Guest v. Rose

Filed 9/24/07 Guest v. Rose CA2/8

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

APPEAL from a judgment of the Superior Court of Los Angeles County.

Barbara A. Meiers, Judge. Affirmed.

Michael A. Younge for Defendant and Appellant.

Duran & Flanagan, William J. Flanagan and Manuel Duran for Plaintiff and Respondent.

Defendant Andre Rose appeals from a judgment after court trial, awarding the late Vera Carr $56,000 damages and $32,175 attorney fees, under Civil Code section 1695.7 (undesignated section references are to that code), which concerns purchases of residences in foreclosure.^[1]Appellant contends that (1) he was not subject to the statutory requirements of section 1695 et seq. because he acquired Carrs home for use as his personal residence ( 1695.1, subd. (a)), (2) the damages awarded constituted unjust enrichment, and (3) he was not subject to joint liability for them. We find these contentions unmeritorious and affirm the judgment.

FACTS

In 1975, Carr acquired a home on South La Brea Avenue. In 2002, when she was nearly 80 years old and had suffered heart failure, stroke, lupus, and visual impairment, Carr went into default on her home loan, and the lender filed a notice of default. During the foreclosure period that followed, Carr was contacted by appellants codefendant, Jacques White, a real estate agent.^[2] Telling Carr she faced losing her home, White said he could help her obtain refinancing. He explained that Carr would have to sign over her property to another individual (plaintiff), who would qualify for a new loan, and would return title to her in six months to a year.

On a subsequent visit, White obtained $1,700 from Carr, ostensibly to open an escrow. At that time he also had her sign papers, stating that he didnt have the time to explain them. White also told Carr he had put her in bankruptcy, something she said was unnecessary because she had only one bill. Carr had the proceeding dismissed.

In March 2003, White had Carr enter into a real estate listing, with his firm as the broker, a purchase agreement and escrow instructions, and a residential lease after sale, between Carr as tenant and appellant as landlord. The purchase agreement failed in several respects to comply with the requirements of sections 1695.3 and 1695.5, governing form and content. Carr agreed to pay Whites firm a commission of four percent, later raised to six percent. She also signed an amended escrow instruction that directed payment of all of her proceeds of the sale to a contractor, Erne Construction (Erne), which appellant had selected.

After close of escrow, Carr made rental payments to appellant. She stopped doing so in August 2003. In 2004, appellant, now owner of the house, resolved to sell it, and engaged a realtor to that end.

Called by Carr at trial, appellant testified that in purchasing the property he obtained two loans against it, totaling $320,000. Appellant admitted he had retained Erne to do reconstruction work on the property. Erne was to be paid out of escrow, and a closing statement indicated $20,500 of Carrs proceeds as being so payable. Appellant later cancelled the transaction with Erne, because it couldnt obtain access to the premises from Carr. The $20,500 was refunded, to appellant.

Appellant further testified that he had intended to occupy the residence; he had so stated in the purchase agreement. After the closing, appellant asked Carr for the keys to the house, but she declined, telling him to see White. Appellant said he then procured the lease from Carr, for $1,200 per month, which she paid from June through August 2003. Thereafter, appellant commenced unlawful detainer proceedings against Carr.

In her first amended complaint, Carr sought to rescind the sale to appellant, first under section 39, regarding persons of unsound mind, and also under section 1695 et seq., which provide remedies regarding home equity purchasers, who acquire residences in foreclosure. Alleging that appellant had failed to provide her a contract in the form and substance the statutes required, Carr sought damages, exemplary damages, and attorney

fees, under section 1695.7.^[3] Against White, plaintiff invoked section 2945 et seq., which address foreclosure consultants. Carr alleged several violations of these statutes, with respect to the contract and prohibited acts, respectively under sections 2945.3 and 2945.4, and she again prayed damages, exemplary damages, and attorney fees under section 2945.6, a remedial statute similar to section 1695.7. The complaint included other causes of action, including quiet title and injunctive relief against appellants effort to evict Carr.

Carrs complaint was tried with appellants consolidated unlawful detainer, and in conjunction with the prove-up of Whites default. The trial court ruled in favor of Carr, and entered judgment awarding her $56,000 actual damages and $32,175 attorney fees, jointly and severally against appellant and White. Carr also was awarded $169,000 punitive damages, only against White. The judgment rescinded appellants deed to the property, and negated any transfer of it to appellant or White. Carr was awarded judgment in the unlawful detainer.

DISCUSSION

Appellants first contention is that he was not an equity purchaser, subject to section 1695 et seq., because he purchased Carrs home with an intent to reside in it. In this regard, section 1695.1, subdivision (a)(1) excludes from the definition of equity purchaser one who acquires a home in foreclosure For the purpose of using such property as a personal residence. Appellant relies principally on his testimony that he so intended, as well as references to that intent in some of the transactional documents.

The trial courts contrary finding must, of course, be judged under the substantial evidence rule. And there was sufficient evidence to support the courts evaluation of the question of intent to reside, in derogation of appellants claim. Most prominently, appellant leased the property back to Carr, in a lease that was dated contemporaneously with appellants purchase of it. The lease provided for a rent increase after one year. The trial court was not obligated to believe appellants claim that the lease had been backdated, from a point later in 2003, at which appellant decided to lease because Carr refused to relinquish possession. In fact, the lease was referred to in the listing agreement. Also significant, as the court observed, was that appellant refrained from seeking to oust Carr legally for over six months, and then did so on the premise of unpaid rent, not occupancy without right. Substantial evidence supports the determination that appellant was an equity purchaser.

In his reply brief, appellant for the first time raises another claim that section 1695 et seq. did not apply as a matter of law. He asserts that Carrs home was not a residence in foreclosure, because the home was in bankruptcy proceedings, not foreclosure. This contention is disqualified by its lateness. It also is incorrect. Section 1695.1, subdivision (b) defines residence in foreclosure as a residence against which there is an outstanding notice of default . . . . That was true of Carrs residence, regardless that she entered bankruptcy for a time.

Appellant next contends that the $56,000 damage award constituted a form of unjust enrichment. Not so. The court awarded these damages as compensation for loss of equity Carr underwent by reason of appellants transaction. The evidence showed that appellant encumbered the property for $320,000 in purchase money, whereas Carrs own mortgage indebtedness at the time of transfer was approximately $56,000 less than that. Appellants suggestion that the award should have been reduced by the value of rent that Carr did not pay is also unwarranted. First, appellant acknowledged that the rent amount effectively equaled other damages which the court did not award, namely the $20,500 of escrow proceeds that were paid first to Erne and later to appellant. Second, appellant did not raise any claim for a setoff for rent in the trial court.

Appellants final contention is that under section 1431.1 et seq. (Proposition 51), he should not have been adjudicated jointly liable with White for Carrs $56,000 loss. The short answer to this contention is that the cited statutes restrict joint liability only for non-economic damages. Contrary to appellants argument, the damages Carr suffered were economic. (See  1431.2, subd. (b).^[4]

DISPOSITION

The judgment is affirmed. Respondent Guest shall recover costs and attorney fees on appeal, pursuant to Civil Code section 1691.7, the fees to be determined by the superior court.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

COOPER, P.J.

We concur:

RUBIN, J.

FLIER, J.

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^[1] Respondent Victor Guest has been substituted for the late Ms. Carr, as her successor in interest under Code of Civil Procedure sections 377.30-377.32.

^[2] Carr obtained judgment by default against White. He is not a party to this appeal.

^[3] Section 1695.7 provides: An equity seller may bring an action for the recovery of damages or other equitable relief against an equity purchaser for a violation of any subdivision of Section 1695.6 or Section 1695.13. The equity seller shall recover actual damages plus reasonable attorneys fees and costs. In addition, the court may award exemplary damages or equitable relief, or both, if the court deems such award proper, but in any event shall award exemplary damages in an amount not less than three times the equity sellers actual damages for any violation of paragraph (3) of subdivision (b) of Section 1695.6 or Section 1695.13; or the court may award a civil penalty of up to two thousand five hundred dollars ($2,500), but it may not award both exemplary damages and a civil penalty. Any action brought pursuant to this section shall be commenced within four years after the date of the alleged violation.

^[4] (b)(1) For purposes of this section, the term economic damages means objectively verifiable monetary losses including medical expenses, loss of earnings, burial costs, loss of use of property, costs of repair or replacement, costs of obtaining substitute domestic services, loss of employment and loss of business or employment opportunities. [] (2) For the purposes of this section, the term non-economic damages means subjective, non-monetary losses including, but not limited to, pain, suffering, inconvenience, mental suffering, emotional distress, loss of society and companionship, loss of consortium, injury to reputation and humiliation.