APPEAL from a judgment of the Superior Court of El Dorado County, Steven C. Bailey, Judge. (Super. Ct. No. SC20090170)
The opinion of the court was delivered by: Murray , J.
partial pub. cert. & mod. 6/28/11 (see end of opn.)
(Super. Ct. No. SC20090170)
Plaintiffs Robert and Gail Herrera lost their house in South Lake Tahoe to a non-judicial foreclosure sale. They brought suit to set aside that sale. They challenge whether the parties that conducted the sale, defendants Deutsche Bank National Trust Company (the Bank) and California Reconveyance Company (CRC), were in fact the beneficiary and trustee, respectively, under a deed of trust secured by their property, and thus had authority to conduct the sale. Plaintiffs also contend that they are entitled to be repaid for the expenses they incurred in repairing and insuring the property and paying back taxes if defendants are successful in establishing their interest in the property.
Defendants moved for summary judgment. In support of their motion, they requested that the trial court take judicial notice of recorded documents, including an Assignment of Deed of Trust and a Substitution of Trustee. Defendants asserted that these documents established the authority of the Bank and CRC to conduct the foreclosure sale. Defendants also provided a declaration by a custodian of records for CRC, in which the custodian did not expressly declare that the Bank was the beneficiary and CRC the trustee. Instead, she merely declared that an Assignment of Deed of Trust and a Substitution of Trustee had been recorded and these recorded documents indicated the Bank had been assigned the deed of trust and that CRC had been substituted as trustee.
Plaintiffs appeal from a judgment after the trial court granted defendants' motion for summary judgment. They contend defendants failed to carry their burden in moving for summary judgment and the trial court erred in taking judicial notice of and accepting as true the contents of certain recorded documents. We agree and reverse the judgment in part. For the reasons discussed herein, we affirm the judgment as to the fourth cause of action, plaintiffs' claim of unjust enrichment.
FACTUAL AND PROCEDURAL BACKGROUND
In June of 2008, plaintiffs purchased the property at 739 Alameda Avenue, South Lake Tahoe (the Property) at a foreclosure sale. On February 27, 2009, CRC recorded a "Notice of Default and Election to Sell [the Property] Under Deed of Trust." On May 29, 2009, CRC recorded a Notice of Trustee's Sale. On July 6, 2009, CRC recorded a Trustee's Deed upon Sale, showing the Property had been conveyed to the Bank, as foreclosing beneficiary. Plaintiffs brought suit against the Bank, CRC and others to set aside the sale, cancel the trustee's deed, quiet title to the Property, and for unjust enrichment.
In the first cause of action, plaintiffs sought to set aside the trustee's sale. Plaintiffs alleged they purchased "this run-down, filthy, distressed property" at a foreclosure sale, rehabilitated and repaired the Property and paid over $4,000 in back property taxes. They had no idea there might be a deed of trust from 2003, as it did not appear in the title search. About a year later, after plaintiffs had completed repair work on the Property, the Bank, "some mega-too-big-to-fail recipient of billions of tax payer dollars" asserted an ownership interest in the Property. The Bank claimed to be the owner of the Property by virtue of a trustee's deed recorded "by an entity purporting to be the trustee."
In seeking to set aside the trustee's sale, plaintiffs alleged that during the year they were the owners of the Property, they never received any notices of assignment of trustee's deeds or notices of deficiency, nor did they receive any notices of trustee's sale or trustee's deeds. They alleged, on information and belief, that "CRC may be, or have been the Trustee, on a purported Trustee's sale of the subject property, to an entity which may have transferred whatever interest may have been acquired in the trustee's sale to Defendant Deutsch[e]." Plaintiffs alleged CRC was not the trustee and had no authority to conduct a trustee's sale, and believed no such sale had taken place. They further alleged any promissory note supporting the 2003 deed of trust was "time barred by the statute" and the maker, if any, "was lulled into believing that no action would be taken to enforce the 2003 [deed of trust] because no collection actions were taken within a reasonable time and no legally required notices of deficiency were sent or recorded."
In the second cause of action, plaintiffs sought to cancel the trustee's deed. Plaintiffs alleged the original promissory note and deed of trust no longer existed and the Bank's deed was invalid "as it is based solely upon purported copies which have no force and effect."
The third cause of action was to quiet title to the Property. Plaintiffs alleged defendants had no original, verifiable promissory note or deed of trust and had no standing to foreclose. They further alleged all rights, title and interest asserted by defendants "were sublimated into a non-functional 'security' instrument that gives no one entity rights in individual notes and deeds of trust." No defendant had an interest in the Property, but they had placed a cloud upon plaintiffs' title.
In the fourth cause of action, entitled unjust enrichment, plaintiffs alleged they had paid back taxes, insured the Property, and repaired deferred maintenance. If defendants were successful in claiming an interest in the Property, plaintiffs wanted to be repaid for their expenditures.
The Bank and CRC moved for summary judgment or summary adjudication on each cause of action, contending there was no triable issue of fact as to any of plaintiffs' claims. They claimed the undisputed evidence showed that the loan was in default, the Bank was the beneficiary under the deed of trust and CRC was the trustee. The default was not cured and CRC properly noticed the trustee's sale. Notice of the sale was sent to plaintiffs and California law did not require the original promissory note to foreclose. The Bank and CRC further contended that to quiet title, plaintiffs must allege tender, or an offer of tender, of the amount owed. They also contended there was no evidence of unjust enrichment.
In support of their motion, defendants requested that the court take judicial notice of certain documents pursuant to Evidence Code sections 451, subdivision (f) and 452, subdivisions (d), (g) and (h). These documents were:
(1) the Trustee's Deed upon Sale recorded August 13, 2008, under which plaintiffs took title to the Property;
(2) a Grant Deed recorded December 13, 2002, showing the transfer of the Property to Sheryl Kotz;
(3) the Deed of Trust recorded April 30, 2003, with Sheryl Kotz as trustor and Long Beach Mortgage Company as trustee and beneficiary (the 2003 deed of trust);
(4) an Assignment of Deed of Trust recorded February 27, 2009, assigning all interest under the 2003 deed of trust to the Bank by JPMorgan Chase Bank, as successor in interest to Washington Mutual Bank, successor in interest to Long Beach Mortgage Company;
(5) a Substitution of Trustee recorded February 27, 2009, under which the Bank substituted CRC as trustee under the 2003 deed of trust;
(6) a "Notice of Default and Election to Sell [the Property] Under Deed of Trust" recorded February 27, 2009;
(7) a Notice of Trustee's Sale under the 2003 deed of trust recorded May 29, 2009; and
(8) a Trustee's Deed upon Sale recorded July 6, 2009, under which the Bank, as foreclosing beneficiary, was the grantee of the Property.
To support their motion, defendants also provided the declaration of Deborah Brignac. Brignac was a vice-president of CRC and a custodian of records for CRC. She was one of the custodians of records for the loan that was the subject of plaintiffs' complaint. She declared that the CRC loan records were made in the ordinary course of business by persons with a duty to make such records and were made about the time of the events reflected in the records. In April of 2003, "Shelia" [sic] Kotz*fn2 obtained a $340,000 loan from Long Beach Mortgage Company, and the loan was secured by a deed of trust on the Property. The 2003 deed of trust provided for a power of sale if the borrower defaulted and failed to cure the default. It also provided that successor trustees could be appointed.
Brignac further declared that as of February 26, 2009, $10,970.50 was "owed" on the note.*fn3 An assignment of the 2003 deed of trust was recorded February 27, 2009, indicating the transfer of all interest in the 2003 deed of trust to the Bank. A Substitution of Trustee was recorded the same date. According to Brignac's declaration, the Bank's ...