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Dr. Leevil, LLC v. Westlake Health Care Center

California Court of Appeals, Second District, Sixth Division

March 7, 2017

DR. LEEVIL, LLC, Plaintiff and Respondent,
v.
WESTLAKE HEALTH CARE CENTER, Defendant and Appellant.

         Superior Court County of Ventura No. 56-2015-00465793-CU-UD-VTA Vincent J. O'Neill, Jr., Judge

          Enenstein Ribakoff LaViña & Pham, Teri T. Pham and Courtney M. Havens, for Defendant and Appellant.

          Law Offices of Ronald Richards & Associates, Ronald N. Richards, Nicholas Bravo; Law Offices of Geoffrey Long and Geoffrey S. Long, for Plaintiff and Respondent.

          TANGEMAN, J.

         A purchaser at a foreclosure sale seeks to evict the occupant of the property as soon as possible. It serves a notice to quit after the sale but before recording title to the property. Here we reject the occupant's claim that the notice to quit is premature, and hold that Code of Civil Procedure section 1161a[1] does not require that title be recorded before the notice to quit is served. We affirm.

         BACKGROUND

         Jeoung Hie Lee and Il Hie Lee own Westlake Village Property, L.P. (Westlake Village), a business entity that formerly owned a skilled nursing facility. In 2002, Westlake Village leased the facility to Westlake Health Care Center (Westlake Health), a corporation also owned and controlled by the Lees. The lease had an automatic subordination clause and a permissible subordination clause with a nondisturbance provision. It was for a 20-year term.

         Six years into the lease, Westlake Village took out a five-year loan from TomatoBank, N.A., secured by a deed of trust on the nursing facility. When Westlake Village defaulted on the loan and filed for bankruptcy, TomatoBank sold the loan to Dr. Leevil, LLC (Leevil). Leevil obtained relief from the bankruptcy stay, instituted a nonjudicial foreclosure, and purchased the nursing facility at a trustee's sale.

         The day after it purchased the facility, Leevil served Westlake Health with a notice to quit. Leevil recorded title to the facility five days later. Westlake Health did not vacate the facility, and Leevil sued for unlawful detainer. Westlake Health's answer alleged that its lease was senior to the deed of trust and that the notice to quit was invalid because it was served before title was recorded. At a bifurcated trial, the court found that the lease was subordinate to the deed of trust and was extinguished by the trustee's sale. The court also found that the notice to quit was valid.

         Westlake Health agreed to surrender possession of the facility and pay damages before the second phase of trial began. The parties stipulated that the judgment would “not affect any party's appellate rights.” The sheriff evicted Westlake Health and Leevil leased the facility to another skilled nursing provider.

         After Westlake Health filed its opening brief, Leevil filed a motion to dismiss the appeal as moot. We deferred ruling on the motion until after oral argument. While this case was under submission, our Supreme Court ordered publication of U.S. Financial, L.P. v. McLitus (2016) 6 Cal.App.5th Supp. 1 (McLitus). In McLitus, the Appellate Division of the San Diego County Superior Court held that a property owner's service of a notice to quit before it perfects title to the property renders invalid any subsequent unlawful detainer proceeding. (Id. at pp. Supp. 3-5.) We vacated submission and ordered supplemental briefing.

         DISCUSSION

         The Motion to Dismiss

         Leevil asks us to dismiss the appeal as moot because Westlake Health is no longer in possession of the facility and cannot operate ...


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