*1 Dist., No. 49797. Aug. First Div. Three. [Civ. 1982.] al., SUSAN GARFINKLE et Plaintiffs and Appellants, al., WELLS FARGO BANK et Defendants and Respondents. *2 Counsel Trembath, Garfinkle, R. Trembath and James pro. per.,

Gary and Appellants. McCabe & Schwartz for Plaintiffs Brobeck, Lennihan, and & Harrison Phleger W. David J. Brown David for Defendants and Respondents.

Opinion a entered favor is from judgment SCOTT, appeal P. J.This Acting an order (Bank) vacating after an Wells respondent Fargo for sum- Bank’s motion granting a certifying order action. this action as dismissing judgment mary This one of a between Susan action is number actions legal (the Bank, all Garfinkles) and Wells Gary Garfinkle Fargo which in 1970 arose after Garfinkles a residence from sellers purchased of trust in whose loan on the was secured a deed favor property deed of a standard due-on-sale clause Bank.1 The trust contained *3 due on if that the Bank could accelerate the balance the loan providing the the sellers sold without its written consent. The Bank offered to let Garfinkles the loan at increased rate of interest in return for assume an accelerate, its to the refused on but Garfinkles to assume agreement the those terms. Bank then informed sellers and the that The Garfinkles note was its that due was not the paid, due in when balance entirety; clause, Bank recorded notice of default authorized the due-on-sale as intent indicated its to sell the property. The Garfinkles then a commenced series of actions both challenging the of this state’s constitutionality nonjudicial procedure foreclosure the clause; of the automatic enforcement of validity the due-on-sale these actions culminated in an action relief Contra Costa seeking County Superior Court. The action was filed on behalf of the Garfin- individuals, kles as and all others situated. similarly The Bank filed a general complaint; demurrer to the the demurrer was overruled toas the cause of action the due-on-sale challenging clause.2 In April the trial court certified the “All following class: who, persons April since have purchased residential real prop- erty under the circumstances: following

“(a) Immediately before the the purchase, property was a subject secured loan that had been Wells made Bank. Fargo

“(b) The loan a agreement contained clause providing “due-on-sale” the upon sale of the entire unpaid balance of loan property the shall become due and the at bank’s payable option. 1 Our summary condensed procedural the factual and history litigation of this been culled from record Superior in this and in (Mar. case v. Court Garfinkle 1979) [unpub. 1 Civ. opn.], and from the opinion Court’s in Garfinkle Superior

v. Cal.3d 268 925]. 2 The trial court sustained the demurrer without leave to amend as to the constitu challenge tional nonjudicial procedure, ground to the foreclosure on that no state involved; Court, agreed. action was (Garfinkle 268, 272.) the purchas- (or policy its assignee’s) Bank’s “(c) Fargo Wells Under loan, without obligations the pre-existing not assume er could fee or penalty a rate interest a higher to pay being required and/or the bank. in- higher a pay having purchase, financed

“(d) The purchaser Wells loan Fargo the preexisting for in provided rate than that terest means: following one of through fee or penalty, a agreement and/or loan; “(i) the pre-exiáting Assumed new loan from and secured loan

“(ii) pre-existing Paid off the Bank; or Wells Fargo *4 from a new loan and secured loan the

“(iii) pre-existing Paid off other source.” some the Garfinkles as class relief on behalf of the class requested by

The the sum of the pay- was “the difference between representatives been under the required original agreement ments that would have [the made plus attorneys seller’s and the sum of payments actually loan] the acceleration and other to The Bank as a result of expenses paid fees ”; (2) a declaration that each class threatened acceleration ... pr was assume the loan between the Bank and the member entitled to member’s in interest. predecessor Bank America 1978, (1978) 21 Cal.

In in Wellenkamp August Court held 3d 943 the 970], deed of trust that a due-on-sale clause contained in a note or promissory the occurrence of an upon cannot be enforced an institutional lender that enforcement is rea sale unless the lender can demonstrate outright the to its or sonably impairment security necessary against default, (id., 953.)3 an argu at The p. rejected risk real estate loan ment that because lenders had entered into long-term the from enforcément of contracts to derive economic benefits expecting ef- clause, be given purely prospective due-on-sale its decision should lenders, in and to both residential and applies private 3 The rule also (Dawn Co. v. property. Investment vestment However, savings in federally and loan 974].) chartered (Fidelity Savings and Loan Federal rule. are not bound stitutions 102 S.Ct. L.Ed.2d 458 U.S. 141 v. De la Cuesta Assn. Nevertheless, feet. the court did limit the holding. of its retroactivity of the of real estate titles and the in stability “[G]iven terest completed real estate we preserving financing arrangements, lender, hold that this decision shall not when the to the date apply final, clause, that this decision becomes has either enforced the due-on in sale resulting foreclosure or in subject property by discharge debt, the accelerated or when the lender has waived enforcement of the due-on clause in return for an with the new agreement buyer modifying (Id., 954.) the existing at financing.” limitation,

In light of this the trial court the Bank’s granted motion to vacate the order and for certifying summary judg ment of dismissal of the action as a class action.4 It is apparent that the trial court’s action was proper. The class as certified consisted of indi viduals who had either secured a new loan and discharged pre debt, existing clause, presumably upon enforcement of the due-on-sale or agreed to assume rate, loan at a preexisting higher interest presumably for the lender’s exchange waiver of enforcement of the due-on clause. The court expressly excluded such individ uals from the benefits of its decision.

Appellants but in an to argue valiantly unpersuasively attempt avoid the death knell sounded court for their class action. First, appellants that this argue bank’s enforcement of due- particular, on-sale clauses these class against members was even before improper and that it should not be allowed to retain Wellenkamp, co- “illegally erced” profits. (1) reason: this bank enforced these clauses solely They interests; (2) to increase its not to its and profits, security Supreme Court cases had increased rejected as a for profits justification enforcing due-on clauses. It is true that in contexts other than outright sales, the Court had concluded that acceleration was Supreme not justi- La (See, fied because it was beneficial commercially e.g., to lender. Sala v. American Sav. & Loan Assn. 864, 880, 5 Cal.3d fn. 17 Cal.Rptr. provision]; [97 1113] [due-on-encumbrance Tucker v. Lassen Sav. & Loan Assn. 629, 639, 12 Cal.3d 10 fn. 633, 526 P.2d Cal.Rptr. of due-on clause [116 1169] [enforcement It was not until Wel- upon execution of an installment land contract].) challenge to the class 4 Respondents’ summary judgment motion for amounted to a a matter of law and was in effect a representatives’ ability to state a cause of action as (See City Compton 64 Cal. judgment pleadings. Sparks v. motion for on the Ducharme, Roger 684]; L. Co. v. Inc. App.3d Cal.Rptr. fn. 1 C. Smith [134 483].) Cal.App.3d 745 65

519 however, lenkamp, Supreme that the Court decided that enforcement of sale wherein outright a due-on clause after property legal transfer title is transferred was a restraint on alienation of sufficient quantum America, v. at all. 21 (Wellenkamp require justification conclusion, 949-951.) Cal. 3d at reach that pp. To otherwise in both La was compelled dicta explain away suggesting Tucker, Sala and Home Sav. & Loan Assn. disapprove Cherry (1969) 276 in which the court had Cal.App.2d Cal.Rptr. 135], 580 that a due-on-sale clause was not an invalid re concluded at page 949-950, straint on alienation. 3d at pp. (Wellenkamp, supra, Cal. 953.) Moreover, the Court itself has referred to (Henn as an of a case which overruled a settled rule of example law. Henn

In a related contend that its argument, appellants despite unequivocal did not language, Supreme Court intend to all com- actually except pleted real estate from its financing Appellants arrangements holding. would have us conclude that automatically lenders who have enforced interests, due-on clauses to protect their without security determining Wel- risks, whether would in fact be credit are purchasers protected by limited lenkamp’s whereas lenders who have enforced retroactivity, clauses their solely profits, increase after determining assump- tion would impair their are not. is security, Appellants’ argument distinction, without merit. such a Nothing supports between lenders on the basis of their motives would obvi- distinguishing be with inconsistent the court’s stated ously purpose limiting retroactive effect of its real es- preservation completed decision: tate and the of the of real financing arrangements stability 954.) (Wellenkamp, supra, estate titles. 21 Cal.3d at *6 Next, Wellenkamp contend that the rule announced in appellants should at least be to those cases which were in the applicable pending trial court when it was decided. In of that support argument, appellants Court decided Wel call our attention to the fact that after the Supreme. v. Jou it, DeMey cases before it retransferred two lenkamp, pending v. American and Loan (L.A. 30716) Savings and Medovoi jon-Roche (L.A. 30717), Association the Courts of for further Appeal proceed the the substantive disposition governed by and ordered their ings, minutes, 15, 1978.) Court Nov. principles Wellenkamp. (Supreme of However, Court it written of published opinions is the (see decisis the doctrine of stare which furnish under binding precedent Vehicles (1977) Motor 71 Cal.App.3d McGlothen Department of 520

1005, Sales, 1018 see Cal.Rptr. 168]; also Auto Inc. v. Equity Su [140 450, perior 321, 57 Cal.2d 455 Cal.Rptr. 369 P.2d [20 minutes, 937]), not orders of that court in its The Supreme Court flatly declared the circumstances under which its rule is inapplicable; it made no exceptions for cases pending the trial America, court. v. Bank (Wellenkamp 954; 21 Cal. 3d at supra, cf. of Assn., Woodland Hills Residents Inc. v. Council City 23 Cal.3d 917, 503, 928-932 In Cal.Rptr. 200]; re Jacqueline H. [154 21 548, Cal.3d fn. 9 Cal.Rptr. 577 P.2d 683].) Unless and otherwise, until that court decrees we can assume that only it meant what it said when it defined limited Wellenkamp'% retroacti vity, (Auto Sales, we must abide that determination. Equity Inc., 455.)5 57 Cal.2d at p.

Finally, appellants contend that even if these class members cannot recover caused damages by past clauses, enforcement of due-on-sale should be they relief, entitled to declaratory injunctive against future use of improper such clauses Bank. In support their that argument such relief is imperative, note that in they opposi tion to this appeal, the Bank that argues does not prevent enforcement of a due-on-sale clause under a variety circumstances. However, certified, as this class is not composed of individuals against whom the Bank is now to enforce a attempting due-on-sale clause de result, spite As a Wellenkamp. discussion any of Wellenkamp’s scope would be no more than dicta. The rendering opinions is not advisory (Chern a function of this court. America 875 P.2d ex 1310]; People rel. Lynch v. Cal.3d is Judgment affirmed.6 5 Wenote that the Garfinkles as individuals deprived have not been of the benefits of Wellenkamp. Unlike the they certified agreed have never pay higher rate of loan; interest in order to assume their dered and the Bank throughout litigation, seller’s they this have ten accepted payments due on that grant loan. The trial court did summary judgment Bank’s motion for dismissing their individual cause of action after the Bank announced its intent to foreclose to the date became final; however, aside, we ordered summary judgment set for reasons unrelated to *7 question presented (Garfinkle in this (Mar. case. 1979) 1 Civ. [unpub. opn.].) 6 Subsequent argument to the waiver of appellants oral requested appeal that the be they

dismissed in that had settled their litigation individual hey and that believe “[t] any possible proceeding benefits the class from further substantially are J., concurred. Barry-Deal, 21,1982, request filed a

FEINBERG, J., appellant Dissenting. On July Court). (rule 19(b) Respondent to dismiss the Cal. Rules of appeal merits, I ease on its than decide the request. Rather opposed would dismiss the appeal.

outweighed by the potential consequences maintaining burdens and adverse the liti- gation many years for the required.” additional that would be We conclude that the public action issues determined herein are of require sufficient Court, Witkin, filing (Cal. opinion. 19(b); (2d our Rules of rule Cal. Procedure ed. 1971) 450-451, Appeal, pp. 4410-4412.) Request to dismiss is denied. §§