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Canyon View Ltd. v. Lakeview Loan Servicing, LLC

California Court of Appeals, Second District, First Division

December 4, 2019

CANYON VIEW LIMITED, Plaintiff and Appellant,
v.
LAKEVIEW LOAN SERVICING, LLC, Defendant and Respondent. CANYON VIEW LIMITED, Plaintiff and Appellant,
v.
BANK OF AMERICA, N.A., et al., Defendants and Respondents. CANYON VIEW LIMITED, Plaintiff and Appellant,
v.
OWCEN LOAN SERVICING, LLC, et al., Defendants and Respondents. CANYON VIEW LIMITED, Plaintiff and Appellant,
v.
HOUSEHOLD FINANCE CORPORATION OF CALIFORNIA, et al., Defendants and Respondents.

         CERTIFIED FOR PARTIAL PUBLICATION[*]

          APPEALS from orders of the Superior Court of Los Angeles County, Nos. PC057181, PC057199, PC057291, Stephen P. Pfahler and Melvin D. Sandvig, Judges. Affirmed in part and reversed in part with directions.

          Norminton, Wiita & Fuster, Thomas M. Norminton and Kathleen Dority Fuster for Plaintiff and Appellant Canyon View Limited.

          McCarthy & Holthus and Melissa Robbins Coutts for Defendant and Respondent Lakeview Loan Servicing, LLC.

          McGlinchey Stafford, Sanford P. Shatz and Kevin S. Kim for Defendants and Respondents Bank of America, N.A., and The Bank of New York Mellon, as Trustee for the Certificateholders CWALT, Inc., Alternative Loan Trust 2005-84 Mortgage Pass Through Certificates, Series 2005-84.

          Bryan Cave Leighton Paisner, Christopher L. Dueringer and Kazim A. Naqvi for Defendants and Respondents Ocwen Loan Servicing, LLC, and Power Default Services, Inc.

          Katten Muchin Rosenman, Stuart M. Richter, Gregory S. Korman, Paul A. Grammatico and Austin T. Beardsley for Defendants and Respondents Household Finance Corporation of California and HSBC Mortgage Services Inc.

          ROTHSCHILD, P.J.

         Plaintiff Canyon View Limited (Canyon View), a mobilehome park owner, appeals from orders denying its motions for attorney fees and costs under the Mobilehome Residency Law (MRL) (Civ. Code, [1] § 798 et seq.), and costs under Code of Civil Procedure section 1032. These orders stem from four actions, consolidated for purposes of appeal, in which Canyon View sued several entities that at one time held liens on four mobilehomes located in Canyon View's mobilehome park: (1) defendant and respondent Lakeview Loan Servicing, LLC (Lakeview); (2) defendants and respondents Bank of America, N.A. (BOA) and The Bank of New York Mellon (BONY) (collectively, the BONY respondents); (3) defendants and respondents Ocwen Loan Servicing, LLC (Ocwen) and Power Default Services, Inc. (Power) (collectively, the Ocwen respondents); and (4) defendants and respondents Household Finance Corporation of California (Household) and HSBC Mortgage Services Inc. (HSBC) (collectively, the Household respondents). The actions sought to quiet title to these homes in Canyon View after it purchased them via MRL-regulated proceedings and public sales. Under the MRL, the purchase of a mobilehome at such a sale extinguishes all then-existing liens and interests in the home. After Canyon View purchased the mobilehomes and acquired title, respondents recorded documents that asserted liens on and security interests in the homes. Canyon View alleged that such documents created a cloud on title, which its lawsuits sought to clear.

         All actions were resolved in Canyon View's favor before trial. Thereafter, the trial court denied Canyon View's requests for attorney fees and costs under the MRL's attorney fees statute, which applies to actions “arising out of ” the MRL. (§ 798.85.) It further denied Canyon View's requests in two of the four actions for costs under Code of Civil Procedure section 1032, subdivision (b).

         In the published portion of this opinion, we conclude that, contrary to the trial court's ruling, an action need not involve the mobilehome park management-resident relationship or landlord-tenant issues in order for it to “arise out of ” the MRL. The MRL addresses numerous issues and rights, including the right of a purchaser at an MRL-regulated abandonment or warehouse lien sale to take title free and clear of any existing liens and interests, other than a lien in favor of the state for nonpayment of fees and penalties. (§§ 798.61, subd. (e)(4), 798.56a, subd. (e)(1).) Because Canyon View's actions against Lakeview, the BONY respondents, and the Household respondents were necessary to perfect Canyon View's right to free and clear title under the MRL, they arose out of the MRL, and Canyon View, as the prevailing party, is entitled to recover its reasonable attorney fees and costs.

         In the unpublished portion of this opinion, we reject the trial court's alternative bases for denying attorney fees and costs under the MRL in all actions, reverse the trial court's order granting the BONY respondents' motion to strike costs in the BONY action, and affirm the court's rulings denying Canyon View's requests for fees and costs in the Ocwen action. As to the Ocwen action, before Canyon View filed suit, the Ocwen respondents offered to take all steps within their power to remove any cloud on Canyon View's title, including executing a reconveyance and recording a quitclaim deed. Suing the Ocwen respondents for this same relief was therefore not necessary to enforce Canyon View's right under the MRL to clear title; thus, the Ocwen action did not arise out of the MRL. Accordingly, Canyon View is not entitled to attorney fees or costs under the MRL in that action.

         As to Canyon View's memoranda of costs, we conclude that the trial court acted within its considerable discretion in concluding that Canyon View was not entitled to costs in the Ocwen action under Code of Civil Procedure section 1032, subdivision (b). We need not address the court's refusal to award costs under Code of Civil Procedure section 1032, subdivision (b) in the BONY action, given our conclusion that Canyon View is entitled to reasonable costs under the MRL in that action.

         Accordingly, we reverse the court's orders denying Canyon View's motions for attorney fees and costs under the MRL in the Lakeview, BONY, and Household actions, as well as the trial court's order granting the BONY respondents' motion to strike costs, and direct the trial court in these three actions to determine the amount of section 798.85 attorney fees and costs reasonable under the circumstances. In all other respects, we affirm.

         FACTUAL AND PROCEDURAL SUMMARY

         A. The MRL

         The MRL is a collection of statutes regulating various issues involving mobilehomes. Although the MRL is not the only law addressing the unique legal issues created by mobilehome ownership and tenancy, [2] its provisions address a wide range of such issues.

         Much of the MRL is dedicated to “ ‘ “extensively regulat[ing] the landlord-tenant relationship between mobilehome park owners and residents.”' ” (SC Manufactured Homes, supra, 148 Cal.App.4th at p. 673.) These sections of the MRL address such issues as rental agreements between mobilehome park owners and their residents, rules and regulations in mobilehome parks, fees and charges a mobilehome park owner may charge its residents, utilities, rent control, and homeowners associations. (See §§ 798.15-798.53 [MRL arts. 2-5.5]; see also §§ 799-799.11 [MRL art. 9].) These provisions “ ‘reflect legislative recognition of the unique nature of mobilehome tenancies.' [Citation.] Ordinarily, mobilehome park tenants own their homes but rent the spaces they occupy. [Citation.] Once a mobilehome is in place in a park, it is difficult to relocate. [Citations.] Its owner thus “is more likely to be a long term resident.” [Citation.] In many cases, mobilehome park tenants have limited and undesirable options if they find “living in the park no longer desirable, practical, or possible....” [Citation.]' [Citation.] The MRL provides ‘homeowners a measure of stability and predictability in their mobilehome park residency.' ” (See SC Manufactured, supra, at p. 673, fn. omitted.)

         Because over half of the sections contained in the MRL address relations between mobilehome park owners and residents, many courts have focused on that relationship when describing the MRL's scope and goals. (See, e.g., Cacho v. Boudreau (2007) 40 Cal.4th 341, 345 (Cacho) [the MRL “regulates relations between the owners and the residents of mobilehome parks”]; SC Manufactured, supra, 148 Cal.App.4th at p. 678 [“The MRL regulates the conduct between tenants and landlords-mobilehome homeowners and residents and mobilehome [park] management.”].)

         But the MRL also addresses other situations and serves other policy goals that, like the goals related to tenants' rights, arise from the unique characteristics of mobilehomes, such as the difficulty and cost associated with moving and/or installing a mobilehome.[3] (See § 798.55.) Most notably for the purposes of this appeal, the MRL seeks to improve “the flexibility and attractiveness of mobilehome financing” and creates rights and procedures that facilitate and encourage the purchase or other disposition of abandoned mobilehomes. (Business and Transportation Agency, Enrolled Bill Rep. on Assem. Bill No. 2915 (1979-1980 Reg. Sess.) Sept. 15, 1980 at p. 3 (BTA Report); see id. at p. 1 [noting certain amendments were “developed with the lending industry to make mobilehomes more desirable collateral despite their mobility”]; see also Adamson Companies v. Zipp (1984) 163 Cal.App.3d Supp. 1, 13-15 (Adamson) [noting legislative goal of certain MRL provisions was “to enhance the availability of financing of mobilehome purchasers” and “to protect the security and ownership interests of the nontenant owner”].) By accomplishing these goals, the MRL seeks to address California's broader housing issues as well. (See id. at p. 21 [Legislature was “cognizant” while drafting MRL of the “critical shortage of decent housing available in particular to families with children in California”]; see BTA Report at p. 3.)

         The MRL promotes these goals in various ways. For example, article 7 of the MRL (§§ 798.70-798.83), which addresses the transfer of mobilehomes or mobilehome parks, permits any lienholder[4] to sell that home while it is still installed in a mobilehome park. (§ 798.79.)

         Article 6 of the MRL (§§ 798.55-798.61) addresses the termination of mobilehome tenancies not only by granting tenants certain rights prior to termination, but also by requiring that mobilehome park management give notice of termination to lienholders and afford them the opportunity to take certain actions upon termination of a leasehold, including “sell[ing] the obligation secured by the mobilehome to the management, ” “foreclose[ing] on [the] security interest, ” and selling the mobilehome to a third party, provided the lienholder fulfills certain duties. (§ 798.56a, subd. (a)(1)-(2).)

         Relatedly, article 6 of the MRL (§§ 798.55-798.61) also creates procedures whereby mobilehome park management may sell or dispose of abandoned mobilehomes. (See § 798.61.) Specifically, management must properly notice all owners and lienholders regarding management's intention to file a petition for declaration of abandonment. (Id., subds. (b) & (c).) If no lienholder or owner appears at the hearing on the petition to claim the abandoned home (and pay all rents and fees due), the court may issue a judgment of abandonment, following which management may sell or otherwise dispose of the abandoned home in compliance with MRL procedures. (Id., subds. (e) & (f).) When management opts to sell the home, the purchaser takes the home “free of any prior interest... or lien.”[5] (Id., subd. (e)(4).) The MRL expressly permits park management to purchase an abandoned mobilehome at such a sale, and to offset from its bids the amount management is owed under the lease.[6] (Id., subd. (e)(2).) The MRL includes similar procedures whereby a mobilehome park manager may acquire a warehouse lien on an abandoned mobilehome and conduct a warehouse lien sale, at which the purchaser takes title to the home “whether or not there existed a [lienholder] on this title to the mobilehome.” (§ 798.56a, subd. (e)(1); see generally § 798.56a.)

         Thus, the MRL creates rights and protections not only for mobilehome tenants, but also for lienholders, “management, selling homeowners”-whether or not they are also residents-and “purchasers” of mobilehomes as well. (SC Manufactured, supra, 148 Cal.App.4th at p. 674; accord, Simandle v. Vista de Santa Barbara Associates, LP (2009) 178 Cal.App.4th 1317, 1323 (Simandle); see, e.g., §§ 798.61, 798.79.)

         Finally, article 8 of the MRL (§§ 798.84-798.88) addresses civil actions to remedy particular violations of the MRL, such as public nuisance actions based on mobilehome park management failing to properly maintain common areas, or substantial violations of mobilehome park rules. (See § 798.87.) Crucially for the purposes of this appeal, it also contains an attorney fees and costs provision, which requires a court to award reasonable attorney fees and costs to the “prevailing party” “[i]n any action arising out of the provisions of this chapter [i.e., the MRL].” (§ 798.85.) For the purposes of this section, “[a] party shall be deemed a prevailing party... if the judgment is rendered in his or her favor or where the litigation is dismissed in his or her favor prior to or during the trial, ” absent an agreement to the contrary. (Ibid.)

         B. The Quiet Title Actions Below

         The cases below share certain facts relevant to this appeal. There are, however, also key factual differences between them. We therefore provide a summary of the facts and proceedings in each action as necessary to resolve the issues.

         1. Canyon View

         Canyon View owns and operates Canyon View Estates, a mobilehome park located in Santa Clarita. Canyon View owns the fee interest in the land. It leases the lots in the park pursuant to long-term leases to owners of mobilehomes, which are installed on the lots.

         2. Case No. PC057181 against Lakeview and Quality Loan Service Corporation (the Lakeview action)

         In December 2004, Canyon View leased lot 213 to Blanca Shapiro. Also in 2004, Shapiro obtained a loan from Lakeview, secured by a deed of trust on the mobilehome installed on lot 213.[7]

         Shapiro defaulted on her loan in 2014, and a notice of default under the deed of trust was recorded. Also in 2014, Shapiro breached her lease with Canyon View by failing to pay rent and other obligations. Canyon View issued the requisite notices to Shapiro and all lienholders, but no one cured Shapiro's defaults under the lease.

         Canyon View initiated an abandonment proceeding under the MRL and, in June 2014, obtained a judgment declaring the mobilehome abandoned. As required by the MRL, Canyon View provided notice to Shapiro and all lienholders of the abandonment proceedings and the resulting court-ordered public sale. Canyon View purchased the mobilehome on lot 213 at that sale on July 2, 2014. Under the MRL, section 798.61, subdivision (e)(4), that purchase extinguished all liens on and interests in the mobilehome. A grant deed conveying the mobilehome to Canyon View was recorded on July 15, 2014.

         Almost a year after Canyon View took title to the mobilehome, on May 14, 2015, Quality Loan Service Corporation (Quality), as trustee under Lakeview's deed of trust, recorded a rescission of the notice of default recorded in 2014.[8] The rescission notice stated that, although Quality was not electing to foreclose on the home, the deed of trust and all rights and obligations thereunder “remain in force and effect, ” and that this election “shall in no way jeopardize or impair any right, remedy or privilege” under the deed of trust or “alter in any respect” that deed. A corrected version of this document recorded on May 11, 2016 contains similar language purporting to recognize, without alteration, the security rights in the mobilehome created by the deed of trust.

         Upon learning that such documents had been recorded, Canyon View sent several letters to Lakeview, Quality, and their counsel, demanding that they take all actions necessary to remove the cloud on Canyon View's title to the subject mobilehome, including executing a full reconveyance and quitclaim deed. These communications spanned several months, and the record does not reflect whether Lakeview or Quality responded.

         On July 14, 2016, Canyon View filed this action against Lakeview and Quality to quiet title (Code Civ. Proc., § 760.010 et seq.), seeking declaratory relief under the MRL (§ 798.61; Code Civ. Proc., § 1060), and removal of the cloud on title (§ 3412), and for relief under the unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.).

         Three months into the litigation with Canyon View, on August 17, 2016, Lakeview recorded a full reconveyance of the deed of trust and substitution of trustee, naming itself as the new trustee. Soon thereafter, on September 21, 2016, it recorded a quitclaim deed in favor of Canyon View. These documents disclaimed any and all interest Lakeview had in the mobilehome.

         On April 3, 2017, Canyon View and Lakeview filed a stipulation for judgment. The stipulated judgment entered by the court that same day provides that, as a result of Canyon View purchasing the mobilehome on lot 213 at the abandonment sale, Canyon View owned the home, and Lakeview had no lien thereon or interest therein. It further provided that Canyon View would have the right to file a motion for attorney fees and costs pursuant to section 798.85, and Lakeview would have a right to oppose such a motion.

         3. Case No. PC057199 against the BONY respondents (the BONY action)

         In October 2005, Dominique Reese and Donna Worthington-Reese purchased a mobilehome on lot 332 in Canyon View Estates. The Reeses obtained a loan secured by a deed of trust encumbering both the mobilehome on lot 332 and the Reeses' leasehold interest in lot 332 as well. That deed of trust was later assigned to BONY and serviced by BOA.

         The Reeses entered into a long-term lease with Canyon View for lot 332. In 2007, the Reeses breached their lease by failing to make payments. Canyon View issued the requisite notices to the Reeses and all lienholders, and no one cured the defaults under the lease.

         Canyon View initiated abandonment proceedings under the MRL and obtained a judgment of abandonment in April 2009. As required by the MRL, Canyon View provided notice to the Reeses and all lienholders of the abandonment proceedings and the resulting court-ordered public sale. Canyon View purchased the mobilehome on lot 332 at that sale on May 7, 2009. Under section 798.61, subdivision (e)(4), the sale extinguished all liens on and interests in the mobilehome. A grant deed conveying the mobilehome to Canyon View was recorded on February 23, 2010.

         Later on that same day, the trustee for the deed of trust recorded a notice of trustee sale, based on the Reeses having defaulted on their note. On March 19, 2010, the trustee recorded a notice of default and election to sell under the deed of trust. This notice claimed BONY held a lien on the subject mobilehome. The trustee held a foreclosure sale, and BONY purchased the mobilehome and leasehold interest on September 30, 2010; the trustee's deed upon sale was recorded on October 12, 2010. BONY never attempted to take possession of the home.

         In February and March of 2016, Canyon View sent letters to BONY and the trustee under the deed of trust, as well as counsel for BOA, demanding they remove the cloud on Canyon View's title to the mobilehome. Communications between the parties regarding these demands continued through June 2016.

         On July 22, 2016, Canyon View sued the BONY respondents to quiet title, seeking declaratory relief and removal of the cloud on title, and for relief under the UCL. Several months into litigation of the suit, in December 2016, BOA, as BONY's agent, recorded a notice of rescission of the trustee's deed to BONY, noting that the foreclosure sale resulting in the trustee's deed was “conducted in error.” In this document, BONY “rescind[s], cancel[s], and withdraw[s] [the] [t]rustee's [d]eed [u]pon [s]ale, ” but notes that the “[d]eed of [t]rust shall remain in force.”

         Several months after that, on May 3, 2017, the parties entered into a stipulation for judgment. The stipulated judgment entered by the court provided that, as a result of Canyon View purchasing the home at the court-ordered public sale, Canyon View owned the home, and the BONY respondents had no lien thereon or interest therein. Like the judgment in the Lakewood action, it provided that Canyon View had the right to seek, and the BONY respondents had the right to oppose, attorney fees and costs pursuant to section 798.85.

         4. Case No. PC057291 against the Ocwen respondents (the Ocwen action)

         In May 2008, Eileen Corp purchased a mobilehome permanently attached to lot 304 in Canyon View Estates, and entered into a long-term lease with Canyon View. To finance the purchase, Corp took out a loan secured by the home, and a deed of trust was recorded, identifying Assurity Financial Services LLC (Assurity) as the lender, Mortgage Electronic Registration Systems, Inc. (MERS) as the beneficiary, and Landsafe Title of California, Inc. (Landsafe) as the trustee.[9]

         On May 21, 2014, MERS, acting “as designated nominee for Assurity... beneficiary of the security instrument, ” executed an assignment, which purported to assign “all beneficial interest under a certain [d]eed of [t]rust” to Ocwen, but incorrectly identified “1st Choice Mortgage Equity Corporation” as the assignor (although MERS still signed the document). On November 5, 2014, a corrected notice of assignment was filed, in which MERS, ...


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