Cal-Western Reconveyance v. Brown CA2/1

Filed 9/29/15 Cal-Western Reconveyance v. Brown CA2/1

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for

publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication

or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION ONE

CAL-WESTERN RECONVEYANCE B251840

CORPORATION, as Trustee, etc.,

(Los Angeles County

Plaintiff, Super. Ct. No. PS015025)

v.

RICHARD W. BROWN et al.,

Defendants and Appellants;

CHASE BANK USA, N.A.,

Defendant and Respondent.

APPEAL from an order of the Superior Court of Los Angeles County. Randy

Rhodes, Judge. Affirmed.

Randall A. Spencer for Defendants and Appellants.

McCarthy & Holthus, Melissa Robbins Coutts and Matthew B. Learned for

Defendant and Respondent.

_________________________________________

In this appeal appellants Richard and Diane Brown (the Browns) argue the trial

court lacked jurisdiction to accept a bank’s late claim as a junior lienholder to a portion of

surplus funds received after a trustee’s nonjudicial foreclosure sale and abused its

discretion in awarding the bank a portion of the surplus equal to its lien. We affirm.

BACKGROUND

In 2011, Citimortgage, the senior lienholder on the Browns’ property, foreclosed

on its lien. Cal-Western Reconveyance Corporation (CWRC) administered the

foreclosure sale as the trustee, which resulted in a surplus of $256,233.77 after it paid

Citimortgage’s senior lien. CWRC could not determine how to disburse the surplus

among Chase Bank USA, N.A. (Chase), the Browns, and other parties, and deposited the

funds with the superior court for the court to disburse the surplus. The court set a hearing

date and ordered the parties to file all claims to the surplus within 15 days of the hearing

date. The Browns timely filed a claim. Chase filed a claim late, two days before the

scheduled hearing. The court subsequently continued the hearing several times and did

not hear the case until more than two months after the hearing was originally scheduled.

Despite an objection by the Browns, the court accepted Chase’s claim and awarded Chase

its requested portion of the surplus. The court disbursed the remainder of the surplus to

the Browns. The Browns appealed.

DISCUSSION

The Browns contend the order awarding Chase a portion of the surplus should be

reversed because the trial court lacked jurisdiction to accept Chase’s late claim or, if the

court did have jurisdiction, it abused its discretion. We disagree and affirm.

A. The court had jurisdiction over Chase’s late claim.

The Browns argue the court did not have fundamental jurisdiction over Chase’s

late claim under Civil Code sections 2924j and 2924k.1 We disagree.

1 Undesignated statutory references are to the Civil Code.

2

We review a court’s statutory interpretation de novo. (County of Los Angeles v.

City of Los Angeles (2013) 214 Cal.App.4th 643, 650.) Under section 2924j, when a

trustee cannot determine how to disburse the surplus of a foreclosure sale, the trustee

deposits the surplus with the court and the court disburses the surplus. Subdivision (d)

mandates “the court shall consider all claims filed at least 15 days before the date on

which the hearing is scheduled by the court.” Section 2924j is otherwise silent regarding

the court’s consideration of claims. The California Supreme Court “has recognized a

general rule that ‘. . . requirements relating to the time within which an act must be done

are directory rather than mandatory or jurisdictional, unless a contrary intent is clearly

expressed.’” (People v. Williams (1999) 77 Cal.App.4th 436, 448.) The absence of

express negative language in the statute prohibiting the court from hearing claims outside

the 15-day period supports our interpretation that the court had the discretion to hear

claims outside the 15-day period. Nothing in the legislative history or in section 2924k’s

related language contradicts that interpretation. (Banc of America Leasing & Capital,

LLC v. 3 Arch Trustee Services, Inc. (2009) 180 Cal.App.4th 1090, 1104 [“‘a statute is

not to be read in isolation; it must be construed with related statutes and considered in the

context of the statutory framework as a whole’”].) Because a court has discretion to grant

relief “‘from failure to take various kinds of nonjurisdictional procedural steps,’” the

court had jurisdiction to hear Chase’s late claim. (Advanced Building Maintenance v.

State Comp. Ins. Fund (1996) 49 Cal.App.4th 1388, 1393.)

B. The court did not abuse its discretion in awarding Chase a portion of the

surplus.

The Browns contend even if the court had jurisdiction to consider Chase’s late

claim, it abused its discretion in awarding Chase a portion of the surplus and the matter

should be remanded for the court to make further findings. We disagree.

We review a court’s consideration of untimely filed papers for an abuse of

discretion. (Bozzi v. Nordstrom, Inc. (2010) 186 Cal.App.4th 755, 765–766.) “A

judgment or order of a lower court is presumed to be correct on appeal, and all

intendments and presumptions are indulged in favor of its correctness.” (In re Marriage

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of Arceneaux (1990) 51 Cal.3d 1130, 1133.) After a review of the evidence construing

all facts and implications in favor of the judgment, we find the court did not abuse its

discretion in equitably awarding Chase a portion of the surplus. Although Chase’s

diligence in executing its claim to the surplus was lacking, denying Chase’s claim due to

lateness would prevent Chase from satisfying its lien, resulting in a windfall to the

Browns. Section 2924k expressly creates a preference for the junior lienholder to be paid

before the homeowner. The court’s award to Chase is in accord with this statutory

preference and protects Chase’s substantive claim from defeat due to a procedural flaw.

(See Mann v. Cracchiolo (1985) 38 Cal.3d 18, 28–29 [“‘Rigid rule following is not

always consistent with a court’s function to see that justice is done’” and there is a

“‘strong policy favoring the disposition of cases on their merits’”].)

Equity also permits comparison of the parties’ conduct. Despite demanding

perfect procedural compliance from Chase, the Browns failed, several times, to comply

with procedure themselves.2 In light of this, it was not an abuse of discretion for the

court to overlook a procedural misstep by Chase, especially when the court subsequently

continued the hearing for reasons unrelated to Chase’s conduct, giving the Browns

adequate time to prepare a response. Considering the evidence, the court did not abuse

its discretion in considering Chase’s late claim.

2 CWRC accepted both the Browns’ and Chase’s procedurally deficient claims.

Although the matter passed to the court to decide once the petition was filed, it is of note

that the Browns were afforded procedural forgiveness at an earlier stage of the

proceeding. (See Wells Fargo Bank v. Neilsen (2009) 178 Cal.App.4th 602, 614.)

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DISPOSITION

The order awarding Chase Bank a portion of the surplus equal to its lien is

affirmed.

NOT TO BE PUBLISHED.

LUI, J.

We concur:

ROTHSCHILD, P. J.

CHANEY, J.

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