Case Number: SC117026    Hearing Date: August 22, 2014    Dept: M

Tentative Ruling
Arden Management v. CLS
SC117026

Harriet Topkis defaulted on payment of HOA dues for the subject property. Plaintiff Arden, through foreclosure trustee California Lien Services (CLS), filed a Notice of Default and Election to Sell. Arden tendered the highest bid and the property was sold to Arden. CLS conveyed title to Arden pursuant to the Trustee’s Deed Upon Sale in February 2012. Arden then encumbered the property with a $200,000 note and deed of trust in favor of Clarence Grey Inc.
Defendants and cross-complainants, Harriet Topkis and W Partners, LLC (“Cross-complainants”) claim to have timely exercised the right of redemption. The cross-complainants alleged in their FACC that: (1) defendant CLS wrongfully failed to issue a Certificate of Sale recognizing Topkis’ right of redemption, and instead issued the Trustee’s Deed Upon Sale conveying title to Arden in February 2012; (2) in April 2012, W Partners, on the one hand, and Topkis, on the other, entered into an Equity Purchase Agreement and Real Property Agreement to split the proceeds from the sale of the property following redemption of the delinquent HOA dues; and (3) W Partners redeemed the property in early May 2012 before expiration of the CCP 1367.4(c)(4) 90-day redemption period (and before recordation of the Clarence Grey deed of trust), which should have fully redeemed the default by Topkis.
Arden demurred to both claims alleged against it in the FACC. On January 31, 2014, the Court sustained the demurrer with ten days leave to amend as to the first cause of action for declaratory relief, and overruled the demurrer to the quiet title claim. Cross-complainants did not file a SACC. On February 21, 2014, Arden moved ex parte for a CCP 581(f) dismissal (and expungement of Cross-complainants’ lis pendens) due to the failure to amend. The Court – in retrospect, erroneously – granted the application, dismissed the cross-complaint, and expunged the lis pendens. Cross-complainants request that the Court vacate its February 21, 2014, order dismissing the cross-complaint and expunging Cross-complainants’ lis pendens.

GRANTED:

Having read and considered the moving papers, the court tentatively grants the request to vacate the dismissal pursuant to CCP 473(d) and rules as follows:

1. CCP 473(d) provides, “The court may, upon motion of the injured party, or its own motion, correct clerical mistakes in its judgment or orders as entered, so as to conform to the judgment or order directed, and may, on motion of either party after notice to the other party, set aside any void judgment or order;

2. Evidentiary matters:
a. Arden’s request for judicial notice is granted as to recordation and existence only; and
b. Arden’s evidentiary objections are overruled as moot, for the reasons stated below.

3. Arden’s ex parte application to dismiss was based on Code of Civil Procedure section 581(f)(2), which provides: “The court may dismiss the complaint as to that defendant when: [¶] … [¶] Except where Section 597 applies, after a demurrer to the complaint is sustained with leave to amend, the plaintiff fails to amend it within the time allowed by the court and either party moves for dismissal.” The ex parte application to dismiss was also based on rule 3.1320(h) of the California Rules of Court, which states: “A motion to dismiss the entire action and for entry of judgment after the expiration of the time to amend following the sustaining of a demurrer may be made by ex parte application to the court under Code of Civil Procedure section 581(f)(2)”;

4. In its ex parte application, Arden failed to inform the Court that the Court had overruled Arden’s demurrer to the quiet title claim. Indeed, the ex parte application misleadingly (presumably, unintentionally) stated that the Court “sustained [Arden’s] demurrers”. Arden also failed to inform the Court (again, presumably, unintentionally) that the FACC contained a (third) cause of action against another party, CLS, which claim, of course, survived Arden’s demurrer;

5. Had the Court been aware of either of these facts, it would not have issued the February 21, 2014, order of dismissal. As is noted in the moving and reply briefs, Cross-complainants were under no obligation to amend the cross-complaint if they had no desire to amend the declaratory relief claim. In other words, the second cause of action for quiet title – which by its nature supports a lis pendens – remained pled. The same is true as to Cross-complainants’ claim against CLS;

6. As is succinctly stated in the reply brief: “Arden invited this Court into acting in excess of its jurisdiction…. The Court must correct its mistake….” Reply, 2:25-27. The Court agrees;

7. The Court, on its own motion pursuant to CCP 128, and pursuant to CCP 473(d) vacates in its entirety the order of dismissal entered on February 21, 2014. SACC is to be served and filed within 10 days, and may contain supplemental claims against Arden. Nothing in this ruling is intended to affect title which has already vested in the Romans (or anyone who has succeeded to any interest in the property through them). See, CCP 405.60 and CCP 405.61;

8. Defendants shall give notice of today’s rulings and timely file proof of service thereof; and
9. The matter will be returned to the active civil calendar.