Filed 9/27/19 Citimortgage v. Yates CA1/4

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FIRST APPELLATE DISTRICT

DIVISION FOUR

CITIMORTGAGE, INC.,

Plaintiff and Appellant,

v.

LINDSEY YATES and ZACHARY YATES,

Defendants and Respondents.

A153940

(Sonoma County

Super. Ct. No. SCV-250399)

Plaintiff Citimortgage, Inc. (Citi) appeals from the denial of its motion for leave to file a Fifth Amended Complaint to bring an action for judicial foreclosure on an equitable mortgage. Citi primarily contends the trial court erred in finding the foreclosure action untimely because the court incorrectly applied the four-year statute of limitations under Code of Civil Procedure section 337, subdivision (a)(1), rather than the six-year statute of limitations under California Uniform Commercial Code section 3118, subdivision (a). Because Citi did not raise this argument in the trial court, it has forfeited this contention. Citi has also waived the other arguments it asserts on appeal. We affirm.

BACKGROUND

Defendants Lindsey and Zachary Yates acquired two adjacent properties, 4401 and 4405 Price Avenue in Santa Rosa, California. The Yateses obtained separate loans for each property, but each recorded deed of trust contained an incorrect legal description. Specifically, the 4405 Price Avenue deed of trust described the 4401 Price Avenue property, and the 4401 Price Avenue deed of trust described the 4405 Price Avenue property. When the Yateses defaulted on their mortgage on the 4405 property, Citi sought to initiate foreclosure proceedings on that parcel, but could not do so because the deed had been reconveyed to the Yateses in error.

In September 2011, Citi filed this action against the Yateses; the Third Amended Complaint asserted causes of action for quiet title, reformation of instruments, and declaratory relief. In June 2014, the trial court conducted a bench trial and issued a memorandum of decision in favor of Citi. The court determined that Citi’s action was timely filed under the three-year statute of limitations governing actions for relief on the ground of mistake under section 338, subdivision (d). It concluded that Citi was entitled to a judgment for reformation and quiet title. In addition, although not raised by any party, the court found that the erroneous trust deed gave rise to an equitable mortgage even though it did not constitute a legal mortgage. The court applied the four-year statute of limitations to equitable mortgages and concluded Citi timely filed its action. (§ 337, subd. (a).) The court entered judgment in favor of Citi and awarded Citi attorney’s fees and costs.

The Yateses appealed. In an unpublished opinion, we reversed, finding Citi’s claims were untimely. (Citimortgage, Inc. v. Yates, et al. (May 23, 2016, A142698).) We also concluded that it was prejudicial for the court to raise the equitable mortgage theory after trial without providing the Yateses an opportunity to defend against the new theory. We remanded the case and directed the trial court to “provide Citi the opportunity to plead an equitable mortgage theory, allow the presentation of evidence by both parties, and provide the Yates[es] an opportunity to present any relevant defenses.”

In December 2016, Citi filed its Fourth Amended Complaint alleging causes of action for equitable mortgage and declaratory relief. The Yateses filed a demurrer asserting those claims were untimely. The trial court overruled the demurrer, finding that the equitable mortgage claim was timely. In its order, however, the trial court noted Citi would be unable to enforce the equitable mortgage because it fell outside the the four-year statute of limitations period under section 337.

In April 2017, Citi filed a motion for leave to file a Fifth Amended Complaint, seeking to assert a cause of action based on judicial foreclosure and deficiency judgment. Citi argued that an amendment would promote judicial economy by ensuring that all of the appropriate causes of action in this case were resolved at the same time. Citi claimed that the equitable mortgage claim was timely under section 882.020, subdivision (a), which sets forth the maximum time limit to enforce a power of sale in a trust deed. Defendants opposed the motion, asserting, among other arguments, that granting Citi leave to amend would unduly prejudice the Yateses.

The trial court denied Citi’s motion for leave to amend, finding that section 337 barred the proposed foreclosure action.

Citi then filed an unopposed motion for summary judgment or, alternatively, for summary adjudication, for a court decree establishing the existence of an equitable mortgage. The court granted Citi’s motion and entered judgment acknowledging the creation and existence of the equitable mortgage. Citi appealed.

DISCUSSION

We review for abuse of discretion a trial court’s decision whether to permit amendment of a pleading. (McGuan v. Endovascular Technologies, Inc. (2010) 182 Cal.App.4th 974, 987.) Although motions for leave to amend are liberally granted, a trial court’s discretion will not be disturbed on appeal unless it clearly has been abused. (Foxborough v. Van Atta (1994) 26 Cal.App.4th 217, 230.) “Of course, if the proposed amendment fails to state a cause of action, it is proper to deny leave to amend.” (Ibid.) “The burden is on the plaintiff to demonstrate that the trial court abused its discretion.” (Sullivan v. City of Sacramento (1987) 190 Cal.App.3d 1070, 1081.)

Citi’s main contention on appeal is that the trial court erred when it concluded that Citi’s proposed judicial foreclosure action fell outside the four-year statute of limitations period under section 337, subdivision (a). As relevant here, section 337, subdivision (a) provides that “[a]n action upon any contract, obligation or liability founded upon an instrument in writing” must be filed within four years. (Code Civ. Proc., § 337, subd. (a).) According to Citi, section 337’s four-year state of limitations does not apply because judicial foreclosure actions are instead governed by California Uniform Commercial Code section 3118, subdivision (a), which provides that “an action to enforce the obligation of a party to pay a note payable at a definite time shall be commenced within six years after the due date or dates stated in the note or, if a due date is accelerated, within six years after the accelerated due date.” (Cal. U. Com. Code, § 3118, subd. (a).) Citi contends that because the Promissory Note for the loan intended to be secured by the 4405 Price Avenue property was payable in installments, California Uniform Commercial Code section 3118 governs, and with each missed installment by the Yateses, a new limitations period began to run. As such, Citi claims its proposed action for judicial foreclosure was timely.

But Citi did not raise this contention in the trial court. At no point did Citi cite or rely upon California Uniform Commercial Code section 3118’s six-year statute of limitations to challenge the defense that the proposed cause of action was time-barred. Nor did Citi argue that a new limitations period began to run against each installment as it became due under the Promissory Note. Rather, Citi relied solely on section 882.020, subdivision(a)(1), a position it has abandoned on appeal. Citi’s failure to raise California Uniform Commercial Code section 3118 as a basis to challenge the Yateses’ defense of untimeliness results in a forfeiture of the issue on appeal.

“It is axiomatic that arguments not asserted below are waived and will not be considered for the first time on appeal.” (Ochoa v. Pacific Gas & Electric Co. (1998) 61 Cal.App.4th 1480, 1488, fn. 3.) “This rule ‘is founded on considerations of fairness to the court and opposing party, and on the practical need for an orderly and efficient administration of the law.’ ” (Rand v. Board of Psychology (2012) 206 Cal.App.4th 565, 587. “ ‘Otherwise, opposing parties and trial courts would be deprived of opportunities to correct alleged errors, and parties and appellate courts would be required to deplete costly resources “to address purported errors which could have been rectified in the trial court.” ’ ” (Dietz v. Meisenheimer & Herron (2009) 177 Cal.App.4th 771, 800.

We also decline Citi’s invitation to exercise discretionary review of the forfeited issue. “[C]ourts have discretion to consider a new theory on appeal if it involves a legal question based on undisputed facts.” (Cox v. Griffin (2019) 34 Cal.App.5th 440, 450.) However, “an appellant may not raise a new theory on appeal when the theory rests on facts that were either controverted or not fully developed in the trial court.” (Tanguilig v. Neiman Marcus Group, Inc. (2018) 22 Cal.App.5th 313, 330.)

As Citi acknowledges, resolution of a statute of limitations issue is normally a question of fact. (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 810.) The question of when a plaintiff’s cause of action accrued is a mixed question of law and fact. (Leaf v. City of San Mateo (1980) 104 Cal.App.3d 398, 406.) Here, the question of section 3118’s application raises questions of fact that are open to controversy or were not fully developed in the trial court, such as when the Yateses made or missed installment payments under the Promissory Note, if and when Citi made a demand for payment, and when the purported six-year limitations period began to run. Thus, Citi’s new theory is not a purely legal question appropriate for review on appeal.

Citi has likewise forfeited the other arguments it asserts on appeal. Citi provides no authority to support its contention that this Court and the trial court incorrectly found the four-year limitations period began to run in July 2008. “ ‘The absence of cogent legal argument or citation to authority allows this court to treat the contention as waived.’ ” (Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939, 956.) Citi also may not rely on the “relation back doctrine” to overcome the Yateses’ statute of limitations defense on appeal, as Citi expressly disclaimed the doctrine as irrelevant below. (See Ochoa v. Pacific Gas & Electric Co., supra, 61 Cal.App.4th at p. 1488, fn. 3.) Lastly, Citi has forfeited its challenge to the purported lack of detail contained in the trial court’s order of denial because Citi neither objected to the proposed order nor requested clarification. An appellate court will ordinarily not consider procedural defects or erroneous rulings where an objection could have been but was not presented to the trial court. (Doers v. Golden Gate Bridge, Highway & Transp. Dist. (1979) 23 Cal.3d 180, 184, fn. 1; see also Cal. Rules of Court, rule 3.1312(a).)

In sum, we conclude Citi forfeited the challenges raised in this appeal and has thus failed to show the trial court abused its discretion in denying leave to amend.

DISPOSITION

The judgment is affirmed.

_________________________

BROWN, J.

WE CONCUR:

_________________________

STREETER, ACTING P. J.

_________________________

TUCHER, J.

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