Legal Heritage v. Bynum

Filed 6/16/06 Legal Heritage v. Bynum CA4/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION TWO

APPEAL from the Superior Court of San Bernardino County. Frank Gafkowski, Jr., Judge. (Retired Judge of the Mun. Ct. for the Los Angeles Jud. Dist. assigned by the Chief Justice pursuant to art. VI, § 6 of the Cal. Const.) Affirmed.

Bynum & Williams, Glenn A. Williams and Lawrence R. Bynum for Defendant and Appellant.

Blankenship & Associates and Mark I. Blankenship for Plaintiffs and

Respondents.

Defendant and appellant Lawrence R. Bynum appeals from a trial court order denying his special motion to strike the plaintiffs' complaint under the SLAPP statute^[1] (anti-SLAPP motion).

This action arises from defendants Michael Street, MBS Investments, Street, Inc. (Street) and Lawrence Bynum (collectively, defendants) refusing to provide plaintiffs Legal Heritage, Ltd. and H.R. Ronneburg (plaintiffs) with a payoff demand notice stating the amount Legal Heritage owed on Street's first trust deed. Legal Heritage owns the underlying real property. Ronneburg holds a subordinate trust deed. Bynum is Street's attorney in this matter.

Plaintiffs wish to pay off the first trust deed to avoid foreclosure on the property but have been prevented from doing so because defendants have refused to tell plaintiffs how much is owed on the first trust deed. As a consequence, plaintiffs filed this action against defendants, seeking damages and equitable relief. In response, Bynum filed an anti-SLAPP motion, under Code of Civil Procedure section 425.16,^[2] to strike plaintiffs' complaint. The lower court denied Bynum's motion, and Bynum appeals the ruling.^[3]

Bynum contends the trial court should have granted his anti-SLAPP motion because the challenged causes of action against him arose from protected activity under the SLAPP statute. We conclude this action is not subject to the SLAPP statute. We also reject plaintiffs' request for sanctions under section 907 for filing a frivolous appeal. The judgment is affirmed.

1. Factual and Procedural Background

Plaintiffs' verified complaint, which is the subject of Bynum's anti-SLAPP motion, contains the following allegations. Plaintiff Legal Heritage, Ltd. holds legal title to the real property which is the subject of this lawsuit. Initially, the Department of Housing and Urban Development (HUD) owned the property. HUD transferred ownership in the property to Carl Dahlgren. Legal Heritage Trust acquired the property from Carl Dahlgren, and then transferred ownership to Legal Heritage, Ltd. Plaintiff H.R. Ronneburg, a broker with Spectrum Real Estate, acting on behalf of Dahlgren, currently holds a junior lien on the property.

On October 1, 2004, Bynum, on behalf of Street, filed and recorded against the property a notice of default and election to sell under Street's deed of trust. According to the notice of default, Street, as trustee and beneficiary, holds a first deed of trust in the amount of at least $58,000 on the property. Plaintiffs believe the note secured by the $58,000 deed of trust does not exist.

As a consequence of the notice of default, in October 2004, Dahlgren, who owned the property at the time, listed the property with Ronneburg of Spectrum Real Estate for $170,000. Century 21 found a qualified buyer willing to purchase the property for the listing price. Escrow was opened at Chicago Title Escrow. Chicago Title Co. sent demands for payoff to the beneficiaries of record, which included defendants.

On October 29, 2004, in response to Chicago Title Co.'s demand, Michael Street faxed Chicago Title a letter stating that there existed forged property title documents and that all inquiries and notices should be addressed to his attorney, Bynum. Bynum allegedly participated in and conspired with the other defendants in attempting to wrongfully foreclose on the property.

By letter dated November 3, 2004, Ronneburg requested Bynum to send Chicago Title Escrow a payoff demand, stating the amount to be paid off on the first trust deed. Due to the delay in funding the loan, the buyer was concerned plaintiffs had changed their minds concerning selling and the lender wanted to know why it could not fund the buyer's loan. Ronneburg requested the payoff demand as soon as possible.

By letter dated November 4, 2004, to Ronneburg, Bynum stated that he represented the Street and that his client feared the proposed sale was an improper attempt to avoid paying his clients money due. His clients believed Dahlgren was orchestrating the sale of the property to obtain the equity in the property without paying the agreed upon share for the subject property and other investments. Bynum's clients were thus investigating the chain of title and other events to determine whether the transaction was legitimate. Bynum further acknowledged his clients had 21 days to respond to the payoff demand and would do so in a timely manner.

In response, Ronneburg sent a letter to Bynum, dated November 9, 2004, denying any impropriety in the sales transaction and reprimanded Bynum for maligning the real estate firms, Spectrum and Century 21, which were involved in the transaction. Ronneburg explained that Dahlgren wanted to sell the property to avoid losing his property through foreclosure on Street's trust deed. Ronneburg urged Bynum to provide a payoff demand so Dahlgren could pay off Street's trust deed and complete the sale.

Despite Ronneburg's persistent attempts to obtain a payoff demand and copy of the trust, Bynum continued to insist upon receiving proof plaintiffs had an interest in the property before providing them with a payoff demand. After the statutory 21-day period to respond to plaintiffs' request for a payoff demand expired, the loan fell through between the buyer and lender, the buyer was forced to cancel escrow, and Dahlgren was unable to sell the property to the buyer. In an attempt to mitigate the loss, Dahlgren transferred the property for consideration to Legal Heritage Trust, which in turn transferred the property to Legal Heritage, Ltd.

Meanwhile, defendants secretly scheduled a nonjudicial foreclosure sale of the property on January 27, 2005. Plaintiffs discovered the foreclosure sale and circumvented the sale by handing out notices to prospective buyers and defendants stating that the sale was invalid for failure to give notice of the sale to the trustor and junior lien holder and for failure to provide a copy of the note showing the true amount due.

After the unsuccessful foreclosure sale, Blair Morton, trustee of Legal Heritage Trust and president of Legal Heritage, Ltd., by letter dated January 29, 2005, requested Bynum to send Ronneburg notice of the payoff amount so Legal Heritage could pay off the first trust deed.

On January 31, 2005, Bynum sent Morton a letter stating that Legal Heritage's interest in the property was questionable. Bynum provided a chain-of-title chronology and noted the chain-of-title indicated Dahlgren did not have an interest in the property. Thus Dahlgren could not transfer the property to Legal Heritage. Bynum said Ronneburg should be able to find evidence of a promissory note and a copy of the payment to Dahlgren, if it existed, and again demanded proof plaintiffs were â€