*1 Dist., Div. Five. Jan. 2009.] B204853. Second [No. INC., PROPERTIES, and Respondent, Cross-complainant
PRO VALUE CORP., and Appellant. Cross-defendant LOAN SERVICE QUALITY *2 Counsel for Cross-defendant J. Goulding Holthus and Daniel &
McCarthy Appellant. *3 and Respondent. for Cross-complainant
No appearance Opinion the trial (QLS)
ARMSTRONG, appeals Loan Service Quality Corp. J . monetary to its the interest rate to applied court’s ruling regarding (Pro Value). We conclude Pro Value Inc. obligation respondent Properties, to Pro Value was QLS’s in finding obligation that the trial court erred its nature, at the annual rate of in the accrual of interest contractual in resulting nature, Rather, to Pro Value was QLS’s obligation percent. rate of interest is 7 percent. from which it follows that proper BACKGROUND FACTUAL AND PROCEDURAL (the deed of trust on a residence At the of the of a beneficiary request commencing foreclosure QLS proceedings, instituted nonjudicial Property), the trustee named in QLS of a notice of default. was not with the recordation trust, a substitution of trustee to record the deed of and so required to do. Pursuant to Code This it neglected to Civil section 2934a. pursuant bidder, sale, to the QLS highest recorded notice of trustee sold Property $842,000. Value, 9, 2005, a trustee’s deed of sale QLS issued Pro on June for Value, to Pro which was recorded. subsequently thereafter, FV-1, deed of under the QLS beneficiary time Some trust, of trastee naming realized that there was no recorded substitution that the trustee’s and FV-1 determined as trustee. both Consequently, deed of sale was void. lawsuit, action for causes of FV-1 filed this alleging
In August named both relief. FV-1 an instrument and declaratory cancellation of FV-1 Value cross-complained Value as defendants. Pro and Pro and against and negligent misrepresentation, negligence breach QLS for negligence. $842,000 October returned the of the purchase price with 7
Property together interest to Pro Value. Pro Value rejected funds, that it was the proffered claiming owner of the rightful Property. $842,000 Because Pro Value had QLS’s rejected of the sales proffer price, QLS continued to hold those It funds. therefore filed a in inter- complaint pleader, seeking determination of who was entitled to the proceeds realized from the sale of the Property.
QLS moved for summary as to FV-l’s judgment and Pro Value’s complaint After cross-complaint. on the hearing arguments motion on January the trial court ruled that the trustee’s sale was void and that the trustee’s of sale which QLS issued to Pro Value was of no force or effect. The court further ruled that Pro Value was entitled to the return of the funds principal *4 interest at the plus rate. The court legal additional requested briefing regard- rate ing legal of interest to be in this case. applied the trial Additionally, court ruled Pro Value on each of the causes of action in the alleged cross-complaint.
The after the day QLS $842,000 hearing, again returned the sales proceeds to Pro Value. 14, 2007,
On May trial court issued its on the ruling interest pending void, issue. The court found that although trustee’s sale was and there was law, no contract as a matter of owed interest at the rate of 10 is, the percent rate which founded applies obligations on contract. —that The court also found that QLS’s tender of funds to Pro Value in October insufficient, 2005 was sincé it included 7 interest instead of percent 10 percent the court found that Consequently, QLS owed Pro Value 10 interest percent on the “from the date of sale the date through [QLS] returns the purchase with 10% proceeds interest.” was entered on
Judgment November from which timely appealed.
DISCUSSION As the trial court acknowledged, California Constitution provides Const., XV, at (Cal. interest 7 annum. prejudgment art. percent per § However, Civil Code section that the rate of provides legal 3289 interest
583 after the breach chargeable contract which does not an interest stipulate rate is 10 annum. The trial court ruled that the latter rate interest per one, that there was a albeit a void between applied, reasoning and Pro Value. It is this with which we disagree.
A (Kachlon foreclosure sale is a creature of statute. v. (2008) 168 334 Civil Cal.App.4th Cal.Rptr.3d Markowitz [85 532] [“The Code contains a comprehensive regulating nonjudicial foreclosure.”].) The trustee’s role in for and the sale is preparing conducting set forth in detail in Civil Code section “The trustee in 2924 seq. duties, foreclosure is not a true trustee with but rather a fiduciary common for the trustor and agent (Vournas[ v. Nat. Tit. beneficiary. Fidelity (1999)] [668,] Ins. Co. 73 490].) Cal.Rptr.2d scope [86 and nature of the trustee’s are duties defined the deed exclusively of trust and the governing statutes. No other common (I. law duties exist. E. Associates v. (1985) Title Ins. Co. 39 Cal.3d 287-288 [216 Safeco ; Cal.Rptr. P.2d . . . Residential Capital v. Cal-Western Reconveyance (2003) Corp. Markowitz,
162].)” (Kachlon short, supra, the trustee does not contract with the for the sale purchaser of the foreclosed but property, which, executed, ministerial performs acts when result in the properly transfer of title to the the trial purchaser. court was mistaken when it concluded (void) that there was a contract between and Pro Value which did not rate, an stipulate interest resulting of Civil Code section application *5 3289’s prescribed 10 rate of percent
Here, the did trustee not execute the ministerial properly acts set forth sale, statute. by This statutory violation resulted in a void which required interest, to return the with to purchase price, Pro Value. This did in October $842,000, 2005 by delivering to Pro Value a check for a second plus $19,053.46, check for interest on the representing percent amount. principal the court As in Residential v. Cal-Western Capital Reconveyance Corp., supra, “ void, 807 stated: ‘Because the sale the appropriate to remedy any damage Plaintiff was the return of the purchase price, plus accrued interest. Because the interest was purchase price plus [Citations.] Plaintiff, tendered to it has sustained no and an damage essential element to ” (Id. all of its causes of action is not 813.) QLS’s present.’ p. when, to Pro obligations Value were fulfilled in full in October tendered the with 7 purchase price together interest thereon to Pro Value.
DISPOSITION the that interest accrued on is modified to judgment provide annum from June at the rate of 7 percent per foreclosure sale proceeds modified, the is affirmed. judgment October 2005. As through is to bear its costs on appeal.
Turner, J., concurred. P.
MOSK, J., concur. Concurring . I (2003) 108 Reconveyance Corp.
In Residential v. Cal-Western Capital the in a (Residential trustee Capital), the bid at auction but refused foreclosure action bidder’s accepted trustee, because, the the trustor and unbenownst to to issue trusee’s (Id. 811.) The trustee the sale. at p. had beneficiary agreed postpone rate), (id. at (at refunded the interest an unspecified purchase price plus for, 813.) other breach of among things, arguing The bidder sued p. that, although that the of its bid created a contract acceptance purchase-sale void, in the foreclosure was not voidable because of the defect proceedings, measured by and that the bidder was therefore entitled to contract damages (Id. at and the fair market value of the the difference between bid property. 813-817.) the bidder’s rejected argument, The Court pp. Appeal are regulated by that foreclosure proceedings “comprehensively which is not set forth in section 2924 seq., detailed statutory (Id. at It would based on common law contract principles.” scheme to conclude that underlying inconsistent with policies and the trustor was not of the sale occurred “although postponement sale, contractual sale neverthe obligation bound separate conflicting beneficiary.” behalf the trustee and less came into existence on its at p. *6 held that the bidder’s rights the court in Residential Accordingly, Capital determined law contract but were were not common governed by principles, forth the rules setting of the scheme statutory of by interpretation “principles (Residential 108 Capital, supra, foreclosure sales.” of trust 820-821; (2008) also L.L.C. v. Golf, Cooper at see Cal.App.4th pp. California 1053, Golf) (California 1070-1071 Cal.Rptr.3d 163 Cal.App.4th [78 153] of “the policies determined consideration by of [availability remedy particular scheme, those would and whether statutory policies advanced the by v. I. E. Associates remedy”]; of the additional frustrated the allowance
585 438, 281, P.2d (1985) Title Ins. Cal.3d 285 702 Cal.Rptr. Co. 39 [216 Safeco 596]; 822, 777].) (1994) Moeller Lien 834 v. 25 Cal.App.4th Cal.Rptr.2d [30 The defective is for a bidder when foreclosure sale is remedy procedurally (Residential of the 108 Capital, supra, restitution purchase price plus 823.) at trustor is from unauthorized Cal.App.4th p. protected “[t]he foreclosure and loss of its and the of foreclosure sanctity finality property (Id. at sales is maintained without to the bidder.” significant high prejudice p. case,
In the instant there was an although purchase-sale agreement express trustee, between the bidder and the under the rationale of Residential Capital, 807, that a contract did not rise to supra, Cal.App.4th agreement give common law contract The bidder’s to restitution governed by right principles. from the trustee is thus not based on their but is relief agreement, provided by The claim there- regulating nonjudicial foreclosures. is fore not a contract cause of action under Civil Code section 3289. decision in Golf, supra, is not California inconsistent with this conclusion. In Golf, court noted that California “California courts have allowed additional rem- repeatedly parties pursue edies for misconduct out of a arising foreclosure sale when not inconsistent with behind the statutes.” In this policies p. case, however, there is no restitution is dispute appropriate remedy. Rather, the bidder seeks to an alternative cause action. But rely upon of claim, the label the bidder has on its its cause of action is notwithstanding put not a “cause of action in contract.”
There is that an action to recover authority relief—such quasi-contractual as an action to recover meruit for the reasonable value of quantum goods or services—is a “cause of action in contract” under Civil Code section Foods, (b). (1984) subdivision v. Double-D (George Inc. 155 Cal.App.3d 870]; 46-47 see Zalk v. Cal.Rptr. (1980) General Co. Exploration [201 [dictum]; al., Cal. Cal.App.3d Wegner 794-795 Cal.Rptr. [164 17:188, (The Practice Guide: Civil Trials and Evidence 2008) Rutter Group f 17-145.) the same should to Civil Code Presumably, section apply “ ‘Quasi-contract’ 3289. is another of for the simply way describing basis of restitution remedy when an enrichment has occurred.” equitable unjust (McBride (2004) Boughton fn. 6 case, however, 115].) In this the bidder cannot invoke principles quasi- contract because there an between the bidder and express agreement trustee. When there is an there is no need to express agreement, imply *7 above, event, i.e., as noted any quasi-contract. contract — is relief bidder’s to restitution right provided foreclosures, not from or any express implied regulating contract.