Filed 4/7/22 City of Fontana v. U.S. Bank, N.A. CA4/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FOURTH APPELLATE DISTRICT

DIVISION TWO

APPEAL from the Superior Court of San Bernardino County. Lynn M. Poncin, Judge. Affirmed.

Reed Smith, Kasey J. Curtis, Charles P. Hyun; Holland & Knight and Zachary C. Frampton for Defendant and Appellant.

Silver & Wright, Curtis R. Wright and Rene L. Farjeat for Plaintiff and Respondent.

Griswold Law, Richardson C. Griswold and Neil R. Sheaffer for Movant and Respondent.

Reed Smith, Kasey J. Curtis, Charles P. Hyun; Holland & Knight and Zachary C. Frampton for Bay Area Receivership Group as Amicus Curiae on behalf of Plaintiff and Respondent City of Fontana.

The house of Romualdo Rodríguez and Rosa Rodríguez (collectively, the Rodríguezes) was in a state of disrepair. Defendant and appellant U.S. Bank (the Bank) is the trustee for the deed of trust on the Rodríguezes’ house (the House). Plaintiff and respondent, the City of Fontana (the City) sent the Rodríguezes and the Bank a notice and order to repair or abate, but they failed to repair the House. On March 5, 2018, the trial court appointed a receiver for the House, movant and respondent Richardson C. Griswold (Griswold). On June 29, 2018, the trial court authorized the receiver to hire a real estate agent to list the House for sale in as-is condition. The Bank appealed the June 29, 2018, order to this court. We dismissed the appeal because an order authorizing the hiring of a real estate agent is not an appealable order. (City of Fontana v. U.S. Bank (Nov. 19, 2019, E070909) [nonpub. opn.].)

On July 6, 2020, the trial court approved the sale of the House. On August 5, 2020, the Bank appealed that ruling, which is case No. E075481 herein. On November 24, 2020, the trial court ordered the distribution of the sale proceeds in the following order of priority: (1st) the receiver’s certificate; (2nd) the receiver’s fees and costs; (3rd) the City’s attorney fees and costs; and (4th) the Bank’s lien. The Bank has also appealed the November 24 ruling, which is case No. E076228 herein. We consolidated the two appellate cases for purposes of briefing, oral argument, and decision.[1]

On appeal, the Bank contends that the trial court lacked authority to subordinate the Bank’s lien. Additionally, the Bank asserts the subordination of its lien is an unconstitutional taking. We affirm the orders.

FACTUAL AND PROCEDURAL HISTORY

The House, which is located in the City, first came to the City’s attention in October 2014, due to “neighbor and resident complaints about it including illegal structures at the [House], mechanic work being done on the property without permits or plans, an empty pool with no equipment, cockroach issues, and accumulation of a large amount of garbage and other debris.” The House had an “unpermitted living unit in the main residence and in the garage. The unpermitted living unit in the main residence also contain[ed] an unpermitted kitchen, bedroom, and bathroom. The garage conversion also ha[d] a bathroom. The [House] ha[d] routinely been rented out and occupied by individuals.” Some of the problems at the House included the garage ceiling buckling and being at risk of collapsing; the interior walls needing replacement due to being dilapidated; and exposed electrical wiring.

In October 2014, a notice of the violations was hand delivered to Rosa Rodríguez. Following inspections, more notices of violations were given to the Rodríguezes in November 2014, December 2014, May 2015, January 2016, and August 2016. A preprinted warning at the top of the August 2016 notice read, “Administration costs have now started to accrue and may be assessed as a tax lien if not paid.” A handwritten note, toward the bottom of the August 2016 notice reads, “A lien has been placed against the property & an up-to-date bill will be prepared.”

On March 2, 2017, the City sent an order to repair or abate to the Rodríguezes and the Bank. The notice reflected that the House was inspected in October 2016 and was found to “pose a substantial danger to the health, safety, and general welfare of the occupants, the surrounding community, and the public.” The notice provided an extensive list of the problems at the House, including: (1) an unpermitted subdivision of the main residence; (2) an illegal garage conversion; (3) structural problems in the garage ceiling; (4) dilapidated interior walls; and (5) exposed electrical wiring.

The notice continued, “Therefore, pursuant to H&S section 17980.6, you are hereby ordered to repair or abate all code violations on the Nuisance Property, including, but not limited to, all unlawful conditions identified herein. Work to abate these unlawful conditions must begin within 10 days and must be completed within 30 days (“Compliance Deadline”) or you will be subject to further legal action, potentially including receivership.”

The repairs were not made. On May 3, 2017, the City filed a nuisance and receivership petition against the Rodríguezes and the Bank. In the petition, the City detailed the problems with the House and the multiple notices of violation that had been given to the Rodríguezes since October 2014. In the petition, the City further alleged that the citations given to the Rodríguezes failed to result in repairs. On May 23, 2017, the Bank’s default was entered.[2]

On December 20, 2017, the City moved for a receiver to be appointed. In the notice of motion, the City asserted that the notice and order of abatement had been recorded, and a “3 Day Notice was provided to all Respondents as required by statute prior to the filing of this Action.” In its motion, the City asserted a receiver was necessary because the House “remains a structural and fire hazard, poses significant sanitation issues, and overall, is a public nuisance.” The City further requested that the “receiver be authorized to fund the receivership estate with first priority liens used to pay property management and maintenance expenses, rehabilitation costs, the receiver’s fees, and the City’s costs, expenses, and attorneys’ fees.”

Despite having defaulted, on January 11, 2018, the Bank filed an opposition to the City’s request for the appointment of a receiver. In the opposition, the Bank “object[ed] to [the] City’s request to establish a super-priority lien regarding its costs, fees and receivership certificates unless and until the Court determines that any work proposed by [the] City or the (ultimately appointed) receiver is, in fact, necessary to remediate property code violations and that the Receiver has satisfied his fiduciary obligations to the receivership estate.”

On January 23, 2018, the Bank moved to set aside its default. In its motion, the Bank explained that it had received the May 2017 petition concerning the alleged code violations. The Bank asserted that its attorney, Preston K. Ascherin (Ascherin), spoke with the City’s attorney, Valerie Escalante Troesh (Troesh).[3] Ascherin understood that the City would not try to “obtain direct relief against [the] Bank.” “Ascherin regularly reached out to [Troesh] during the summer and fall of 2017 for updates on the status of the abatement efforts.” Troesh informed Ascherin “that little progress had been made.” Ascherin understood that to mean “the City would take no action on its Petition” because some attempt to resolve the code violations was being made by the Rodríguezes. Therefore, the Bank did not oppose the petition or previously seek relief from default.

The City filed Troesh’s declaration. Troesh declared that Ascherin had been communicating with her via telephone and email since June 2017. Troesh “proposed to [Ascherin] that if [the] Bank was willing to agree to the appointment of a receiver and subordinate its lien on the [House] in favor of the receivership via stipulation and court order, the City would be willing to dismiss it from the action.” The Bank asked for the costs of the receivership, which Troesh said the City could not provide because such an estimate would require the receiver to inspect the House. Ascherin continued to “reach out to [Troesh] asking for . . . update[s] on whether [the Rodríguezes] had done repairs.”

On February 22, 2018, the trial court granted the Bank relief from default. On March 5, 2018, the trial court found the House constituted a public nuisance and that “[t]he building violations [at the House] are so extensive and of such a nature that the health and safety of the occupants and the public is substantially endangered.” Further, the court found that the City gave the Bank a reasonable time to rehabilitate the House, and the Bank failed to comply with the notice and order of abatement.

The court appointed a receiver, Griswold. The court ordered, “Court Receiver may borrow funds as necessary to pay for the rehabilitation of the Nuisance Property and to pay the costs and debts of the receivership estate. All funds borrowed by Court Receiver on behalf of the receivership estate shall be entitled to become first-priority liens against the [House] superseding all other interests subject to this Receivership Order.” The order further provided, “Court Receiver shall reimburse the City out of the receivership estate for all the City’s reasonable inspection costs, investigation costs, enforcement costs, court costs, administrative fines, and attorney’s fees incurred related to this Action.”

In May 2018, Griswold recommended the House be sold in as-in condition for approximately $225,000 because he did not believe he could obtain the funding necessary to repair the House. The buyer of the House would then be obligated to correct the code violations. Griswold informed the court that the County of San Bernardino held a $125,000 judgment lien against the House. Griswold asserted that the sale had the potential to “satisfy the receivership lien, the non-subordinated judgment held by the County of San Bernardino, and the City[’s] . . . attorney fees and costs.” Any remaining funds would be disbursed to the “Bank to partially satisfy its existing private mortgage lien.”

The Bank opposed Griswold’s plan asserting: (1) the Bank’s “lien has priority” over Griswold’s fees and the City’s attorney fees and costs as a “senior lien” under the “first in time, first in right policy”; (2) the City’s attorney fees are not a receivership cost; and (3) Griswold failed to obtain competitive construction bids. In Griswold’s reply he asserted that the “Bank’s Response appears to be an attempt to re-litigate issues of lien priority that were already briefed, argued and considered at the receivership appointment hearing.” On June 29, 2018, the trial court approved Griswold’s plan and authorized him to hire a real estate agent to list the House for sale in as-is condition.

The Bank appealed the June 29, 2018, order to this court. In an unpublished opinion, filed on November 19, 2019, this court dismissed the appeal because an order authorizing a receiver to hire a real estate agent to list a home for sale is not an appealable order.

On March 31, 2020, the House was in escrow for an all-cash purchase of $290,000; however, at that time, the courts were closed due to the pandemic, so the court could not approve the sale. On June 12, 2020, Griswold applied ex parte for approval to sell the House. Griswold asserted the matter was urgent because the buyer might cancel the escrow due to the court’s pandemic closures causing delays with the escrow. The proceeds of the sale would be $242,331.47. The receivership fees were $44,955.82. The City’s attorney fees and costs were $118,918.54. The County of San Bernardino’s lien was $133,796.74. The amount due on the Bank’s loan was approximately $360,000. Griswold explained that the receivership fees would be paid through the escrow.

In opposition, the Bank characterized Griswold’s plan as “lien stripping,” and asserted that the “[l]aw does not permit lien stripping” and that lien stripping is an unconstitutional taking. The Bank further contended that the law did not permit “the City’s fees and costs to be charged to the Receivership estate and thus paid out of [the] Bank’s lien.”

In response to Griswold’s application, the City requested that the order approving the sale of the House also require that the City’s costs and fees be paid through escrow. The City asserted the court had previously ordered that the City be reimbursed through the receivership estate, and that the Health and Safety Code, the City’s Municipal Code, and equity requires such payment terms. The City contended that it litigated for the appointment of the receiver, so equity requires that the City be reimbursed at the same time as the receiver.

In opposition, the Bank asserted the City could not seek priority of its payment in the City’s response to Griswold’s ex parte application. The Bank contended that the priority of payments should be decided following a noticed motion after termination of the receivership. Further, the Bank asserted the court’s previous order about the City being reimbursed did not establish that the City’s costs and fees had priority over the Bank’s lien.

On July 6, 2020, the trial court approved the sale of the House. The court ordered that the net sale proceeds “be distributed to the Receiver and held in the receivership trust account pending further orders of the Court.” Further, the court ordered the lien of the receivership certificate “be stripped from the Property and transferred as a lien to the funds held by the Receiver.” The court also ordered that the Bank’s lien be stripped from the House “and transferred as a lien to the funds held by the Receiver.”

On August 10, 2020, the Bank filed a brief, in the trial court, concerning distribution of the sale proceeds, which totaled $267,255.89, after the “payment of incidental escrow fees.” The Bank asserted there was no legal basis for Griswold and the City to take priority over the Bank. The Bank asserted its mortgage lien totaled $465,762.51. The Bank contended the law requires that, when distributing sale proceeds, priority goes to lienholders, such as the Bank, and then any remainder goes to the owners, which in this case would be Griswold, who was standing in the shoes of the owners. (Code Civ. Proc., § 701.810(d)(1).) The Bank contended that the City could not collect its fees until it was found to be the prevailing party after a judgment. Thus, the Bank asserted the City’s request for fees was premature. Further, the Bank contended subordinating the Bank’s lien would be an unconstitutional taking.

The City also filed a brief concerning distribution of the sale proceeds. The City asserted the trial court had previously ordered that the City be paid from the receivership estate, and that the law requires that the City have the same priority as Griswold. The City asserted that the court determined the City was the prevailing party when the court appointed Griswold. The City contended the Bank could have rehabilitated the House but chose not to do so. The City requested $144,544.15 in attorney fees, litigation costs, and other enforcement costs.

On August 14, 2020, the trial court continued the hearing concerning distribution of the sale proceeds to October 2020 due to the Rodríguezes declaring bankruptcy. On September 30, 2020, Griswold filed a supplemental memorandum. Griswold explained that the escrow had not yet closed because the people occupying the House refused to vacate. Griswold asserted the failure of escrow to close should not prevent the court from ruling on the distribution issue. Griswold contended that receivership certificates are given “super-priority status” under the law. Griswold noted that the Bank had notice of the Rodríguezes’ failure to maintain the House, so the Bank could have rehabilitated the House in order to prevent waste, or the Bank could have funded the receivership in order to retain its first lien position.

In a written decision, the trial court explained that courts have authority “to give super-priority lien status to receiver’s certificates” and “to allow for the payment of a receiver’s remediation fees and costs on a super priority-basis under appropriate circumstances.” In regard to the City’s fees and costs, the trial court concluded that it had “broad equitable powers to grant super-priority status to [the] City’s attorney fees and costs.” The Court explained, “In this matter it does not seem equitable for [the] Bank to be placed in a position in front of [the] City when [the] Bank has caused the resolution of this case to be delayed by opposing numerous motions brought by the Receiver and the City and appealing the Court’s orders. This has caused the Receiver and the City to continue to incur fees and costs.”

The trial court ordered the sale proceeds be distributed in the following order: (1) the receiver’s certificate; (2) Griswold’s fees and costs; (3) the City’s enforcement costs, inclusive of attorney fees and litigation costs; and (4) the Bank’s lien. The court noted that the parties failed to discuss the priority of the County of San Bernardino’s $74,511.91 lien but concluded that the “Bank’s lien was recorded prior to the County’s Abstract of Judgment, and thus, [the] Bank’s lien is presumed to have priority.”

DISCUSSION

A. TRIAL COURT’S AUTHORITY

The Bank concedes that the receiver’s certificate has priority over the Bank’s lien. However, the Bank contends the trial court lacked authority to subordinate the Bank’s lien to Griswold’s fees and the City’s attorney fees and costs. Specifically, the Bank asserts Health and Safety Code[4] section “17980.7 says nothing about altering . . . lien priority.”

When interpreting a statute, “ ‘it is well settled that we must look first to the words of the statute, “because they generally provide the most reliable indicator of legislative intent.” [Citation.] If the statutory language is clear and unambiguous our inquiry ends. . . . In reading statutes, we are mindful that words are to be given their plain and commonsense meaning.’ ” (Pineda v. Bank of America, N.A. (2010) 50 Cal.4th 1389, 1394; see also Civ. Code, § 13; and Code Civ. Proc., § 16.)

Section 17980.7, subdivision (c)(9), provides: “The receiver shall be discharged when the conditions cited in the notice of violation have been remedied in accordance with the court order or judgment and a complete accounting of all costs and repairs has been delivered to the court. Upon removal of the condition, the owner, the mortgagee, or any lienor of record may apply for the discharge of all moneys not used by the receiver for removal of the condition and all other costs authorized by this section.”

We examine the last part of the second sentence—“the discharge of all moneys not used by the receiver for removal of the condition and all other costs authorized by this section.” The word “and” suggests that both types of expenditures are exempt from discharge. That is because “[t]he ordinary and usual usage of ‘and’ is as a conjunctive, meaning ‘ “an additional thing,” ’ ‘also’ or ‘plus.’ ” (In re C.H. (2011) 53 Cal.4th 94, 101-102.) The first item is “all moneys not used by the receiver” to remedy the violating condition. The second item is “all other costs authorized by this section.” Thus, we read section 17980.7, subdivision (c)(9), as providing that a mortgagee may apply for any funds remaining after deductions have been made for (1) money spent by the receiver in rehabilitating the property, and (2) costs authorized by section 17980.7.

The Bank seemingly agrees with this interpretation because it wrote, “Implicit in this use of the language ‘moneys not used . . . for . . . costs authorized by this section,’ is an acknowledgement that certain expenditures may be made during the course of the receivership.” The Bank then asserts that a question in the case is what “were ‘other costs authorized by this section’ under subdivision (c)(9).”

Griswold’s fees are clearly “other costs authorized by this section.” Section 17980.7, subdivision (c)(5), provides, “The receiver shall be entitled to the same fees, commissions, and necessary expenses as receivers in actions to foreclose mortgages.” Thus, Griswold’s reasonable fees are authorized by section 17980.7, which means they may be paid prior to a mortgagee being paid. (§ 17980.7, subd. (c)(9) [“all other costs authorized by this section”].)

Similarly, the City’s attorney fees are “other costs authorized by this section.” Section 17980.7, subdivision (c)(11), provides, “The prevailing party in an action pursuant to this section shall be entitled to reasonable attorney’s fees and court costs as may be fixed by the court.” The trial court found the City was the prevailing party. As such, the City’s attorney fees and court costs are authorized by section 17980.7. Therefore, they may be paid prior to the Bank, i.e., the mortgagee, being paid. (§ 17980.7, subd. (c)(9) [“all other costs authorized by this section”].)

In sum, a mortgagee may apply for distribution of any funds that remain after all costs authorized in the statute have been paid. (§ 17980.7, subd. (c)(9).) The receiver’s fees and the prevailing party’s attorney fees are within the costs authorized by section 17980.7, subdivision (c). (§ 17980.7, subds, (c)(5) & (c)(11).) Therefore, both Griswold and the City were properly given priority over the Bank.

The Bank cites County of Sonoma v. Quail (2020) 56 Cal.App.5th 657, 687 (Quail) to support its assertion that the City’s attorney fees cannot have priority over the Bank’s lien. In Quail, the appellate court, in looking at section 17980.7, saw no authority for giving the County of Sonoma’s attorney fees and costs the same priority as the receiver’s remediation fees and costs. The appellate court pointed to section 17980.7, subdivision (d)(1), which provides, “If the court finds that a building is in a condition which substantially endangers the health and safety of residents pursuant to Section 17980.6, upon the entry of any order or judgment, the court shall do all of the following: [¶] Order the owner to pay all reasonable and actual costs of the enforcement agency including, but not limited to, inspection costs, investigation costs, enforcement costs, attorney fees or costs, and all costs of prosecution.” (Italics added.) When the appellate court quoted the foregoing statutory text, it also italicized “the owner.” (Quail, at pp. 687-688.) In other words, in looking at the statute, the appellate court concluded that section 17980.7, subdivision (d)(1), requires an owner to pay the government’s costs and attorney fees. The appellate court concluded the trial court erred by “equating the County’s enforcement costs with those of the receiver.” (Quail, at p. 688.)

Quail is distinguishable. As we have explained in City of Norco v. Mugar (2020) 59 Cal.App.5th 786, 799-800, “Section 17980.7, subdivision (c)(11) is the applicable statute [pertaining to attorney fees] where, as here, a receiver was appointed pursuant to section 17980.7, subdivision (c).” By contrast, subdivision (d)(1), which was quoted in Quail, applies when receivers are not appointed.

Accordingly, when there has been a receivership, section 17980.7, subdivision (c) applies (City of Norco v. Mugar, supra, 59 Cal.App.5th at pp. 799-800), which means the receiver (§ 17980.7, subd. (c)(5)) and the prevailing party (§ 17980.7, subd. (c)(11)) can be paid from the money in the receivership estate, and then a mortgagee can apply for any funds that remain after those payments have been deducted (§ 17980.7, subd. (c)(9)). However, when there has not been a receivership, and the building endangers the residents/tenants, then the court shall “[o]rder the owner to pay all reasonable and actual costs of the enforcement agency.” (§ 17980.7, subd. (d)(1).) In sum, the Bank’s reliance on Quail is misplaced.

The Bank provides an analysis of the legislative history of section 17980.7. However, we need not examine the legislative history of the statute because the statutory language is unambiguous.[5] (Whaley v. Sony Computer Entertainment America, Inc. (2004) 121 Cal.App.4th 479, 486-487.)

In an order for supplemental briefing, we asked the parties whether the trial court’s distribution order was premature in light of section 17980.7, subdivision (c)(9). Notably, the subdivision provides that a mortgagee may apply for any remaining funds after the code violations have been remedied. (§ 17980.7, subd. (c)(9).) Thus, per the statute, the Bank should not have been included in a distribution order until after the code violations had been remedied. (§ 17980.7, subd. (c)(9).) The record in the instant cases does not reflect that the code violations have been remedied. Nevertheless, the trial court included the Bank in the distribution order.

The City asserts that the “Buyer [of the House] has finally rehabilitated the Nuisance Property” and “there is nothing left to do in this case except resolve the distribution of the sale proceeds.” Griswold confirms that the House has been “completely renovated and received final sign-off from the City.” In the Bank’s response, it asserts that “to the extent § 17980.7 authorizes lien stripping . . . [the] Bank sees no principled reason why . . . such subordination would need to wait until the conclusion of the receivership. In that circumstance, the Court should just affirm on the merits.”

It appears the parties have no interest in the matter being returned to the trial court for a hearing in which “the owner, the mortgagee, or any lienor of record may apply for the discharge of all moneys not used by the receiver for removal of the condition and all other costs authorized by this section.” (Health & Saf. Code, § 17980.7, subd. (c)(9).) We note that the County of San Bernardino, which had a recorded judgment lien on the House, has not sought to intervene in this matter despite being served with Griswold’s memorandum concerning the distribution order. (Code Civ. Proc., § 387.) Accordingly, we will not reverse the distribution order due to this procedural issue.

B. TAKING

The Bank contends that it is an unconstitutional taking, under both the state and federal constitutions, to subordinate the Bank’s lien. We apply the de novo standard of review to this constitutional issue. (Thurston v. Midvale Corp. (2019) 39 Cal.App.5th 634, 639.)

1. CALIFORNIA CONSTITUTION

“Private property may be taken . . . for a public use . . . only when just compensation . . . has first been paid to . . . the owner.” (Cal. Const. Art. 1, § 19, subd. (a).) Thus, “the government must pay just compensation when it takes a lien—a right to receive money that is secured by a particular piece of property.” (Koontz v. St. Johns River Water Management Dist. (2013) 570 U.S. 595, 613.)

“There is, however, a well-known exception to the general rule stated in the Constitution. Damages inflicted in the course of a proper exercise of the state’s police power are noncompensable. [Citation.] ‘ “[T]he constitutional guarantee of just compensation attached to an exercise of the power of eminent domain does not extend to the state’s exercise of its police power, and damage resulting from a proper exercise of the police power is simply damnum absque injuria.” ’^[[6]^] [Citation.] A government’s action will be upheld as a valid exercise of police power if it is ‘reasonably necessary to “protect the order, safety, health, morals, and general welfare of society.” ’ ” (Farmers Ins. Exchange v. State of California (1985) 175 Cal.App.3d 494, 501.) Thus, for instance, “ ‘[a] municipality in the exercise of its police power may, without compensation, destroy a building or structure that is a menace to the public safety or health.’ ” (Hawthorne Savings & Loan Assn. v. City of Signal Hill (1993) 19 Cal.App.4th 148, 159.)

The trial court found that the House constituted a public nuisance and that “[t]he building violations [at the House] are so extensive and of such a nature that the health and safety of the occupants and the public is substantially endangered.” The Bank’s lien was subordinated in order to abate the public nuisance. As a result, the subordination of the Bank’s lien was not an unconstitutional taking.

The Bank contends the House was not sold in order to protect health and safety; instead, the House was sold as “a way to make money for the City.” Noting that Griswold had not taken “any action to rehabilitate” the House, the Bank reviewed the history of private attorneys, representing cities in code enforcement cases, who were “ ‘policing for profit’ on these municipalities’ behalf [sic].” The Bank contends that Griswold did nothing more than seek to sell the House so that Griswold and the City could profit from the sale.

We are not persuaded. The trial court found that the House constituted a public nuisance. The trial court ordered the House sold. The trial court approved the sale with the requirement that the buyer remedy the code violations. We rely on the trial court’s findings and orders for the determination that the House was sold due to a health and safety issue; we do not speculate on the motives of counsel and the receiver. (See Fry v. Pro-Line Boats, Inc. (2008) 163 Cal.App.4th 970, 973 [“speculation . . . will not support a reversal of the judgment”].) The trial court’s findings and orders demonstrate that the House was sold because it constituted a threat to health and safety.

The Bank asserts that when a house is sold due to a house being a nuisance, then the public entity requiring the sale must pay just compensation to lienholders. The Bank supports its assertion with a citation to Code of Civil Procedure section 1265.220. That statute provides, “Where property acquired by eminent domain is encumbered by a lien and the indebtedness secured thereby is not due at the time of the entry of judgment, the amount of such indebtedness may be, at the option of the plaintiff, deducted from the judgment and the lien shall be continued until such indebtedness is paid; but the amount for which, as between the plaintiff and the defendant, the plaintiff is liable under Article 5 (commencing with Section 1268.410) of Chapter 11 may not be deducted from the judgment.” (Code Civ. Proc., § 1265.220.)

Code of Civil Procedure section 1265.220 describes a general eminent domain situation. It does not set forth a law pertaining to the sale of a house, in receivership, for health and safety purposes. The law that pertains to the sale of a house, in a receivership, for health and safety purposes, is Health and Safety Code section 17980.7, subdivision (c). In that situation, a mortgagee may apply for any funds “not used by the receiver for removal of the condition and all other costs authorized by this section.” (Health & Saf. Code, § 17980.7, subd. (c)(9).) Accordingly, we are not persuaded that Code of Civil Procedure section 1265.220 governs in this procedural circumstance.

A second citation given by the Bank to support its assertion is City of Vallejo v. Superior Court of Napa County (1926) 199 Cal. 408, 417. The case concerned a public entity taking private land for the purpose of establishing and maintaining “a reservoir for the impounding of waters for the public use of the City of Vallejo and its inhabitants.” (Id. at p. 410.) The Bank of Napa held “a deed of trust, covering the property sought to be condemned.” (Id. at p. 411.) The Supreme Court wrote, “Under the provisions of section 1248 of the Code of Civil Procedure, when property encumbered by a mortgage or other lien is sought to be taken and the indebtedness thus secured is not due the court is empowered to deal with such a situation by deducting the amount of the debt from the judgment and continuing the lien upon the property taken until the indebtedness is paid.” (Id. at p. 417.)

Again, the authority cited by the Bank does not address a situation in which property is taken due to the property constituting a public nuisance. A general eminent domain situation is distinguishable from a situation in which the property is taken due to the property posing a threat to the public. “Courts have consistently held that a State need not provide compensation when it diminishes or destroys the value of property by stopping illegal activity or abating a public nuisance. [Citations.] It is hard to imagine a different rule that would be consistent with the maxim ‘sic utere tuo ut alienum non laedas’ (use your own property in such manner as not to injure that of another.) [Citation.] As Professor Epstein has recently commented: ‘The issue of compensation cannot arise until the question of justification has been disposed of. In the typical nuisance prevention case, this question is resolved against the claimant.’ ” (Keystone Bituminous Coal Ass’n v. DeBenedictis (1987) 480 U.S. 470, 492, fn. 22.) In sum, because these consolidated cases concern a nuisance property, we are not persuaded by the Bank’s reliance on eminent domain authority involving non-nuisance properties.

The Bank contends the City should have handled the code enforcement problems at the House via eminent domain, so that the Bank would not have to indirectly finance the City’s code enforcement efforts. Such an argument should have been raised in an appeal from the order appointing the receiver. (See Code Civ. Proc., § 904.1, subd. (a)(7) [order appointing a receiver is appealable].) Because it was not raised in such an appeal, the Bank has forfeited the argument. At this point, the receivership has occurred, so there is little point to discussing alternatives to the receivership.

The Bank contends that, at the time the receivership was instituted, the Rodríguezes’ loan was not in default, so the Bank could not have foreclosed, and there is “nothing in § 17980.7 (or in any other statute or regulation) [that] created a legal obligation on [the] Bank to rehabilitate the property or to foreclose in order to protect its interest.” To the extent the Bank is asserting it did not have the opportunity to protect its security interest, i.e., remedy the nuisance, prior to the House being sold, we will address this issue.

If the Bank had desired to protect its security interest, then it could have done so pursuant to the deed of trust. The deed of trust provided: (1) “Borrower shall not destroy, damage or impair the Property, allow the Property to deteriorate or commit waste on the Property”; and (2) If . . . Borrower fails to perform the covenants and agreements contained in this Security Instrument . . . then Lender may do and pay for whatever is reasonable or appropriate to protect Lender’s interest in the Property and rights under this Security Instrument, including . . . securing and/or repairing the Property. . . . Securing the Property includes . . . entering the Property to make repairs, . . . [and] eliminate building or other code violations or dangerous conditions.” Thus, the Bank could have remedied the nuisance conditions if it had chosen to do so.

2. FEDERAL CONSTITUTION

The Bank raises the same takings argument under the federal constitution. “ ‘The takings clause of the Fifth Amendment [of the federal constitution] prohibits a governmental entity from taking private property for public use without just compensation.’ ” (People v. Gonzalez (2020) 57 Cal.App.5th 960, 976.) Similar to the California Constitution, there is a nuisance exception to the federal takings clause. The exception can “be understood on the simple theory that since no individual has a right to use his property so as to create a nuisance or otherwise harm others, the State has not ‘taken’ anything when it asserts its power to enjoin the nuisance-like activity.” (Keystone Bituminous Coal Ass’n v. DeBenedictis, supra, 480 U.S. at p. 491, fn. 20.) “Courts have consistently held that a State need not provide compensation when it diminishes or destroys the value of property by stopping illegal activity or abating a public nuisance.” (Id. at p. 492, fn. 22.)

The same analysis set forth ante applies under the federal Constitution. The trial court found that the House constituted a public nuisance. Therefore, the subordination of the Bank’s lien, in order to abate the nuisance, falls within the nuisance exception to the takings rule.

C. THE CITY’S CONTENTIONS

The City asserts, “[The] Bank agrees its appeal of the Sale Order is moot because the [House] has already been sold to Buyer. [Citation.] [¶] [The] Bank is absolutely correct that its meritless appeal of the Sale Order is moot and should be dismissed.” The focus of the Bank’s arguments is the distribution order. Thus, dismissal of case No. E075481 would have little impact on the topics discussed in this appeal. Accordingly, we decline to dismiss case No. E075481.

Next, the City asserts, “This Court lacks jurisdiction to consider [the] Bank’s untimely challenge to subordination of its lien due to its failure to appeal the original Appointment Order,” in which the trial court ordered the City be “reimburse[d] . . . out of the receivership estate.” An order requiring the immediate payment of money is an appealable order. (City of Riverside v. Horspool (2014) 223 Cal.App.4th 670, 683.) The distribution order provides, “[T]he Court distributes the sale proceeds in the following order,” and then it proceeds to provide a list of names and sums of money to be distributed. Thus, the distribution order will result in the payment of money upon escrow closing, and according to Griswold, escrow closed over a year ago, on January 4, 2021. It is reasonable for the Bank to raise the subordination issue in the appeal from the distribution order. Therefore, we are not persuaded that we lack jurisdiction.

DISPOSITION

The orders are affirmed. The respondents are awarded their costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1).) The stay issued on April 19, 2021 in case No. E076228 is dissolved.

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

MILLER

Acting P. J.

We concur:

FIELDS

J.

MENETREZ

J.

[1] In addition to the combined appellate brief, the Bank filed a petition for writ of supersedeas under Case No. E076228. In the writ petition, the Bank sought a stay of the trial court’s order authorizing distribution of the sale proceeds. In April 2021, this court granted the petition.

[2] Rosa Rodríguez’s default was entered on May 26, 2017. Romualdo Rodríguez’s default was entered on June 16, 2017.

[3] The motion includes citations to Ascherin’s declaration. However, Ascherin’s declaration does not appear to be included in the appellant’s appendix. Accordingly, we rely on the description of the declaration that is set forth in the motion.

[4] All subsequent statutory references will be to the Health and Safety Code unless otherwise indicated.

[5] The Bank requests this court take judicial notice of documents pertaining to the legislative history of section 17980.7. (Evid. Code, § 452, subd. (c).) We deny the request because the documents are not relevant to our analysis. (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1135, fn. 1; Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998) 18 Cal.4th 739, 748, fn. 6.)

[6] “[D]amnum absque injuria (damage without legal injury) . . . means merely that a person may suffer damages and be without remedy because no legal right or right established by law and possessed by him, has been invaded, or the person causing the damage owes no duty known to the law to refrain from doing the act causing the damage.” (Rose v. State (1942) 19 Cal.2d 713, 729.)