Case Name: Redwood Property Investors II, LLC v. Darvin Peck, et al.
Case No.: 18CV336583

I. Background

This common count action is filed by plaintiff Redwood Property Investors II, LLC (“Plaintiff”) against defendants Darvin Lyn Peck (“Peck”) and Celia J. Salazar (collectively “Defendants”).

As alleged in the Complaint, Defendants are the former owners of real property located at 1951 Wellington Drive, Milpitas, CA (the “Property”). (Complaint, ¶¶ 1, 9.) In 2005, Defendants decided to mortgage the Property. (Id. at ¶ 10.) To this end, Peck obtained a $582,000 mortgage loan from Santander Bank, which was secured by a deed of trust on the Property (the “Santandar Lien”). (Id. at ¶ 10.)

Defendants continued to reside together at the Property from 2005 to 2016. (Id. at ¶ 11.) Around June 2016, Plaintiff purchased the Property at a trustee’s sale and acquired title subject to the Santander Lien. (Id. at ¶ 12.) This sale generated more than $660,000 in surplus funds after the payment of all liens and obligations aside from the Santander Lien. (Ibid.) Around July 2016, Defendants stopped making payments on the loan, which remained in default from 2016 to 2018. (Id. at ¶ 13.) Despite this fact, the trustee did not use the surplus funds from the sale to pay off the Santander Lien. (Ibid.) Instead, in 2018, Defendants received the $664,847.15 in surplus funds, which they pocketed without paying off their loan. (Ibid.)

In September 2018, the Santander Bank initiated foreclosure proceedings on the Property. (Id. at ¶ 14.) Plaintiff then paid off the Santandar Lien as it had also otherwise entered into an agreement to convey free and clear title to the Property to a third party. (Ibid.)

The Complaint alleges a single cause of action for common count for money paid.

Currently before the Court is Defendants’ motion for judgment on the pleadings, which is accompanied by a request for judicial notice. Plaintiff opposes the motion and also files a request for judicial notice in support.

II. Motion for Judgment on the Pleadings

Plaintiff’s common count claim alleges Defendants are required to reimburse it for the $577,384.83 it spent to pay off the Santander Lien.

Defendants move for judgment on the pleadings on the ground of failure to state facts sufficient to constitute a cause of action. (See Code Civ. Proc., § 438, subd. (c)(1)(B)(ii).)

Defendants argue Plaintiff has no right to reimbursement of the money it spent to pay off the Santandar Lien because that lien was a senior lien in a foreclosure initiated by a junior lienholder. In support, they cite MTC Fin., Inc. v. Nationstar Mortg., LLC (2018) 19 Cal.App.5th 811 (“MTC”) for the proposition that “[w]hen a junior lienholder forecloses on a second deed of trust at a nonjudicial trustee’s sale, the senior lienholder is not entitled to any proceeds from the sale because the property is purchased at the sale subject to the first deed of trust.” (MTC, supra, 19 Cal.App.5th at 814, citing Romo v. Stewart Title of California (1995) 35 Cal.App.4th 1609, 1614, Ostayan v. Serrano Reconveyance Co. (2000) 77 Cal.App.4th 1411, 1422.)

At the outset, MTC, supra, is inapposite because that case involved a senior lienholder seeking proceeds from a sale initiated by a junior lienholder; here, in contrast, the present action concerns a purchaser seeking reimbursement of monies it spent to pay off a lien that came with the property.

Moreover, neither the face of the Complaint nor matters that are judicially noticeable indicate that the Santandar Lien occupied the senior position.

It is well-established that a motion for judgment on the pleadings, like a general demurrer, confines the court’s consideration to allegations on the face of the complaint and any matters that may be judicially noticeable. (Cloud v. Northrop Grumman Corp. (1998) 67 Cal.App.4th 995, 999; Jayasinghe v. Lee (1993) 13 Cal.App.4th Supp. 33, 36.) Extrinsic matters cannot be considered. (Ibid.)

Here, the Complaint makes no reference to the lien position of either the Santandar Lien or the lien that was ultimately foreclosed upon. (See Complaint, ¶¶ 12, 13.) Instead it merely alleges Plaintiff took title to the Property in June 2016 and later paid off the Santandar Lien. (Ibid.) As such, the relative positions of the liens on the Property at the time of foreclosure are facts extrinsic to the pleading.

Defendants seek to establish the purported senior position of the Santandar Lien by requesting judicial notice of a May 9, 2017 trustee’s deed upon sale that was recorded for the Property. They note the deed indicates the lien foreclosed upon was a $439,500 loan and also includes a handwritten note stating: “Covers both 1st position $582,000 [and] 2nd position $439,500.00.” (RJN, Exh. 1.) Based on these facts, they conclude the deed “establishes that [Plaintiff] acquired title at the trustee sale by paying the lien of the second deed of trust and assuming the lien of the holder of the first deed of trust.” (Def. RJN at p. 3:4-8.) Defendants’ position is unsound and appears to be predicated on a misunderstanding of the purpose and function of judicial notice.

Though recorded documents are generally judicially noticeable under Evidence Code section 452, subdivision (h), which permits judicial notice of facts that are not reasonably subject to dispute and capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264-265, disapproved of on other grounds in Yvanova v. New Century Mortg. Corp. (2016) 62 Cal.4th 919), it is also well-established that “[t]aking judicial notice of a document is not the same as accepting the truth of its contents or accepting a particular interpretation of its meaning.” (Herrera v. Deutsche Bank Nat’l Tr. Co. (20110 196 Cal.App.4th 1366, 1375, citing Joslin v. H.A.S. Ins. Brokerage (1986) 184 Cal.App.3d 369, 374.) Thus, while courts may take judicial notice of the existence of public records, they do not take notice of the truth of the matters stated therein because those facts are reasonably subject to dispute. (Ibid.; see also Love v. Wolf (1964) 226 Cal.App.2d 378, 403, Poseidon Development, Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal.App.4th 1106.)

Here, Defendants seek judicial notice of the May 9, 2017 trustee’s deed upon sale for the express purpose of establishing the truth of a fact stated therein, namely that the Santander Lien was senior at the time of foreclosure and Plaintiff took title to the Property subject to that lien. But these facts are reasonably subject to dispute. Thus, the May 9, 2017 trustee’s deed upon sale is not judicially noticeable for the purpose for which it is submitted.

Accordingly, Defendants’ motion for judgment on the pleadings is DENIED.