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Capon v. Monopoly Game LLC

March 4, 2011

DANIEL J. CAPON, PLAINTIFF AND APPELLANT,
v.
MONOPOLY GAME LLC ET AL., DEFENDANTS AND APPELLANTS.



Superior Court of San Mateo County, No. CIV451348, Steven L. Dylina, Judge.

The opinion of the court was delivered by: Simons, J.

CERTIFIED FOR PARTIAL PUBLICATION*fn1

The Home Equity Sales Contract Act (HESCA or the Act) (Civ. Code, § 1695 et seq.),*fn2 enacted in 1979, is designed to protect homeowners in default against unfair purchases of their home equity. The Act regulates transactions between an equity purchaser and an equity seller resulting in the sale of residential real property in foreclosure. Central to the legislative scheme is the requirement that the agreement between the buyer and seller be in writing and contain specific terms aimed at protecting the homeowner (§§ 1695.2, 1695.3, 1695.5). (Segura v. McBride (1992) 5 Cal.App.4th 1028, 1034-1036 (Segura).)

This case arises from a home equity purchase transaction involving plaintiff Daniel J. Capon (plaintiff) and defendants Sidney Gladney (Gladney), Monopoly Game LLC (Monopoly Game), Charles Prael (Prael), and Los Trancos Systems, L.L.C. (Los Trancos) (collectively, defendants). Following a bench trial, the trial court awarded plaintiff a total of $660,625.48 to compensate him for the home equity he lost in the transaction and for the conversion of his personal property. On appeal, defendants challenge the trial court's findings that the deed recorded on their behalf is void and that they are liable for conversion. Plaintiff cross-appeals, contending the trial court erred in concluding that the underlying sale transaction did not violate HESCA and in failing to hold defendants Prael and Los Trancos jointly and severally liable for a portion of the amount awarded to plaintiff for loss of his home equity.

In the published portion of this opinion we interpret section 1695.1, subdivision (a)(1),*fn3 which exempts from the definition of "equity purchaser" a person who acquires title to a residence in foreclosure "[f]or the purpose of using such property as a personal residence." We conclude the trial court erred in rejecting plaintiff's HESCA claim: section 1695.1(a)(1) is inapplicable because, although the trial court found defendant Gladney intended to live in plaintiff's house, the buyer was defendant Monopoly Game, not Gladney. In the unpublished portion of this opinion, we conclude the trial court erred in failing to hold defendants Prael and Los Trancos jointly and severally liable for a portion of plaintiff's lost home equity. We affirm the court's rulings that the recorded deed is void and defendants are liable for conversion. We remand for an award of attorney fees to plaintiff under HESCA and entry of an amended judgment in accordance with this opinion.

BACKGROUND

In 1991, plaintiff purchased a house located on Woodridge Road in Hillsborough, California (the Property) for $1,310,000. Plaintiff lived at the Property with his two sons and later with his wife Miriam Siekevitz (Siekevitz). Plaintiff and Siekevitz encountered financial difficulties that ultimately resulted in a default on a second mortgage on the Property. In October 2003, a notice of trustee's sale was recorded, setting November 14, 2003, at 1:00 p.m. as the date and time for the sale.

Gladney is the owner of Monopoly Game; the company's primary business in November 2003 was the purchase of residential properties in foreclosure. Prael is one of the owners of Los Trancos; in 2003, 75 to 80 percent of Los Trancos's business was related to foreclosure management.

On or around October 28, 2003, defendants became aware of the scheduled trustee's sale of the Property. Thereafter, plaintiff was approached by Prael at the County of San Mateo Recorder's Office. Prael represented that he was familiar with plaintiff's situation and offered to help him seek refinancing. Prael also came to the Property and left his business card, reiterating that he could help.

On the morning of November 14, 2003, the date set for the trustee's sale, Gladney and Prael visited plaintiff and Siekevitz at the Property. Plaintiff and Siekevitz agreed to sell Gladney their equity interest in the Property for $100,000, plus $50,000 if they moved out by December 15. Gladney instructed plaintiff and Siekevitz to go to Alliance Title Company in San Jose to complete the paperwork for the transaction. Plaintiff and Siekevitz signed a one-page "Agreement to Sell Real Property" (Agreement), a grant deed in favor of Monopoly Game (Deed), and a document entitled "Estoppel Affidavit." The Agreement was backdated to October 29, 2003.

The Deed, as executed by plaintiff and Siekevitz, purported to convey real property located in the "City of San Mateo," did not contain a street address or other description of the Property, and referenced a parcel number that is not the correct parcel number for the Property. Subsequently, the Deed was altered to change a reference from "San Mateo" to "Hillsborough" and to attach a new second page describing the Property (Altered Deed). Neither plaintiff nor Siekevitz consented to the alterations. The Altered Deed was recorded on December 3, 2003.

Subsequently, Monopoly Game sold the Property to David Salma (Salma) for over $1.5 million; the sale netted Monopoly Game over $300,000. For services related to the Property, Los Trancos was paid $70,000.

As relevant to plaintiff's conversion claim, at some point after sale of the Property to Monopoly Game, Gladney suggested to Siekevitz that she apply for a restraining order against plaintiff; Gladney's lawyer provided the paperwork to Siekevitz. On December 10, 2003, two plainclothes police officers came to the Property and told plaintiff he had to leave. When plaintiff refused, he was arrested pursuant to the restraining order. The next day, plaintiff was allowed to return for 10 minutes with Staci Adams (Adams), who also lived at the Property, to gather what he could of his belongings. Most of plaintiff's belongings remained at the Property after that visit, including a $28,000 antique oriental rug and scientific equipment that plaintiff testified was worth more than $1 million. Adams testified that Prael told her that he would deliver her and plaintiff's remaining belongings to a warehouse. Prael failed to do so.*fn4

On December 15, 2003, Siekevitz turned over to Gladney her keys to the Property. On December 17, Prael and workmen began removing plaintiff's personal property under instructions from Gladney to remove it all by December 19. Prael donated some of plaintiff's belongings and some of the scientific equipment; he valued the donations at $325,745. Prael disposed of nearly everything else.

Prior to filing the instant action, plaintiff recorded a notice of rescission under section 1695.14 of HESCA, seeking return of the Property. On December 2, 2005, plaintiff filed the present lawsuit against, among others, defendants and Salma (who purchased the Property from Monopoly Game). The complaint asserted 12 causes of action: (1) rescission under HESCA; (2) damages for violation of HESCA; (3) declaratory relief; (4) quiet title; (5) breach of contract; (6) fraud; (7) deceit; (8) conversion; (9) unjust enrichment; (10) civil conspiracy; (11) unfair business practices within the meaning of Business and Professions Code section 17200 et. seq.; and (12) injunctive relief.*fn5

The trial court conducted a bench trial and in February 2009 the court issued its final statement of decision and judgment. The court ruled in favor of plaintiff on the causes of action for declaratory relief, unjust enrichment, and unfair business practices, finding the Altered Deed was void ab initio because it lacked a legally sufficient property description when executed and was rendered a forgery when it was altered. As restitution, the trial court awarded plaintiff $306,880.48 (Monopoly Game's profits from resale of the Property).*fn6 Monopoly Game and Gladney were found jointly and severally liable for that amount, based upon the court's finding of alter ego status between them. The court did not hold Prael and Los Trancos liable for the $70,000 of the proceeds that they received from Monopoly Game.

The trial court also ruled in favor of plaintiff on the cause of action for conversion, finding that defendants had taken and disposed of plaintiff's personal property without his consent. The court awarded damages of $353,745, including $325,745 for plaintiff's scientific equipment and $28,000 for an antique oriental rug.

The trial court concluded the causes of action for rescission, quiet title, and injunctive relief were moot based upon plaintiff's settlement with Salma and plaintiff's reacquisition of the Property at a foreclosure sale in April 2008. The trial court found in favor of defendants on the causes of action for breach of contract, fraud, deceit, and civil conspiracy. With respect to the claim for damages under section 1695.7 of HESCA, the court found the Property was a " 'residence in foreclosure' " within the meaning of section 1695.1, subdivision (b) and the Agreement failed "to comply with the Act in a variety of respects." However, notwithstanding the fact that Monopoly Game acquired title to the Property, the trial court found applicable an exception from the requirements of HESCA: under section 1695.1(a)(1), Monopoly Game was not an "equity purchaser" because Gladney intended to use the Property as a "personal residence."

Defendants appealed the trial court's judgment and plaintiff ...


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