegal/usurious loan and thus was void on its face and subject to set-aside at any time | The judgment roll shows the complaint requested the non-monetary relief awarded; the note attached to the judgment is not usurious on its face; court may not consider extrinsic evidence when testing facial voidness | Denied: on de novo review the judgment roll did not show facial voidness; §473(d) relief properly limited to void-on-face claims and none appeared in the record reviewed |
| Whether the 2015 default judgment constituted the investor’s “one action” under CCP §726, barring subsequent nonjudicial foreclosure | Garrards: the default judgment was the Investors’ election of remedies and therefore the “one action” that prevents nonjudicial foreclosure | Respondents: the 2015 judgment was declaratory/for specific performance of a settlement term, not an action to recover debt or enforce a deed of trust, so §726 does not apply | Trial court found §726 inapplicable (not an action to recover debt/enforce mortgage); this portion of the ruling was not finally appealable and appeal dismissed as premature |
| Whether the trial court could consider extrinsic evidence (Hill rule / collateral attack) in deciding vacatur | Garrards: extrinsic evidence and admissions show fraud/illegality and should be considered; Hill rule allows treating admissions as rendering an otherwise facially valid judgment void | Respondents: under §473(d) the court’s review is limited to the judgment roll; extrinsic evidence belongs in a different remedy (equitable action or §473(b) motion) | Court: The Hill rule applies only in certain collateral-attack contexts; here appellants sought relief under §473(d) so the trial court correctly limited review to the judgment roll and did not err in excluding extrinsic evidence |
| Whether the appellate court should treat the premature appeal from the judgment-on-pleadings order as an original writ | Appellants: if appeal is defective they ask this court to grant writ relief to set aside the trial rulings now | Respondents: ordinary appellate remedy from final judgment is adequate; extraordinary writ is not warranted absent unusual circumstances | Denied: appellate court declined to convert the nonappealable portion into a writ; appeal on that part dismissed as premature because final judgment not entered |
Key Cases Cited
- Shapiro v. Clark, 164 Cal.App.4th 1128 (2008) (order denying vacatur of default judgment under §473(d) is appealable)
- Varian Medical Systems, Inc. v. Delfino, 35 Cal.4th 180 (2005) (scope of automatic stay under CCP §916 and when postorder proceedings are stayed)
- Olson v. Cory, 35 Cal.3d 390 (1983) (standards for treating attempted appeals as writ petitions; extraordinary writ principles)
- Pittman v. Beck Park Apartments Ltd., 20 Cal.App.5th 1009 (2018) (§473(d) limited to orders void on face of record; de novo review)
- Dhawan v. Biring, 241 Cal.App.4th 963 (2015) (default judgment exceeding complaint can be set aside as void; appellate review after trial court vacatur)
- Armendariz v. Foundation Health Psychcare Servs., Inc., 24 Cal.4th 83 (2000) (severability and when unlawful provisions render a contract unenforceable)
- Greenup v. Rodman, 42 Cal.3d 822 (1986) (limits on default judgments exceeding pleaded relief; notice/damages pleading principles)
- Becker v. S.P.V. Construction Co., 27 Cal.3d 489 (1980) (§580 requires notice of the relief sought; specificity of damage allegations)
- OC Interior Services, LLC v. Nationstar Mortgage, LLC, 7 Cal.App.5th 1318 (2017) (Hill rule described; when admissions permit treating an otherwise valid judgment as void)
- First American Title Ins. & Trust Co. v. Cook, 12 Cal.App.3d 592 (1970) (late charges and penalties are not interest for usury purposes)