APPEAL from a judgment of the Superior Court of Los Angeles County, C. Edward Simpson, Judge. (Los Angeles County Super. Ct. No. GC044440)
The opinion of the court was delivered by: Zelon, J.
CERTIFIED FOR PUBLICATION
The Castle Green Homeowners Association notified Afshan and Rahim Multani that they were delinquent in paying their monthly assessment fees. After the Multanis disputed the debt, the Association conducted a non-judicial foreclosure sale of their condominium unit. The Multanis sued to set aside the foreclosure alleging irregularities in the sale notices and procedure. They further alleged that the Association and its agents had committed tortious acts during the foreclosure process.
The defendants filed a motion for summary judgment or adjudication arguing that the court should dismiss the foreclosure claims because plaintiffs had actual knowledge of the foreclosure proceedings and failed to exercise their post-sale right of redemption. The defendants also argued that plaintiffs' tort claims were untimely and predicated on privileged conduct related to the foreclosure process. The court granted the motion.
We reverse the trial court's dismissal of plaintiffs' claims seeking to set aside the foreclosure sale, concluding that defendants failed to demonstrate that they notified the plaintiffs of their right of redemption as required by Code of Civil Procedure section 729.050.
FACTUAL AND PROCEDURAL BACKGROUND
A. Summary of Plaintiffs' Complaint
1. Plaintiffs' factual allegations
In January of 2010, plaintiffs Afshan and Rahim Multani filed a complaint against the Castle Green Homeowners Association (the Association) and numerous other parties arising from a foreclosure of the Multanis' condominium unit.*fn1 The complaint alleged that, in 1998, plaintiffs had purchased a condominium unit in the "Castle Greens" building in Pasadena, California. Plaintiffs obtained financing to purchase the unit from Chase Bank, who later transferred the loan to Indymac Bank.
In 2005, Rahim Multani returned from an overseas trip and was informed by the Association and its agents, LB Property Management and SBS Lien Services, that he was delinquent in paying his homeowner assessment fees. Although Multani paid the delinquent fees, he received a letter from SBS in August of 2005 alleging that he still owed approximately $2,000 in fees and costs. Multani met with SBS and issued a payment of $743.16 that was never credited to his account. In October, Multani attempted to pay the Association his monthly assessment but was told that the account had been referred to SBS "for collection." One month later, the Association, acting through SBS, recorded a notice of delinquent assessment against the property in the amount of $3,317, which consisted of $2,229 in unpaid assessments and an additional $1,087 in attorney's fees, costs, late fees and interest.
Throughout 2006, Multani and the Association continued to "disput[e] the validity of the amount . . . owed . . ." In February of 2007, Multani received a notice of sale informing him that the Association "intended to enforce the lien created by the November . . . recording of the Notice of Assessment by selling the Subject Property on March 27, 2007." The Association alleged that Multani now owed almost $12,000 in assessment fees and costs. Although Multani disputed the Association's accounting, he agreed to pay the full amount and the Association released the assessment lien.
Shortly after the lien was released, Multani contacted the Association and "requested that his account be given . . . credit f[or] . . . previously non-credited payments." Between April and July of 2007, Multani continued to make his "required monthly assessment payments, but was never given the credit due on the account." In February of 2008, the Association recorded a second notice of delinquent assessment lien against the property and, in June, recorded a "Notice of Default and Lien." Six months later, on December 5, 2008, the Association and its trustee, Witkin & Neal, "set a sale date of the property to take place on January 27, 2009." Multani "sent a letter disputing the validity of the amount owed" and requested alternative dispute resolution. The Association did not respond.
On January 5, 2009, "Indymac [Bank], the lender and beneficiary of the senior deed of trust [on the condominium unit], mistakenly instructed their [sic] trustee to foreclose . . . on the property." Plaintiffs immediately filed a wrongful foreclosure action and Indymac agreed to issue a notice of rescission of foreclosure, which was recorded on April 28, 2009. Plaintiffs contended that Indymac's actions had effectively "extinguish[ed] [the Association's] lien and its Notice of Trustee's Sale," thereby requiring the Association to reinitiate the foreclosure process by recording a new lien.
The Association, however, elected to proceed and directed Witkin & Neil to record the notice of trustee sale set for January 27, 2009. In May of 2009, Multani informed the president of the Association, Randy Banks, that he "ha[d] been trying for some time to correct and rectify what seemed an impossible task of getting a [sic] accurate accounting on Plaintiffs' account and getting the proper credits that were due." Banks told Multani that he was unaware of the accounting discrepancies and would "provide assistance . . . with the outstanding issues regarding the [improper] Association assessments."
Despite these assurances, on May 21, 2009, the Association placed a notice on the door of the Multanis' condominium stating that they owed $13,640 for delinquent assessments and costs. Shortly after the notice was posted, the Multanis' tenants informed them that the locks on the condominium unit had been changed. When Multani arrived at Castle Green to investigate the matter, he was met by Banks, who said that he had contacted the police and that Multani would be arrested if he did not leave the premises. Although Multani informed the responding officers that he was the legal owner of the condominium, he was forced to leave the building. Between May and October of 2009, Banks and other Association members continued to "harass Plaintiffs' tenants," causing them to vacate the condominium.
On July 23, 2009, the Association conducted a foreclosure sale of the Multanis' condominium, which was purchased by ProValue Properties. Although the "property was estimated to be valued at approximately $400,000," ProValue paid only $20,400, subject to Indymac Bank's $75,000 deed of trust. The Association and its trustee never notified the Multanis that the sale had been postponed from January 27 to July 23, nor did they provide any notice after the sale was completed.
In October of 2009, the Multanis signed a lease with new tenants who moved into the condominium. However, on November 19, the Multanis received a courtesy copy of an unlawful detainer complaint from the Los Angeles Superior Court stating that: (1) a non-judicial foreclosure of the condominium had occurred on July 23, 2009; (2) although originally scheduled to occur on January 27, 2009, the Association's trustee had "from time to time postponed" the sale until July 23; and (3) a trustee deed of sale had been recorded on October 24, 2009, which was 90 days after the plaintiffs' "right to redemption" had expired. Prior to receiving the unlawful detainer complaint, the plaintiffs were unaware of the foreclosure sale.
In November and December of 2009, ProValue repeatedly changed the locks on the condominium unit. Multani and his tenants had several disputes with ProValue, culminating in an altercation on December 17, 2009. Based on misrepresentations made by ProValue, the Pasadena police told Multani that he had to vacate the condominium by the end of the weekend or he would be arrested for trespassing. After being repeatedly harassed and threatened with arrest, Multani finally relinquished possession of the unit and elected to file a lawsuit against the Association, its agents - Witkin & Neal, SBS Lien Services and LB Property Management - and numerous other parties, including ProValue.
2. Summary of plaintiffs' claims
The Multanis' complaint asserted numerous claims seeking to set aside the foreclosure, including: quiet title, wrongful foreclosure, rescission and declaratory relief. The Multanis alleged that the foreclosure was improper because the Association and its agents (collectively defendants) had failed to properly serve the notice of trustee sale or comply with other procedural requirements mandated under Civil Code section 2924, et seq. Plaintiffs also alleged that the defendants had failed to comply with "Civil Code section 1367 et seq.," which imposes additional procedural requirements on non-judicial foreclosures conducted by homeowner associations for delinquent assessment fees. More specifically, plaintiffs alleged that the defendants "failed to provide alternate dispute resolution as required by [Civil Code section 1367.4]." The Multanis further asserted that all of the defendants' foreclosure notices had been "effectively voided" when "Indymac Bank . . . conducted their non-judicial foreclosure sale of January 2009 and recorded the Deed Upon Sale."
In addition to the foreclosure claims, the complaint alleged several tort claims based on the defendants' actions during the foreclosure process. Plaintiffs asserted claims for fraud, breach of fiduciary duty and intentional infliction of emotional distress alleging that the defendants had: (1) "intentionally mixed up the accounting of Plaintiffs' dues, imposed unwarranted dues and other charges, and confused Plaintiffs as to what was actually going on by repeated filings of notices, liens, and releases of liens by Defendants"; (2) "intentionally did not properly credit Plaintiffs' account so as to further extract additional monies in the form of collections costs, attorneys fees and late penalties"; and (3) "conspired to conduct a [non-judicial foreclosure] sale without any notice to prevent Plaintiffs from opposing such sale."
The complaint also asserted claims for interference with contractual relations and interference with prospective economic advantage, which were predicated on the defendants' harassment of the plaintiff's condominium tenants. The complaint listed numerous additional statutory claims based on similar conduct, including violation of the Unruh Civil Rights Act (Civ. Code, §§ 51 et seq.), violation of the Fair Debt Collection Practices Act (Civ. Code, §§ 1788 et seq.), violation of the federal Racketeer Influence and Corrupt Organization Act (18 U.S.C §§ 1961 et seq.) (RICO) and unfair business practices.
B. Defendants' Motion for Summary Judgment or Summary Adjudication
1. Defendants' motion and supporting evidence
a. Summary of motion for summary judgment or adjudication
In June of 2011, the Association and its agents filed a motion for summary judgment or, alternatively, summary adjudication. First, defendants asserted that the undisputed evidence showed the Multanis had "violated the 'tender rule' by failing to tender the full amount before the foreclosure sale." Second, defendants argued that they had provided evidence demonstrating substantial compliance with all statutory notice requirements. Third, defendants contended that plaintiffs were not harmed by any alleged procedural irregularity because they had actual notice that the foreclosure sale was scheduled to occur on January 27, 2009. Fourth, defendants argued that, pursuant to Civil Code section 1058.5, Indymac Bank's rescinded January 5th foreclosure had no effect on the Association's foreclosure.*fn2
As to plaintiffs' tort claims, the defendants argued that all of the conduct alleged in the complaint was related to the "processing of [a] . . . foreclosure" and was therefore "covered by the Civil Code Section 47(b) absolute privilege." The Association also argued that the allegations in the complaint demonstrated that plaintiffs' interference claims were time barred.
The Association's agents, Witkin & Neil and LB Management, separately argued that all of the tort claims asserted against them should be dismissed because they were entitled to qualified immunity under Civil Code section 2924, subdivision (b) and defendants had "failed to articulate the alleged bad acts committed by [them]."
b. Summary of evidence filed in support of defendants' motion
In support of their motion, the defendants submitted a declaration from the chief operating officer of Witkin & Neal summarizing the actions the trustee had taken during the foreclosure proceedings. According to the declaration, on April 21, 2008, Witkin & Neal mailed the plaintiffs a "pre-notice" of default letter informing them that a notice of delinquent assessment had been recorded against the property and that the current amount due on the account was $4,206.40. The letter further stated that the plaintiffs had the right to "dispute the assessment debt by submitting a written request for dispute resolution." A declaration of mailing indicated that the letter was sent to the Multanis' condominium unit and a Pasadena post office box numbered "82341."
The declaration also stated that, on June 23, 2008, Witkin & Neal mailed the plaintiffs a notice of default and election to sell stating that the amount currently due totaled $5,494.73 and would continue to "increase until [the] account bec[a]me current." A declaration of mailing indicated that the notice was sent to the same two addresses as the "pre-notice" letter and to a second Pasadena post office box numbered "92341." On January 9, 2009, Witkin & Neal sent the plaintiffs a notice of trustee's sale informing them that: (1) the sale was scheduled to occur on January 27, 2009; (2) the total unpaid balance was currently $10,267.62; and (3) the foreclosure sale was subject to a 90-day redemption period during which the owners could reclaim the property. A declaration of mailing indicated that the notice was sent to the same three addresses as the notice of default.
The declaration further alleged that, "at the time and place fixed in the Notice of Trustee's Sale, [Witkin & Neal] did, by public announcement, and in a manner provided by law, postpone the sale date from time to time thereafter until July 23, 2009, when [Witkin & Neal] sold the Subject unit to ProValue Properties . . . for the sum of $20,200." On July 31, 2009, defendants recorded a certificate of sale confirming that that the property was sold to ProValue and that the sale was subject to a 90-day "right of redemption." According to the declaration, plaintiffs "made no attempt to tender the full amount before the foreclosure sale date" and "failed to redeem the Subject Property during the 90-day right of redemption period." At the expiration of the 90-day redemption period, Witkin & Neal recorded a Trustee's Deed Upon Sale, dated November 6, 2009.
The defendants also submitted excerpts from Rahim Multani's deposition in which he admitted that he stopped paying his assessment fees because he "felt that [a] claim of overpayment was not being handled correctly." According to Multani, "no one gave [him] a correct accounting or breakdown of what the actual outstanding amount was owed." Multani alleged that, in 2008, he had tried to pay the amount that he believed he owed but the Association rejected his payments. Thereafter, Multani made a "conscious decision" not to pay the "entire asserted balance" because he believed it was incorrect and was ...