Motion by Defendant Sunset Capital, Inc. dba Sunset Mortgage, etc. for Summary Adjudication:

The motion is denied

1. Because of Defects in the Notice and Separate Statement, the court will treat this motion as one for summary judgment only. If there is any triable issue of fact then the motion must be denied. The parties are reminded that “[i]nasmuch as summary judgment is a drastic procedure and should be used with caution, the moving party’s papers are to be strictly construed while the opposing party’s papers are

liberally construed.” (See Committee to Save Beverly Highland Homes Ass’n v. Beverly Highland (2001) 92 Cal.App.4th 1247, 1260 (internal citations omitted).)

(a) With respect to a motion for summary adjudication, “the specific cause of action, affirmative defense, claims for damages, or issues of duty must be stated specifically in the notice of motion and be repeated, verbatim, in the separate statement of undisputed material facts.” [Cal. Rules of Court, rule 3.1350, subd. (b) emphasis added.]

The reasons for this are obvious. If not in compliance then the opposing party and the court must guess at which facts are applicable to which issue to be summarily adjudicated.

(b) Neither Defendants’ notice of motion nor their separate statement sets forth any separate issues to be adjudicated. For this reason, the court does treat this motion as one for summary judgment, and not for summary adjudication. This is not form over substance. Neither the court nor presumably the Responding Party can fairly tell which facts are related to which issues for which summary adjudication of issues is requested.

2. Summary judgment is also denied.

(a) Preliminary issues:

(i) Although this is Defendants’ second motion for summary judgment, it appears they have set forth newly discovered facts that permit the court to consider the motion. (Code Civ. Proc., § 437c, subd. (f)(2) [“a party may not move for summary judgment based on issues asserted in a prior motion for summary adjudication and denied by the court, unless that party establishes to the satisfaction of the court, newly discovered facts . . . supporting the issues reasserted in the summary judgment motion.”].) A review of Defendants’ evidence shows that they included discovery responses from Plaintiff, some of which were served after the ruling on the first MSJ. It thus appears Defendants have included newly discovered facts, even though the issues raised in both motions are the same.

(ii) Defendants’ request for judicial notice is granted. Plaintiff has not objected to the requests.

Exs. 1-6 are documents pertaining to the subject property, recorded in the Office of the Recorder of Orange County. Judicial notice is proper under Evid. Code, § 452, subd. (d), which permits the court to take judicial notice of court records. Judicial notice, however, will not extend to any hearsay allegations contained therein. (Bach v. NcNelis (1989) 207 Cal.App.3d 852, 865.)

Exs. 7-12 and 16 are documents filed with the court in either this action or In re: 1839 Port Barmouth Place, Newport Beach, California 92660, OCSC no. 2012-00594546. Exs. 13-15 are website printouts, from the State of California Bureau of Real Estate (13-14) and the National Mortgage Licensing System (15). Judicial notice is appropriate pursuant to Evid. Code, § 452, subds. (c) [official acts] and (h) [facts not reasonably subject to dispute], but not as to the truth of any matters asserted therein. (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264-265.)

(iii) The court declines to consider Defendants’ objections to evidence for failure to comply with Cal. Rules of Court, rule 3.1354(c).

(b) Because Defendants assert one or more elements of the breach of contract claim cannot be established, they can meet their burden in one of two ways. They can present affirmative evidence negating, as a matter of law, an essential element of Plaintiff’s claim. (Guz v. Bechtel Nat’l, Inc. (2000) 24 Cal.4th 317, 334.) Alternatively, they can “show” that an essential element of Plaintiff’s claim cannot be established by presenting evidence that Plaintiff “does not possess and cannot reasonably obtain, needed evidence.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 854.) Defendants have not satisfied either burden of production.

(c) Defendants argue that they have presented evidence to show that they did not breach the contract by misapplying any loan proceeds, that Plaintiff cannot establish his performance under the loan because he admitted to being in default, and that Plaintiff did not suffer any damages as a result of Defendants’ conduct. Additionally, Defendant Sunset argues it cannot be liable for breach of contract because it was not a party to the loan.

(i) With respect to the last argument, there is a triable issue of material fact whether Defendant Sunset was a party to the loan. (See UMF 32, Moore declaration and RJN Exhibit 1.) Although Sunset was not the lender, Plaintiff points out that it was the trustee under the Deed of Trust and was the agent designated to receive loan payments, and it processed those loan payments. (Plaintiff’s Response to UMF 32; UMF 13.) A trustee can be liable for breach of the deed of trust: “When the parties accepted the terms by due execution of the deed of trust, the Bank [as trustee] became a party bound by the terms of the instrument it authored. Should the Bank fail to observe the terms and conditions of the trust or the obligations of a trustee imposed by law, it will be held liable for damages flowing from the breach of contract.” (Huckell v. Matranga, 99 Cal.App.3d 471, 481.)

(ii) With respect to the first argument, it is the general rule that “[s]everal contracts relating to the same matters, between the same parties, and made as parts of substantially one transaction, are to be taken together.” (Civ. Code, § 1642.) Here, the subject note, deed of trust, and loan agreement constitute one contract because they are a part of the same transaction. (See Huckell v. Matranga (1979) 99 Cal.App.3d 471, 481 [note, mortgage, and agreement of sale together constitute one contract].)

Plaintiff contends the loan agreement sets forth the dates when payments were due and when fees and other charges could be assessed. (TAC, ¶ 13.) But Defendants have not introduced the subject loan agreement into evidence. Without this document, Defendants have not provided the court with the complete loan contract and the court cannot determine whether Defendants properly applied all loan payments or correctly calculated the outstanding balance.

(iii) With respect to the second argument, Defendants are mistaken that Plaintiff’s default under the loan defeats Plaintiff’s claim that Defendants misapplied loan payments. Plaintiff’s default under the loan may likely prevent Plaintiff from setting aside the trustee’s sale. Even so, the failure to make loan payments does not give Defendants license to miscalculate the outstanding loan balance in Defendants’ favor or to tack on fees or charges not expressly allowed by the loan terms. “‘When the property has been sold to a bona fide purchaser, even though the sale cannot be avoided, the trustor or a junior lienor . . . retain[s] the right to recover damages from the trustee and the beneficiary of the foreclosing lien if there have been material irregularities in the conduct of the foreclosure.” (S. Bay Bldg. Enterprises, Inc. v. Riviera Lend-Lease, Inc. (1999) 72 Cal.App.4th 1111, 1121.)

(iv) Finally, Defendants have failed to show that Plaintiff did not suffer any damages as a result of any misapplication of loan payments. Again, Defendants have the better argument that Plaintiff lost his home in foreclosure, not because of misapplied loan proceeds, but because Plaintiff could not make his monthly loan payments and was in default. Nonetheless, Defendants ignore the fact that the subject property was sold for $460,000 at the trustee’s sale—well over the $234,200.72 that Defendants claim Plaintiff owed at the time of the sale. (See Defendants’ RJN, Ex. 6.) The amount in excess of the unpaid debt belonged to Plaintiff, either as direct cash or as payment for other debts of Plaintiff. Thus, if Defendants misapplied loan payments that increased the unpaid loan balance or charged improper fees, Plaintiff was damaged because the excess amount belonging to Plaintiff should have been larger.

(d) Under the second method for establishing a prima facie entitlement to judgment, the moving party must demonstrate a negative, i.e., that there is no evidence to support an element of the opponent’s case. “If a party contends some particular issue of fact has no support in the record, it must set forth all the material evidence on the point and not merely the evidence favorable to it.” (Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881.) Such evidence usually consists of admissions by the plaintiff following extensive discovery to the effect that he or she has discovered nothing to support an essential element of the cause of action. (See Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at 855.)

Here, Defendants cite to transcript excerpts from Plaintiff’s deposition taken on 04/24/13 to show that Plaintiff has no evidence that Defendants’ calculation was inaccurate. The court notes that the Moore Declaration which indicates experts are attached as Ex. 8, does not actually attach an Ex. 8. Nonetheless, some but not all of the excerpts on which Defendants rely is attached to the Krolikowski Declaration as Ex. A. While it is true that Plaintiff testified he did not know whether Defendants’ calculations were accurate, such testimony fails to show Plaintiff “cannot reasonably obtain, needed evidence.” (Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at 854.)

As a preliminary matter, calculations of outstanding balances on real property loans are usually based on an amortization schedules, as is the case here. (See Moore Decl., Ex. 1.) Such calculations are usually based on a complicated formula. A single incorrect payment amount or payment date would render the final calculation inaccurate. Several errors would magnify the inaccuracy.

That Plaintiff could not articulate at his deposition how Defendants’ calculations in specific deposition exhibits—copies of which Defendants have not provided the court—is insufficient to show that Plaintiff could not later reasonably obtain the needed evidence.

Although this time around Defendants offer into evidence some written discovery responses of Plaintiff, they still fail to offer all discovery responses. (See Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881 [“must set for all the material evidence”].) Defendants offer Plaintiff’s responses to form interrogatories (Set Two) (see Abel Decl., Ex. 7), but not to Set One. Set Two addresses only form interrogatory no. 17.1 in connection with Plaintiff’s responses to RFA (Set One). Presumably, Form Interrogatories (Set One) addressed all the usual interrogatory answers, such as facts supporting Plaintiff’s breach of contract claim (nos. 50.1 – 50.6 re: breach of contract).

(e) Because Defendants did not meet their initial burden, the burden did not shift to Plaintiff to present evidence to demonstrate a triable issue of material fact. (Code Civ. Proc., § 437c, subd. (p)(2).)

Even if the burden did shift of Plaintiff, there is a triable issue of fact whether Plaintiff agreed to and authorized Sunset to apply $95,523.51 from the sale of the Westminster Property to the loan. (Plaintiff’s response to UMFs 13-16, 21.) Plaintiff declared that he never discussed with Defendants, nor approved, the application of that sum toward the loan principal. (See Krolikowski Decl., Ex. E, ¶ 2.)

As indicated, the motion is denied. There are triable issues of material fact.

Plaintiff is ordered to give notice.