Filed 6/1/17 Tanner v. Keating CA5




NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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
FIFTH APPELLATE DISTRICT

CRAIG E. TANNER et al.,

Plaintiffs and Respondents,

v.

DORIS M. KEATING,

Defendant and Appellant.

F071491

(Super. Ct. No. CV283310)


OPINION

APPEAL from a judgment of the Superior Court of Kern County. David R. Lampe, Judge.
Ford Law AZ and Chris Ford for Defendant and Appellant.
Klein, DeNatale, Goldner, Cooper, Rosenlieb & Kimball, Catherine E. Bennett and Sebastien J. Bauge for Plaintiffs and Respondents.
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Respondents, Craig and Gina Tanner, entered into a contract with appellant, Doris Keating, to purchase Keating’s home. Being a short sale, the agreement was subject to lender approval.
The lender approved the short sale and the parties opened escrow. A few days before escrow was to close, Keating identified alleged “questions with chain of title” that would “probably delay closing.” Keating then froze the transaction and withdrew her consent to the proposed short sale.
The Tanners filed the underlying complaint seeking specific performance of their contract with Keating. Following a bench trial, the trial court entered judgment for the Tanners and ordered Keating to execute all documents necessary to close escrow.
Keating argues the trial court erred because (1) the parties did not mediate and arbitrate the dispute as required by the contract; (2) the lender’s withdrawal of short sale approval rendered the contract void and unenforceable; (3) the lender was a necessary party to the action; and (4) the contract was the product of undue influence and elder financial abuse.
Since specific performance is a discretionary remedy, we must consider whether the trial court abused its discretion in granting the Tanners relief. (Petersen v. Hartell (1985) 40 Cal.3d 102, 110.) Finding no abuse, we will affirm the judgment.
BACKGROUND
The parties executed a “Residential Purchase Agreement and Joint Escrow Instructions” (Purchase Agreement) dated April 11, 2014. The Purchase Agreement provided that the Tanners would buy a home on 40 acres of land in Frazier Park, California (Property), from Keating for $540,000. The mortgage on the Property was approximately $1.25 million. Thus, the sale was contingent on the lender, Select Portfolio Servicing, Inc. (SPS), consenting to the short sale. The parties based the purchase price on what SPS had approved for an earlier short sale to a third party that Keating had recently cancelled.
Because it is difficult to predict the time required to complete a short sale, the parties agreed that the Tanners would lease the Property from Keating until the sale closed. The Tanners moved into the Property in April 2014 under a one-year lease agreement.
On August 27, 2014, SPS approved the short sale subject to maximum closing costs, minimum net proceeds and Keating’s execution of a “Verifying Affidavit” and an “Affidavit of ‘Arm’s Length Transaction.’” SPS also required that the closing take place on or before October 17, 2014. SPS agreed that, upon satisfaction of all the terms of its approval, it would discharge the mortgage in its entirety and release the lien on the Property.
On October 8, 2014, Keating sent Gina Tanner a text message stating, “found questions with chain of title” and “have asked bank for clarification. Will probably delay closing.” That same day, Keating sent two letters to SPS that froze the transaction.
Keating’s position was that the transfer of her lien from Washington Mutual to Chase Bank violated federal law and she therefore questioned whether SPS could collect on the debt on behalf of Chase Bank. Keating’s allegation that Chase Bank improperly took over the lien on the Property from Washington Mutual is what Keating referred to as a “chain of title dispute.” However, Keating had already litigated this claim against Washington Mutual and Chase Bank in both Ventura and Kern Counties. In both actions, the court entered judgment against Keating and those judgments are final.
Responding to Keating’s October 8, 2014 text message, the Tanners sent Keating a letter dated October 10, 2014, demanding performance or mediation. The Tanners requested that Keating “[p]lease move forward with our targeted closing date or agree to mediate the issue immediately.” The parties agreed on a mediator and a date.
During this period, the title company attempted to explain to Keating why her “chain of title” concern was unfounded. By email sent on October 13, 2014, a title assistant told Keating that she was intertwining two unrelated issues, (1) proof of legal assignment/transfer of debt from Washington Mutual to Chase Bank; and (2) the close of the negotiated short sale of the property. The title assistant noted that a company’s acquisition and subsequent transfer of assets to the new entity is not a recorded matter. Further, the absence of a recorded document to establish an acquisition and/or merger neither invalidates the transfer nor relieves the debtor of the responsibility to pay the loan. Therefore, the title assistant explained, the absence of the debt assignment from Washington Mutual to Chase Bank in the title report was not a defect in title.
Both the escrow officer and the Tanners’ counsel also told Keating that there was no issue with title. Nevertheless, Keating continued to assert that she had “the right to raise a Federal legal issue regarding a major breach in the chain of title with the banks and servicers involved during the course of Escrow.”
By letter dated October 23, 2014, SPS agreed to extend its approval of the short sale to November 24, 2014.
Before the scheduled mediation, Keating requested that she be told “what it is you want to mediate.” Keating testified that she never received a response to her query. By email sent October 22, 2014 to the real estate broker and Gina Tanner regarding the selected mediator, Keating asked “But, just what is it you want me to do re ‘performance’? And what dispute do you want to ‘mediate?’” Keating then stated “If you can’t articulate to me, and try and resolve it, I am not going to waste time and money going to a mediation and getting blindsided.”
The Tanners filed the underlying complaint against Keating on October 28, 2014. The Tanners requested specific performance, a preliminary and permanent injunction, damages and attorney fees for breach of contract. The Tanners also filed an ex parte application for an order to show cause on a preliminary injunction and for a temporary restraining order against Keating.
On October 30, 2014, Keating withdrew her consent to the short sale and requested a loan modification from SPS. SPS then closed the short sale review and returned Keating’s account “to normal collection activity.”
Keating also faxed a letter to SPS stating that she would perjure herself if she signed either the verifying affidavit or arm’s length transaction affidavit. As to the verifying affidavit, Keating explained that she was aware of a previous chain of title dispute on the Property and was currently involved in a new one. Keating further claimed that Gina Tanner orally promised to give her a five-acre piece of the Property. Therefore, Keating explained, she could not affirm that there was no agreement that allowed her to regain ownership of the Property after the consummation of the sale as required by the arm’s length transaction affidavit.
On October 31, 2014, the trial court issued a temporary restraining order requiring Keating to “refrain from canceling, terminating, delaying, hindering or otherwise refusing to perform under” the Purchase Agreement. The court set an order to show cause hearing on the temporary restraining order and the requested preliminary injunction for November 7, 2014.
Keating filed a response to the order to show cause on November 5, 2014. Keating argued the court should deny the Tanners’ request for a “temporary injunction” because “the ‘short sale’ was canceled” on October 30, 2014, one day before the court issued the temporary restraining order. Keating further noted that the Purchase Agreement required the parties to mediate disputes.
The trial court heard arguments on the order to show cause at the November 7, 2014 hearing. The court enjoined Keating from canceling the escrow or taking acts in furtherance of the loan modification.
Keating then answered the complaint. Her answer noted that she had filed a cross-complaint for elder financial abuse and fraud and breach of the lease agreement.
The court tried the Tanners’ specific performance claim in January 2015. The court announced its tentative decision in the Tanners’ favor and thereafter issued a statement of decision. The trial court ordered Keating to execute all documents required to consummate the sale and deliver those documents to escrow. The trial court further found that mediation “would have been fruitless.”
On its own motion, the court severed Keating’s cross-complaint. Keating later dismissed that cross-complaint without prejudice.
DISCUSSION
1. The trial court did not err in failing to enforce the mediation and arbitration clauses.
The Purchase Agreement provided that a dispute is to be resolved through mediation and, if not settled in mediation, through binding arbitration. Specifically, the parties agreed to “mediate any dispute or claim arising between them out of this Agreement, or any resulting transaction, before resorting to arbitration or court action.” The Purchase Agreement further provided that a party is not entitled to recover attorney fees if that party either commences an action without first attempting to resolve the matter through mediation or refuses to mediate after a request has been made.
a. The record supports the trial court’s finding that mediation would have been “fruitless.”
As outlined above, Keating notified Gina Tanner approximately one week before escrow was scheduled to close, that she “found questions with chain of title” that would probably “delay closing.” In response, the Tanners sent Keating a demand for performance or mediation. The parties agreed on a mediator and a date.
In the meantime, others, including the title company and the escrow officer, explained to Keating multiple times why her “chain of title” concern was unfounded. Nevertheless, Keating refused to accept that her claimed title defect did not exist.
Although Keating agreed to a mediator, she asserted she did not know what the Tanners wanted to mediate and that her inquiries to that effect went unanswered. Keating then took the position that, if the Tanners could not articulate what they wanted, she was “not going to waste time and money going to a mediation and getting blindsided.”
The trial court acknowledged that Keating raised “failure to mitigate” as an affirmative defense and that the contract called for mediation. The court found that the Tanners demanded mediation but that “the response by [Keating] indicates that mediation would have been fruitless.”
According to Keating, the trial court’s conclusion that the mediation process would have been “fruitless” has no support in the record. Therefore, Keating argues, the trial court erred when it did not enforce the mediation provision.
In reviewing the sufficiency of the evidence, we must resolve all conflicts in favor of the respondent and give the respondent the benefit of every reasonable inference. Although the evidence must be reasonable, credible and of solid value, it may consist of inferences. (Kuhn v. Department of General Services (1994) 22 Cal.App.4th 1627, 1632-1633.) Nevertheless, “such inferences must be ‘a product of logic and reason’ and ‘must rest on the evidence’ [citation] .…” (Id. at p. 1633.) However, when confronted with conflicting inferences, this court cannot substitute its own deductions for those of the trial court. (Wilmot v. Commission on Professional Competence (1998) 64 Cal.App.4th 1130, 1139.)
Contrary to Keating’s position, substantial evidence supports the trial court’s finding that mediation would have been “fruitless.” The only issue before the parties was whether Keating would move forward with the sale. Gina Tanner set this issue out when she demanded that Keating “[p]lease move forward with our targeted closing date or agree to mediate the issue immediately.” Thus, it is reasonable to infer that Keating’s claim that she did not know what the Tanners wanted to mediate was insincere. Keating also opined that mediation would be a “waste [of] time and money.” This response indicates Keating did not intend to carry through with the mediation. In effect, Keating was refusing to mediate.
Further, in the face of expert explanations on the state of the title to the Property, Keating refused to accept that her asserted title defect was nonexistent. As noted above, Keating based her position on her claim that the transfer of the lien from Washington Mutual to Chase Bank violated federal law, a belief Keating continued to hold on to despite having litigated and lost twice. Again, these circumstances support inferring that Keating did not intend to settle through mediation. In fact, at trial Keating testified she believed it was possible she could “end up with legal title to this property without any lien whatsoever.” According to Keating, she was “working all the angles” and still thought she could get a “very favorable loan modification.”
b. Keating waived her contractual right to arbitrate the dispute.
In her opening brief, Keating states that the trial court should also have ordered the parties to arbitrate the matter following a mediation. In its statement of decision, the trial court noted that the Purchase Agreement required that all disputes “‘in law or equity’ be resolved by binding arbitration.” The court then concluded Keating waived the issue because she did not raise it before the trial.
A party may waive the contractual right to arbitration. (St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1195.) Being as Keating never requested arbitration before trial, the trial court properly found Keating waived her right to arbitrate. Moreover, because Keating failed to raise the parties’ agreement to arbitrate at any time in the trial court, we will not consider this issue for the first time on appeal. (Santantonio v. Westinghouse Broadcasting Co. (1994) 25 Cal.App.4th 102, 113.)
c. The mediation provision does not bar the Tanners from recovering attorney fees.
The trial court awarded the Tanners their costs of suit. Keating argues that, to the extent those costs include attorney fees, recovery is barred because the Tanners failed to mediate the dispute.
As noted above, the Purchase Agreement provided that a party, otherwise entitled to attorney fees, is not entitled to recover such fees if that party commences an action without first attempting to resolve the matter through mediation or refuses a request to mediate. Such agreements conditioning the right to attorney fees on participation in mediation are enforceable. (Frei v. Davey (2004) 124 Cal.App.4th 1506, 1512 (Frei).)
The appellate court reviews an award of attorney fees and costs for abuse of discretion. Thus, the trial court’s decision to award attorney fees will not be disturbed unless there is no substantial evidence to support the trial court’s findings or there has been a miscarriage of justice. (Frei, supra, 124 Cal.App.4th at p. 1512.)
Here, the Tanners attempted to mediate their dispute with Keating before filing suit. The Tanners sent Keating a mediation demand setting forth the issue and then worked with Keating to choose a mediator and a date.
Keating argues the Tanners abandoned mediation when they filed their lawsuit while Keating was working in good faith to move forward with the mediation and thus, the Tanners “refused” to mediate. Therefore, Keating asserts, the Tanners cannot recover attorney fees.
However, as discussed above, it is reasonable to infer that the failure to go to mediation was due to Keating’s behavior. Keating responded to Gina Tanner’s specific demand to mediate the issue of moving forward with the targeted closing date by claiming she did not understand what issue the Tanners wanted to mediate and informing the Tanners that she was “not going to waste time and money going to a mediation and getting blindsided.” Further, Keating took unfounded positions regarding “title issues” and refused to accept the expert opinions that no such issues existed. In addition, Keating unrealistically believed that she could end up owning the property without any lien or could negotiate a very favorable loan modification. Thus, substantial evidence supports the trial court’s finding that mediation would have been fruitless. Therefore, the mediation provision does not preclude the Tanners’ recovery of attorney fees.
2. SPS’s withdrawal of the short sale approval did not preclude a specific performance order.
Keating argues that the Purchase Agreement was void or unenforceable because SPS withdrew its approval of the short sale. According to Keating, without the short sale approval, it became impossible to perform the single object of the Purchase Agreement, i.e., the sale of the Property. Keating further contends that the Purchase Agreement lacked an essential term once the short sale approval was withdrawn and thus was void for vagueness. Therefore, Keating asserts, the trial court had no legal foundation for its specific performance order.
When the object of a contract is “wholly impossible of performance, or so vaguely expressed as to be wholly unascertainable,” the contract is void. (Civ. Code, § 1598.) A contract is also impossible to perform when it is not practicable. Such impracticability does not require literal impossibility. Rather, performance is impracticable when it requires excessive and unreasonable expense. (Habitat Trust for Wildlife, Inc. v. City of Rancho Cucamonga (2009) 175 Cal.App.4th 1306, 1336.)
Further, a court cannot specifically enforce an agreement to procure the consent of a third person. (Civ. Code, § 3390, subd. (d).) However, a land sale contract in which a third party’s approval is required as a condition precedent to the close of escrow is specifically enforceable. (Bleecher v. Conte (1981) 29 Cal.3d 345, 354.)
Here, the parties agreed that the Purchase Agreement was contingent on obtaining the lender’s consent to the short sale. Further, Keating promised to “reasonably cooperate” with the existing lender in the short sale process. Keating and the Tanners acknowledged that the lender was not obligated to give consent to the short sale and that Keating did “not have control over whether Short Sale Lenders will consent to a short sale, or control over any act, omission, or decision by any Short Sale Lender in the short sale process.”
Thus, SPS’s withdrawal of the short sale approval did not render the Purchase Agreement impossible to perform or uncertain. Rather, the contract merely required Keating to cooperate with SPS to obtain consent to the short sale. This is what the trial court ordered Keating to do. The judgment directs Keating to execute all documents necessary to close escrow and to request and consent to the short sale. Keating must also withdraw her non-consent to the short sale and request for loan modification.
Moreover, Keating did not agree to procure SPS’s consent. Keating merely promised to cooperate with SPS to acquire consent to the short sale. Further, the Tanners acknowledged that SPS was not obligated to consent. Therefore, the trial court could properly order specific performance of the Purchase Agreement. The court was not ordering Keating to close escrow without a short sale consent. Rather, the court ordered Keating to perform under the Purchase Agreement as she originally promised.
3. SPS was not an indispensable party.
Keating argues SPS was an indispensable party because, without SPS, the trial court could not grant complete relief to the Tanners. Keating notes that the short sale was contingent on SPS’s approval and that the sale cannot go forward without such approval. Therefore, Keating contends, the absence of SPS subjects the action to dismissal.
Code of Civil Procedure section 389 governs joinder of parties. (Dreamweaver Andalusians, LLC v. Prudential Ins. Co. of America (2015) 234 Cal.App.4th 1168, 1173 (Dreamweaver).) One reason to join a person in a lawsuit is if “in his absence complete relief cannot be accorded among those already parties.” (Code Civ. Proc., § 389, subd. (a).) Such a person is sometimes referred to as a “necessary party.” (Dreamweaver, supra, 234 Cal.App.4th at p. 1173.)
A determination that a person is a necessary party is the predicate for determining whether that party is an indispensable party. (TG Oceanside, L.P. v. City of Oceanside (2007) 156 Cal.App.4th 1355, 1365.) If a necessary party cannot be joined, “the court shall determine whether in equity and good conscience the action should proceed among the parties before it, or should be dismissed without prejudice, the absent person being thus regarded as indispensable.” (Code Civ. Proc., § 389, subd. (b).) Thus, before reaching the issue of SPS’s indispensability, we must first determine whether, in SPS’s absence, complete relief can be accorded among the Tanners and Keating. In other words, is SPS a necessary party?
A party is necessary to provide complete relief only when that party’s nonjoinder prevents the court from rendering complete justice among those already joined. (Countrywide Home Loans, Inc. v. Superior Court (1999) 69 Cal.App.4th 785, 793-794.) The effect of the decision on the absent party is immaterial. Further, the fact that the absent party may later frustrate the outcome does not make the absentee necessary for complete relief. (Id. at p. 794.)
Here, SPS’s absence does not preclude the Tanners from obtaining the requested relief. The Tanners sought specific performance of the Purchase Agreement. The trial court granted this relief when it ordered Keating to “request and consent to short sale,” withdraw her “non-consent to short sale,” and withdraw her “[r]equest for loan modification.” The court ordered Keating to execute all documents necessary to close escrow. The court did not order the close of escrow.
When Keating and the Tanners executed the Purchase Agreement, they recognized that they had no control over whether SPS would consent to a short sale. The trial court’s judgment did not require SPS to take any action. The risk that SPS would not approve the short sale is a risk both parties agreed to when they executed the Purchase Agreement and it remains a risk through the specific performance of that contract. Therefore, SPS was not an indispensable party.
4. Substantial evidence supports the trial court’s finding that Keating failed to prove lack of capacity or undue influence.
In her answer, Keating asserted unclean hands as an affirmative defense. Keating alleged the Tanners “committed Elder Financial Abuse … by making promises they did not keep to Elder Defendant, using ‘undue influence’ and coercing Elder Defendant into signing a Real Estate Sales Contract with a ‘Short Sale’ addendum in which the Elder Defendant was Deprived of any Property Right .…” The trial court ruled that Keating “failed to meet her burden in defense that there has been any lack of capacity, undue influence, or any collateral agreement outside the writings in contravention of the contract integration clause.”
California law proscribes financial abuse of an “elder,” i.e., a person age 65 or older. (Bounds v. Superior Court (2014) 229 Cal.App.4th 468, 478 (Bounds).) Such abuse can occur when a person takes, appropriates, or obtains an elder’s real or personal property for a wrongful use or by undue influence. (Ibid.)
“A taking is for a ‘wrongful use’ when a party ‘knew or should have known that [its] conduct is likely to be harmful to the elder … adult.’” (Bounds, supra, 229 Cal.App.4th at p. 478.) Undue influence consists of using confidence or authority to gain an unfair advantage over another, taking an unfair advantage of another’s weakness of mind, or taking a grossly oppressive and unfair advantage of another’s necessities or distress. (Civ. Code, § 1575.) To cancel a contract on the ground of incapacity, the test is whether the party was mentally competent to deal with the subject with a full understanding of his or her rights. (Philbrook v. Howard (1958) 157 Cal.App.2d 210, 214.)
Keating asserts that Gina Tanner conducted a lengthy campaign to gain Keating’s trust. According to Keating, Gina Tanner provided her California State Bar license number and seemed to bring Keating in “under her wing,” even going so far as to invite Keating to live in her own modular home on five acres of the 40-acre Property after the sale.
Keating further contends that, due to having suffered a serious horse-riding accident, she was “greatly incapacitated” by the potent pain-relief medication she was required to take. Keating additionally argues that when she signed the Purchase Agreement at her home, the presence of Gina Tanner’s “creepy” houseguest and five young children created “bedlam” and “rattled and disoriented” Keating.
Contrary to Keating’s position, substantial evidence supports the trial court’s conclusion that Keating did not lack capacity and the Tanners did not exert undue influence. Before Keating signed the Purchase Agreement, Gina Tanner, her children and her houseguest went outside leaving Keating alone with the real estate agent. Gina Tanner did not return to Keating’s house until asked to do so.
The real estate agent testified that she spent about an hour alone with Keating going over the Purchase Agreement. The agent read every line of the transfer disclosure and the seller property questionnaire to Keating at Keating’s request and answered Keating’s questions. Regarding the short sale addendum, Keating told the agent she was familiar with the document and that she had previously signed a similar document. According to the real estate agent, Keating was sharp and lucid and did not show any signs of confusion or incoherency. The agent saw no indication that Keating did not understand what she was signing. Thus, the record supports the trial court’s conclusion that Keating did not demonstrate she lacked capacity to sign the Purchase Agreement.
As evidence of the Tanners exerting undue influence, Keating relies on the terms of the sale. Keating argues she only agreed to the deal because she was under the influence of the “extremely appealing” Gina Tanner. Keating questions why she would otherwise agree to a sale that resulted in “zero” benefit to her unless she was able to retain five acres for her own use. Keating also claims she gave up other loss-mitigation options that would have allowed her to keep the Property.
Keating’s argument is disingenuous. The benefit to Keating was the forgiveness of over $700,000 in debt secured by the Property. This is far more than “zero.”
Further, the alleged “loss-mitigation options” Keating gave up were illusory. Keating believed she could challenge SPS’s ability to collect on the debt based on her claim that the transfer of her lien from Washington Mutual to Chase Bank violated federal law. However, she had already litigated that claim twice and had lost. Keating also hoped she could get a “favorable loan modification” out of the “national settlement for billions of dollars” to take care of “predatory lending.” However, there is no evidence that Keating was a victim of such “predatory lending.” Moreover, Keating was in foreclosure. This indicates that any previous attempts to modify the loan had been unsuccessful.
Moreover, the earlier cancelled short sale demonstrates the Tanners did not exert undue influence on Keating. Two days before the Tanners saw the home’s interior, Keating terminated another short sale claiming the previous buyers wanted her to do illegal things. Thus, before the Tanners had any contact with Keating, her intent was to sell the Property in a short sale.
DISPOSITION
The judgment is affirmed. Costs on appeal are awarded to respondents.



LEVY, J.
WE CONCUR:



HILL, P.J.



GOMES, J.