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• • CIV-130201-ACI-AS11 00016-AJ0-121602

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System Code: CIV

Case Number: AS1100016 -

Case Type: ACI

Action Code: AJO

Action Date: .02/01/13

Action Time: 12:16 .

Action Seq: 0002 .

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Judgment With Opinion ·

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0 SCANNE[f FillED

SUPERIOR COURT COUNTY OF SAN BERNARDINO

APPEl\LS DIViSION

FEB 1 2013

SUPERIOR COURT OF THE STATE OF CALIFO~N~~~"l Sog~~ COUNTY OF SAN BERNARDINO ' LYN OLBERG, DEPUIIJY

APPELLATE DIVISION

U.S. BANK, N.A., Case No: ACIAS 1100016 (Trial Court: UDRS 1 000279) Plaintiff and Respondent,

v.

HELENE CANTARTZOGLOU, Defendant and Appellant.

PER CUR!AM OP!N!ON

Appeal from judgment after court trial, San Bernardino Superior Court, Rancho Cucamonga District, Barry L. Plotkin, Judge. Reversed.

Care Law Group, Alan L. Geraci, Esq., for defendant and appellant.

AlvaradoSmith, S. Christopher Yoo, Esq., Thomas S. Van, Esq., for plaintiff and respondent.

THE COURT:

Facts

Appellant Helene Cantartzoglou appeals from a judgment in an

unlawful detainer action brought against her by respondent U.S. Bank

N.A., following a court trial. The unlawful detainer action was brought

pursuant to section 1161 a of the Code of Civil Procedure. In its verified

complaint, respondent alleged that, as trustee for a mortgage investment

trust, it had acquired title to appellants' property at a trustee's sale

following nonjudicial foreclosure proceedings under a Deed· of Trust

1

executed by appellant in March 2006 (the "DOT"), and that the foreclosure

sale was held in compliance with the statutory requirements. 1

In her answer to the complaint, appellant raised a number of

affirmative defenses, including (1) fraud in respondent's acquisition of title;

(2) violation of the statute of frauds; (3) respondent's failure to mitigate

damages; and (4) respondent's lack of ownership of the property. The

fraud defense was based on appellant's claim that the documents

evidencing various assignments of the DOT and substitutions of trustee

were fraudulent. The claim that U.S. Bank was not the actual owner of the

property was based on appellant's assertion that U.S. Bank was not

appellant's creditor at the time of the trustee's foreclosure sale, and

therefore could not have purchased valid title at that sale by way of a credit

bid.2

Respondent brought a motion to strike all four of the foregoing

affirmative defenses from appellant's answer, on the ground they

constituted an improper attempt to litigate title in an unlawful detainer

action.3 The court granted respondent's motion in its entirety, and ordered

those affirmative defenses stricken from the answer.4 Appellant does not

purport to challenge that ruling on appeal.

1 CT 17 2 CT27-32 3 CT 36-50 4 CT111-114

2

~. .-, '

Court trial was initially held on October 15, 2012. Appellant did not

appear, and the trial was held in her absence after the trial court

determined she had been given proper notice of the trial. At the

conclusion of the trial, the court entered judgment for possession in favor

of respondent. 5 Appellant subsequently brought a motion to set aside the

judgment under section 473 of the Code of Civil Procedure, and the trial

court granted that motion.6

A new trial was held on November 1, 2010, at which both appellant

and respondent appeared. At the outset of the trial, appellant argued, as

she had in her trial brief for the prior trial, that two Trustee's Deeds Upon

Sale had been recorded for the same property, thereby creating a question

about the validity of U.S. Bank's claim of ownership of the property. 7 It

appears undisputed that the trustee's foreclosure sale of appellant's

property was held on September 17, 2009. A Trustee's Deed Upon Sale

was recorded on September 25, 2009, conveying title to appellant's

property to LaSalle Bank (the "September Trustee's Deed"). Appellant

asserted that the recording of that deed extinguished the DOT originally

executed by appellant in March 2006. However, three months later, on

December 17, 2009, an Assignment of Deed of Trust was created (the

"Assignment"), purporting to assign the same March 2006 DOT to

5 CT 73-74 6 CT 79-86 7 RT 2-3

3

>I

respondent U.S. Bank. In addition, also on December 17, 2009, a second

Trustee's Deed Upon Sale was executed, purporting to transfer title to

appellant's property to U.S. Bank, as the foreclosing beneficiary under the

DOT (the "December Trustee's Deed").8

The trial court took judicial notice of the September Trustee's Deed

and the December Trustee's Deed, as well as the Assignment,9 and those

three documents are included in the clerk's transcript on appeal. 10 The

September Trustee's Deed reflects that title to the property was conveyed

to LaSalle Bank on September 17, 2009, after LaSalle Bank made a

successful credit bid for the property as the foreclosing beneficiary. That

deed also contains an attestation of compliance with all of the notice

requirements regarding the Notice of Default and the Notice of Sale. The

September Trustee's Deed was recorded on September 25, 2009. 11

The Assignment was executed on December 17, 2009, by LaSalle

Bank, "as trustee for Washington Mutual Pass-Through Certificates

WAML T Series 2006-AR4 Trust by JPMorgan Chase Bank, National

Association, Attorney in fact." The Assignment documented the

assignment of LaSalle Bank's beneficial interest under the DOT to U.S.

8 RT 2-3; CT 87-89 9 RT 24 1° CT 117-118 (September Trustee's Deed, trial exhibit 11); CT 121-122 (Assignment, trial exhibit 12); CT 124-125 (December Trustee's Deed, trial exhibit 13) 11 CT 117-118

4

I I

Bank, as trustee for the same Washington Mutual trust. The Assignment

was recorded on December 28, 2009. 12

Finally, the December Trustee's Deed documents the trustee's

conveyance of title to U.S. Bank, pursuant to a successful credit bid at the

trustee's sale on September 17, 2009. The document bears a notation

that it is being recorded "to change the grantee name on Trustee's Deed ?

upon sale document recorded on 9/25/09 instrument # 20090418964."

That document number matches the document number on the September

Trust Deed. The December Trustee's Deed is identical in every respect to

the September Trustee's Deed, with the exception of the name of the

grantee and the dates of execution and recordation. 13

The trial court heard testimony from two witnesses for respondent

U.S. Bank. The first was Lucas Kleiss, an employee of the real estate

broker representing respondent in the foreclosure transaction. He testified

that the foreclosure on appellant's property took place in September

2009. 14 In December 2009, a second Deed of Trust was recorded for the

same property, specifically stating on its face that its purpose was to

correct the name of the grantee in the original Trustee's Deed. 15

After the foreclosure on appellant's property, Mr. Kleiss caused a

3/90-Day Notice to Quit to be served on appellant. Appellant did not

12 CT 121 13 CT 124 14 RT 4 15 RT 5

5

> I

vacate the property, and Mr. Kleiss filed an unlawful detainer action. The

court rendered a verdict in favor of the plaintiff at the first trial because no

defense had been presented, but Mr. Kleiss later learned that appellant's

trial attorney had not been given notice of the trial, so the trial was being

held again. Appellant had not vacated the property in the intervening

time. 16

On cross-examination, appellant's counsel attempted to question Mr.

Kleiss further about the two Trustee's Deeds and the Assignment.

Respondent's attorney objected that, as a field inspector for respondent's

real estate broker, Mr. Kleiss had no foundation for testifying about the

recorded documents. Noting that respondent had not elicited any

testimony from Mr. Kleiss about the documents in its case-in-chief, the

court sustained respondent's objection to Mr. Kleiss's testimony on cross-

examination. 17

The next witness to testify for respondent Bank was Jay Arcement,

who testified to having served the 3/90-Day Notice to Quit on appellant by

posting it on appellant's property and mailing it to her by first class mail.

He further stated that the proof of service in the court file reflected that

form of service of the notice. 18

16 RT 5-6 17 RT 19-23 18 RT 25-26

6

) '

On cross-examination, Mr. Arcement testified that he had not been

to appellant's property before the day he posted the notice. He did not

attempt to contact anyone inside the dwelling, and he did not return to the

property after that visit. He mailed the Notice to Quit by regular mail, not

by certified mail, because certified mail is not required. Mr. Arcement was

retained by respondent Bank's attorneys as a process server. 19 The court

excused Mr. Arcement, and stated it was taking judicial notice of the proof

of service of the Notice to Quit. Respondent Bank rested, and appellant

began her own case-in-chief. 20

Appellant's first and only witness was her nephew, Edmond

Goubran, who began to testify about respondent's failure to properly serve

the Notice to Quit. However, before the witness could testify on that issue,

the court requested an offer of proof as to the relevance of the proposed

testimony. During the ensuing discussion, Mr. Goubran stated that

respondent had been asked during discovery to produce the proof of

service of the Notice to Quit because it had not been attached to the

complaint that was served, as required by section 1162 of the Code of Civil

Procedure. Respondent had served a response to the request, but Mr.

Goubran had not brought the response with him to trial, and respondent's

counsel also did not have a copy at trial. 21 The court noted that there was

19 RT 26-27 20 RT 28-29 21 RT32-33

7

' '

in fact no proof of service of the Notice to Quit attached to the unlawful

detainer complaint, and it had taken judicial notice of that proof of service

in error. Although the record contained sworn testimony from Mr.

Arcemont that he had in fact served the Notice to Quit, and had executed a

proof of service of that notice, there was no proof of service anywhere in

the court file. 22 The court then vacated its previous order taking judicial

notice of the proof of service.23

Appellant confirmed that she had raised the lack of proof of service

of the Notice to Quit in her answer to the complaint and in her trial brief,

and asserted it constituted a defect in the complaint. Thereupon, the court

concluded that appellant did not require any testimony on the issue of lack

of proper service of the notice, and dismissed Mr. Goubran. Appellant

then stated she had no further testimony to present. 24

At that point, the court suspended proceedings and requested

further briefing from respondent on the issues raised in appellant's trial

brief, as well as the alleged irregularities in the title documents and

plaintiff's claim that U.S. Bank was a "stranger" to the title.25

Respondent filed its response to appellant's trial brief, but that

response did not address the question of the validity of service of the

Notice to Quit, nor did respondent submit a copy of a valid proof of service

22 RT 35-37 23 RT 36 24 RT 37-38 25 RT 39

8

' .

of that notice. Respondent argued that (1) appellant was attempting to .

raise affirmative defenses that had been stricken from her answer by the

court; and (2) the December Trustee's Deed was exactly what it purported

to be-a document designed to correct an error in the identity of the

grantee reflected in the September Trustee's Deed. The reference in the

September Trustee's Deed to LaSalle Bank as the grantee was in error,

because LaSalle Bank had ceased to exist by September 2009. 26 The

December Trustee's Deed was not, and did not purport to be, a new

transfer of title. Respondent further argued that the December 2009

Assignment did not establish that appellant's DOT was not assigned to

U.S. Bank until after the trustee's sale had been held-it did nothing more

than reflect that the DOT had been assigned to U.S. Bank at some time in

the past, and the date of recordation did not equate to the date of the

assignment.27

In her reply brief, appellant repeated her argu-ments that (1)

respondent lacked capacity to prosecute the unlawful detainer action

because it was not registered to do business in San Bernardino County;

(2) respondent failed to properly serve the Notice to Vacate because the

process server did not attempt to contact anyone on the property before

posting and mailing the notice, and respondent failed to address this issue

26 CT 146; RT 43. At appellant's request, the trial court took judicial notice of a computer document from the website of the Federal Deposit Insurance Corp. (FDIC), stating that LaSalle Bank was an "inactive institution" that had been merged into Bank of America in October 2008. 27 CT 94-99

9

..

in its brief; (3) the sale of appellant's property at the trustee's sale on

September 17, 2009 extinguished her original DOT pursuant to Civil Code \

section 2910-consequently, LaSalle's assignment of that DOT to

respondent in December 2009 was invalid because there was no longer

any DOT to assign; and (4) respondent's admission that LaSalle Bank had

become defunct in 2008 established that the September 2009 Trustee's

Deed conveying title to LaSalle Bank and the December 2009 Assignment

of the DOT from LaSalle to respondent were both invalid, inasmuch as

both transactions involved an entity that did not exist. Even if the original

DOT had not been extinguished, and even if JPMorgan Chase actually

held a power of attorney authorizing it to execute the Assignment in

December 2009, that power of attorney expired when LaSalle Bank

became defunct in 2008. Consequently, the December Trustee's Deed,

purportedly correcting the September Trustee's Deed to reflect purchase of

title by U.S. Bank as the foreclosing beneficiary under the DOT, was also

invalid because U.S. Bank could not be the foreclosing beneficiary if the

Assignment was invalid.28

It was not until November 30 when respondent, in apparent

response to appellant's reply brief, filed an executed proof of service of the

Notice to Vacate, signed by Mr. Arcemont and attesting that he had served

the notice by "post and mail" on January 21, 2010. That document stated

28 CT 135-142

10

' .

there was "no person of suitable age or discretion to be found at any

known place or [sic] residence of [sic] place of business of said tenant(s)."

The proof of service attached to respondent's filing demonstrated that it

was served on appellant's counsel on November 29, just two days before

trial reconvened, by regular mail and by email. 29

At the reconvened trial on December 1, 2010, the trial court

indicated that the parties had rested at the conclusion of the previous

session, and that it would render judgment based on its review of the

written submissions. That review included "the history of the transfers of

the deed from the original lender who was Alliance Bank Corp. through

MERS and the historical transactions that resulted in the current state of

affairs."30

The court then recognized the rebuttable presumption that the

foreclosure sale had been conducted "regularly and fairly," and ruled that

appellant had failed to overcome that presumption. First, the trial court

interpreted appellant's argument regarding respondent's capacity to

maintain the unlawful detainer action in California court as a challenge to

the court's personal jurisdiction over respondent, and rejected that

argument on the basis of authority holding that a nonresident plaintiff who

files suit in California court submits to the personal jurisdiction of that court.

29 CT 152-154 30 RT 43

11

Thus, respondent's failure to qualify to do business in San Bernardino

County did not deprive the court of jurisdiction. 31

Next, the court took judicial notice of the fact that LaSalle Bank had

become inactive as of October 17, 2008, but rejected appellant's argument

that the DOT was therefore void. The court noted that "LaSalle Bank was

acting through successor banks and not in its former capacity at the

relevant times."32 Further, the court found appellant's argument involved

the question of "ownership," which fell within the scope of the affirmative

defenses previously stricken from appellant's answer. On the basis of

those findings, the trial court rendered a verdict in favor of respondent U.S.

Bank. 33 The court made no mention of the issue of service of the Notice to

Vacate or of the recently-filed proof of service, and neither of the parties

raised the matter.

31 RT 43 32 RT 43-44 33 RT 50

12

Discussion

Issues on Appeal

Appellant poses the following questions in her appeal:

1. Can an unregistered foreign corporation maintain an action in the

State of California?

2. Does a recorded Trustee's Deed Upon Sale extinguish a Deed of

Trust? If so, (a) does a subsequent assignment of that extinguished Deed

of Trust and a second recorded Trustee's Deed Upon Sale confer title to a

third party and convey standing to that party to prosecute an unlawful

detainer action under section 1161 a of the Code of Civil Procedure; and

(b) is an assignment in the name of a non-existent entity valid?

3. Is notice by a non-existent entity sufficient to satisfy the statutory

requirements of Civil Code section 2924b to exercise the power of sale in a

Deed of Trust?

4. Is a process server required under Code of Civil Procedure

section 1162 to attempt personal service of a Notice to Vacate before

posting and mailing the notice?

1. Can an unregistered foreign corporation maintain an action in the State of California?

Answer: yes, if that action is initiated to further the ownership of a

loan or the enforcement of a loan by trustee's sale or judiCial process, or

the acquisition of property by way of trustee's sale.

13

Under section 191 of the California Corporations Code, "any foreign

lending institution ... shall not be considered to be doing, transacting or

engaging in business in this state solely by reason of engaging in any or all

of the following activities. . . : (3) The ownership of any loans and the

enforcement of any loans by trustee's sale, judicial process or deed in lieu

of foreclosure or otherwise." (Corp. Code, § 191, subd. (d)(3).)

Moreover, section 191, subdivision (d)(6) also provides that a foreign

lending institution does not transact or engage in business in this state by

acquiring title to real or personal property covered by any mortgage or

deed of trust by trustee's sale, judicial sale, foreclosure or deed in lieu of

foreclosure, or the retention of title pending the orderly sale or other

disposition thereof.

Finally, subdivision (d)(7) extends that exemption to "the engaging in

activities necessary or appropriate to carry out any of the foregoing

activities." We have no doubt that respondent's initiating a legal action to

remove appellant from property to which respondent acquired title at a

trustee's sale conducted pursuant to the power of sale in a deed of trust, of

which respondent was the beneficiary, qualifies for both of the foregoing

exceptions listed in section 191 of the Corporations Code.

Appellant contends the trial court misconstrued her argument on this

point as an assertion that respondent's failure to register to do business in

California divested the trial court of personal jurisdiction over respondent,

14

and ruled on the basis of its misunderstanding of appellant's argument.

For purposes of this appeal, that contention, even if correct, is of no

consequence. It is a well-settled principle that a reviewing court should

uphold the decision of the lower court if it is correct for any reason, even if

the court's stated reason is erroneous. (D'Amico v. Board of Medical

Examiners (1974) 11 Cal. 3d 1, 18-19.) Because we conclude the trial

court's ruling was correct under section 191 of the Corporations Code, we

must uphold that ruling regardless of the court's stated reason.

2. Were the Assignment of Deed of Trust and the December Trustee's Deed Sufficient to Convey Title to Respondent, Such That Respondent Had Standing to Sue?

Answer: no.

Appellant contends, as she did in the trial court, that respondent

U.S. Bank was not the owner of title to her property, and therefore had no

standing to seek possession of the property in an unlawful detainer action.

We agree with appellant.

"A person who holds over and continues in possession of ... real

property after a three-day written notice to quit the property has been

served upon the person . . . may be removed therefrom . . . : Where the

property has been sold in accordance with Section 2924 of the Civil Code,

under a power of sale contained in a deed of trust executed by such

person, or a person under whom such person claims, and the title under

15

the sale has been duly perfected." (Code Civ. Proc., § 1161a, subd.

(b)(3).)

In its verified complaint, respondent alleged it had acquired plaintiff's

property by Trustee's Deed following a foreclosure sale, and thereafter

perfected its title.34 A copy of the Trustee's Deed was attached as an

exhibit to the complaint. 35 That exhibit is the December Trustee's Deed,

executed on December 17, 2009 and recorded on December 28, 2009,

and purporting to correct an error in the name of the grantee in an earlier

Trustee's Deed recorded on September 25, 2009. If valid, the effect of the

December Trustee's Deed was to establish that respondent, as the

beneficiary under plaintiff's DOT, purchased title to plaintiff's property at a

trustee's sale held on September 17, 2009 by trustee California

Reconveyance Company. Because respondent was the beneficiary under

the DOT at the time of the trustee's sale, its purchase of the property was

effected by means of a credit bid in the amount of $161,500.

In her verified answer, appellant denied the allegation that

respondent had purchased and perfected title in the property at the

trustee's sale. That denial put respondent's ownership of the property at

issue, thereby obligating respondent to prove its ownership at trial as an

element of its case. (See Code Civ. Proc., § 431.30, subd. (b)(1 ); see also

34 CT 17 35 CT 19-20

16

Advantec Group, Inc. v. Edwin's Plumbing Co. (2007) 153 Cai.App.4th

621, 627 [denial of a material allegation in a complaint places burden on

plaintiff to prove that-allegation].)

Appellant elaborated on her denial of respondent's ownership of the

property in her eighth affirmative defense, in which she alleged respondent

was not the creditor and therefore could not have obtained title to her

property by way of a credit bid at the trustee's sale. Therefore, respondent

was "a foreign third party with no rights to ownership and should be barred

from seeking relief under this action."36

As noted earlier, respondent moved to strike several affirmative

defenses from appellant's answer, including the eighth affirmative defense,

on the ground they constituted an improper attempt to litigate title in the

limited context of an unlawful detainer action. 37 For reasons not disclosed

in the record, appellant did not oppose respondent's motion, and the court

granted the motion in its entirety.38

We note that the court's order striking the eighth affirmative defense

had no effect on appellant's right to litigate the issue of respondent's title at

trial, because the eighth affirmative defense was, in fact, not an affirmative

defense at all. An affirmative defense is an allegation of new matter in the

answer that is not responsive to an essential allegation in the complaint. In

36 CT 31 37 CT 36-49 38 CT 51-56. The bench officer who granted the motion to strike is not the same as the one who presided over the trial.

17

other words, an affirmative defense is an allegation relied on by the

defendant that is not put in issue by the plaintiff's complaint. (State Farm

Mut. Auto. Ins. Co. v. Superior Court (1991) 228 Cai.App.3d 721, 725.)

Where the answer alleges facts showing that some essential allegation of

the complaint is not true, those facts are not "new matter," but only a

traverse. (Ibid.) Because respondent's acquisition and perfection of title to

appellant's property was an essential element of its unlawful detainer

action, appellant's allegation that respondent had not acquired and

perfected title was a denial of a material allegation, not an affirmative

defense. Granting respondent's motion to strike did not relieve respondent

of its affirmative burden of proving its ownership at the time of trial.

The evidence proffered by respondent to prove its ownership of the

property consisted of three documents: the September Trustee's Deed;

the Assignment; and the December Trustee's Deed. The September

Trustee's Deed (identified in the record as trial exhibit 11) documented

LaSalle Bank's purchase of appellant's property at a trustee's sale on .

September 17, 2009. Because LaSalle Bank was the beneficiary under

the DOT, it acquired title by way of a credit bid. 39 The September

Trustee's Deed was executed by an officer of the Trustee, California

39 The September Trustee's Deed states that LaSalle Bank was the foreclosing beneficiary, and later states: "Grantee, being the highest bidder at said sale, became the purchaser of said property for the amount bid being $161,500.00 in lawful money of the United States, or by credit bid if the Grantee was the beneficiary of the Deed of Trust at the time of said Trustee's Sale."

18

Reconveyance Co., on September 22, 2009, and recorded on September

The second document (identified in the record as trial exhibit 12) is

the Assignment, which documented LaSalle Bank's assignment of

appellant's DOT and the underlying note to respondent U.S. Bank. The

document was executed on December 17, 2009 by Deborah Brignac on

behalf of J PM organ Chase Bank, which in turn was acting as attorney-in-

fact for LaSalle Bank, acting as trustee for the investment trust that owned

the note. The Assignment was recorded on December 28, 2009.41

The third piece of evidence is the December Trustee's Deed (trial

exhibit 13), which purported to corr~ct the September Trustee's Deed by

replacing the name of LaSalle Bank with that of U.S. Bank. That document

was executed on December 17, 2009, by the same officer of California

Reconveyance Co. who had executed the September Trustee's Deed.

The net effect of this document was to retroactively cause U.S. Bank to be

the credit-bid purchaser and transferee of title to appellant's property at the

September 17, 2009 trustee's sale, and also to establish that U.S. Bank,

not LaSalle Bank, was the foreclosing beneficiary under the DOT at the

time of the sale.42 Respondent's explanation for the December Trustee's

Deed was that the September Trustee's Deed erroneously named LaSalle

4° CT 117-118 41 CT 121 42 CT 124-125

19

Bank instead of U.S. Bank, inasmuch as LaSalle Bank no longer existed

by the time of the trustee's sale.

"To establish that he is a proper plaintiff, one who has purchased

property at a trustee's sale and seeks to evict the occupant in possession

must show that he acquired the property at a regularly conducted sale and

thereafter 'duly perfected' his title."' (Stephens v. Hollis (1987) 196

Cai.App. 3d 948, 952.) "[W]here the plaintiff in the unlawful detainer action

is the purchaser at a trustee's sale, he or she 'need only prove a sale in

compliance with the statute and deed of trust, followed by purchase at

such sale, and the defendant may raise objections only on that phase of

the issue of title." (Old Nat'/ Fin. Servs. v. Seibert (1987) 194 Cai.App.3d

460, 465.) At trial, appellant asserted the evidence upon which respondent

relied to prove its title to the property was insufficient to meet its affirmative

burden. We agree.

Even giving retroactive effect to the December Trustee's Deed,

respondent's evidence was still only sufficient to establish that respondent

purported to purchase appellant's property by credit bid at the trustee's

sale on September 17, 2009. In order to do so, respondent was required

to be the beneficiary under the DOT. This is so because any proceeds

realized at the sale would be payable to the beneficiary, so it would be

useless and inefficient to require that beneficiary to tender cash that would

only be immediately returned to it. (Alliance Mortgage Co. v. Rothwell

20

(1995) 10 Cal.4th 1226, 1238; Cornelison v. Kornbluth (1975) 15 Cal.3d

590, 607.)

Here, respondent could not have been the foreclosing beneficiary at

the trustee's sale on September 17, 2009 because it was not assigned the

beneficial interest under the. DOT until three months later, on December

17. Moreover, that Assignment was not valid in any event, because it was

executed on behalf of JPMorgan Chase Bank, acting as agent (attorney-in­

fact) for LaSalle Bank. However, on December 17, 2009, there was no

agency relationship between LaSalle Bank and JPMorgan Chase Bank,

because the principal, LaSalle Bank, no longer existed. Absent any

evidence that JPMorgan's agency relationship with LaSalle Bank was

coupled with any interest in the subject of the agency, the agency

relationship between LaSalle Bank and JPMorgan also ceased to exist

when LaSalle Bank ceased to exist in October 2008.43 (Civ. Code, § 2356, .

subd. (a).) Accordingly, JPMorgan had no authority or power to assign the

DOT and the note to respondent in December 2009, or, for that matter, at

any time after October 2008.

It follows, then, that if respondent was neither the beneficiary under

the DOT nor the owner of the underlying note at the time of the trustee's

sale, it could not have acquired title to appellant's property at that sale in

the manner asserted in the Trustee's Deed.

43 A fact judicially noticed by the trial court (see RT 43).

21

Respondent cites the recent decision in Fontenot v. Wells Fargo

Bank, N.A. (20 11) 198 Cai.App.4th 256 as support for its argument that it

was not enough for appellant to assert that the assignment of the DOT

(and/or the underlying debt) was invalid, and therefore respondent lacked

standing to bring the unlawful detainer action. As the Fontenot court

observed, assignments of debt, unlike assignments of the security interest,

are commonly not recorded. It was possible for the foreclosing party to

have received an assignment of the underlying debt "in an unrecorded

document that was not disclosed to plaintiff." Therefore, a plaintiff in a

wrongful foreclosure action based on the defendant's lack of authority to

foreclose on the note was required to allege not only that the assignment

was invalid, but also that the foreclosing defendant had not received an

assignment of the debt in any other manner. (/d. at pp. 271-272.)

Respondent's reliance on Fontenot is misplaced for a significant

reason. Fontenot was not an unlawful detainer action, brought by the post­

foreclosure purchaser of a defaulted property. It was a wrongful

foreclosure action, brought by the homeowner against the foreclosing

entity. Accordingly, it was the homeowner, not the forecloser, who had the

burden of proving all of the elements of the claim. Thus, if the homeowner

wanted to assert the invalidity of the assignment of the debt, it was the

homeowner's burden to do so.

22

That is not the case here. Unlike the plaintiff in Fontenot, appellant

was the defendant in this action, and had no burden of proof-on the

contrary, the burden of proving all of the essential elements of the unlawful

detainer action rested squarely on respondent. Respondent chose to rely

on the two Trustee's Deeds and the Assignment to prove its ownership of

the property, and therefore its standing to bring the unlawful detainer

action. For the reasons discussed, that evidence was insufficient to meet

that burden, and respondent failed to prove all of the elements of its claim.

It was therefore not entitled to judgment.

3. Is notice by a non-existent entity sufficient to satisfy the statutory requirements of Civil Code section 2924b to exercise the power of sale in a Deed of Trust?

Although this may pose an interesting question, we find it is a

question that does not warrant consideration, because appellant has failed

to develop this issue in her brief, with citations to the record and to legal

authority. "[U]nless a party's brief contains a legal argument with citation

of authorities on the point made, the court may treat it as waived and pass

on it without consideration." (Trinkle v. California State Lottery (2003) 105

Cai.App.4th 1401, 1413.)

4. Is a process server required under Code of Civil Procedure section 1162 to attempt personal service of a Notice to Vacate before posting and mailing the notice?

23

Answer: yes, to the extent of attempting to ascertain whether any

proper recipient of personal service is present before utilizing an

alternative method of service.

Under section 1162 of the Code of Civil Procedure, a Notice to

Vacate may be served on a tenant: (a) by personal service; (b) if the tenant

is absent from his or her place of residence, and from his or her usual

place of business, by substitute personal service on a person of suitable

age and discretion, followed by mailing to the tenant and his or her place of

residence; or (3) if the place of residence and place of business cannot be

ascertained, or if a person of suitable age and discretion cannot be found

there, by affixing a copy of the notice to a conspicuous place on the

property, followed by mailing to the tenant at the same address. (Code

Civ. Proc., § 1162, subd. (a).) This last option is commonly referred to as

the "post and mail" approach.

Because unlawful detainer actions are purely a creation of statute,

and because they are summary proceedings designed to affect the

defendant's right of possession, and to afford the defendant fewer

procedural entitlements, the plaintiff must "clearly bring itself within the

purview of the unlawful detainer statutes." (Smith v. Municipal Court

(1988) 202 Cai.App.3d 685, 689, citing Markham v. Fralick (1934) 2 Cal.2d

221, 227 and Baugh v. Consumers Assoc., Ltd. (1966) 241 Cai.App.2d

672, 674-675.) In particular, a Notice to Vacate "is valid and enforceable

24

only if the lessor strictly complies with the specifically described notice

conditions" under section 1162. (Lamey v. Masciotra (1969) 273

Cai.App.2d 709, 713.)

An unlawful detainer complaint must "state specifically the method

used to serve the defendant with the notice or notices of termination upon

which the complaint is based." This requirement may be satisfied by either

(1) using and completing all of the items relating to service of the notice in

an appropriate Judicial Council form complaint; or (2) attaching a proof of

service of the notice to the unlawful detainer complaint. (Code Civ. Proc.,

§ 1166, subd. (a)(S).) In this case, because respondent did not utilize a

Judicial Council form complaint, it was required to attach a proof of service

·of the Notice to Vacate. It did not do so.

In her verified answer, appellant alleged she never received any

Notice to Vacate until she received the copy attached as an exhibit to the

unlawful detainer complaint. 44 She raised the issue again in her trial

brief,45 and again in her reply to respondent's trial brief.46 Further,

appellant attempted to introduce evidence to that effect at the first session

of trial, through the testimony of her nephew, Mr. Goubran.

"'[A] tenant is entitled to a three-day notice to pay rent or quit which

may be enforced by summary legal proceedings [citation], but this notice is

44 CT 28 45 CT 87-88, 91 46 CT 139

25

valid and enforceable only if the lessor strictly complies with the specifically

described notice conditions. [Citations.]' Stated another way, 'proper

service on the lessee of a valid three-day notice to pay rent or quit is an

essential prerequisite to a judgment declaring a lessor's right to

possession under section 1161, subdivision 2. [Citations.]' 'A lessor must

allege and prove proper service of the requisite notice. [Citations.] Absent

evidence the requisite notice was properly served pursuant to section

1162, no judgment for possession can be obtained. [Citations.]"' (Palm

Property Investments, LLC v. Yadegar (2011) 194 Cai.App.4th 1410, 1425,

quoting Kwok v. Bergren (1982) 130 Cai.App.3d 596, 600 and Liebovich v.

Shahrokhkhany (1997) 56 Cai.App.4th 511, 513; see also, Lamey v.

Masciotra, supra, 273 Cai.App. 2d at p. 713.) "When the fact of service is

contested, compliance with one of these methods [in section 1162] must

be shown or the judgment must be reversed." (Liebovich, supra at p. 514.)

It is true that section 1162 does not require a showing of reasonable

diligence by the process server in attempting personal service before

electing the alternative "post and mail" method of service. (Hozz v. Lewis

(1989) 215 Cai.App.3d 314, 317.) However, the statute contemplates at

least some attempt to determine whether anyone is present at the location

before resorting to the "post and mail" alternative. To conclude otherwise

would be to negate the provision in subdivision (a)(3) of section 1162,

which permits "post and mail" service of the Notice to Vacate "if such a

26

place of residence and business cannot be ascertained, or a person of

suitable age or discretion there can not be found." That condition is not

met if no attempt at all is made to ascertain whether any such person is

present on the property.

Had the Legislature not intended to require an attempt to determine

whether an appropriate recipient of personal service is not available before

resorting to the "post and mail" option, it would not have made that option

conditional upon such a finding-instead, it would simply have made "post

and mail" an equally acceptable alternative method of service. '"When

statutory language is thus clear and unambiguous there is no need for

construction, and courts should not indulge in it."' (Ornelas v. Randolph

(1993) 4 Cal.4th 1095, 1105, quoting Delaney v. Superior Court (1990) 50

~al.3d 785, 800, italics in Delaney.)

While the proof of service submitted by respondent the day before

the reconvened trial contained a sworn statement by Mr. Arcemont, under

penalty of perjury, that he had served the Notice to Vacate by "post and

mail" when no person of suitable age or discretion could be found at the

property, that proof of service did no more than create a rebuttable

presumption that service was proper. (Dill v. Berquist Construction Co.,

Inc. (1994) 24 Cai.App.4th 1426, 1441-1442.) In other words, the

presumption could be dispelled by evidence that the service was not

proper.

27

In this case, that contrary evidence took the form of the trial

testimony of Mr. Arcemont himself. He testified that he personally went to

the property and posted the Notice to Vacate, after which he mailed the

notice to appellant by first-class mail.47 On cross-examination, he

conceded he made only a single trip to the property, and made no attempt

to contact anyone in the residence before posting the notice. He posted

the notice in lieu of attempting to personally serve it because he believed

"the code allows for posting of the notice." When Mr. Arcemont was

specifically asked if he found anyone present at the residence, he did not

answer; instead, he simply responded that he posted the notice on the

property. 48 On redirect, he again confirmed that he posted and mailed the

notice because, to his knowledge, it was an "acceptable" method of service

under the statute.49 We find that testimony sufficient to refute the

attestation in the proof of service that there was "no person of suitable age

or discretion to be found" at defendant's place of residence, and to

establish that service of the Notice to Vacate was improper and invalid.

The authorities upon which respondent relied do not compel a

different conclusion. For example, in Hozz v. Lewis, supra, the court found

that the process server had no obligation to attempt to locate the

47 RT 26 48 RT 27: "Q: So you found no one there, is that correct?

49 RT 29

A: I post [sic] it on the exterior of the property. Q: Did you attempt to contact anyone inside the dwelling? A: No."

28

defendant at a second home. The Hozz court found service by "post and

mail" was proper, where the process server had first gone to the

defendant's residence, rang the bell and knocked at the door. When no

one answered, he posted the notice and mailed a copy to the defendant.

(Hozz, 215 Cai.App.3d at p. 316.)

In Nourafchan v. Miner (1985) 169 Cai.App.3d 746, the court held

that, where the defendant was undisputedly absent from the residence, the

plaintiff was not required to attempt to serve the defendant at his place of

business before resorting to the "post and mail" method of serving the

Notice to Vacate, where the plaintiff reasonably believed the defendant

had vacated his business address and was conducting his business from

his home.

Finally, in Highland Plastics, Inc. v. Enders (1980) 109 Cai.App.3d

Supp. 1, an appellate division decision from Los Angeles County, the court

concluded that service by "post and mail" was proper where the process

server went to the premises identified to him as the defendant's place of

residence and business, knocked at the door, and there was no response.

Although Highland Plastics is not binding authority, we note

respondent's willingness to rely on its reasoning and holding, and to ask

this court to do the same. With that in mind, we note the following

language in that decision: "This code section [1162] does not require a

showing of reasonable diligence · in attempting personal service before

29

I • ..

utiliz'ing the substituted service provisions, as required in section 415.20,

subdivision (b). The 'post and mail' provision of section 1162, subdivision

3 does require, however, that if the tenant cannot be located for personal

service that the person making this substituted service first determine

either that the tenant's '. . . place of residence and business cannot be

ascertained, or that a person of suitable age or discretion there cannot be

found .... "' (/d. at p. 6.) The Highland court concluded: "When defendant

could not be found, one of the two ways of substituted service of the notice

was proper and when a person of suitable age and discretion could not be

found, the 'post and mail' method of service could be accomplished." (/d.

at p. 7.) Despite the non-binding status of Highland Plastics, we further

note that both Hozz and Nourafchan cited that decision. And we recognize

the common thread in all three decisions: the process server actually

made an attempt to contact someone at the property before resorting to

the "post and mail" alternative form of service. That did not happen here.

On the basis of the foregoing authorities, we conclude respondent

was obligated to provide evidence to justify employing the "post and mail"

alternative to personal service of the Notice to Vacate, to the extent of

showing at least some attempt to ascertain whether defendant or some

other person upon whom personal service could be effected could be

found at the property before resorting to an alternative method of service.

Although the averment in the proof of service filed the day before trial

30

created a presumption that "post and mail" service was proper, the process

server's own testimony at trial was sufficient to rebut that presumption

because he testified that he made no effort whatsoever to satisfy the

prerequisite for utilizing that alternative method of service. Rather, he

used that method as a first resort. As Highland Plastics clearly explains, ·it

is a last resort.

Moreover, because respondent failed to establish proper service of

the Notice to Vacate when it was challenged by appellant at trial,

respondent was not entitled to judgment for possession. (Palm Property,

supra, 194 Cai.App.4th at p. 1425.) Accordingly, the judgment for

possession must be reversed. (Liebovich v. Shahrokhkhany, supra, 56

Cai.App.4th at p. 514.)

Disposition

The judgment is reversed.

cittBERG.OcHOA esiding Judge of the Appella

31

• • ~uperior <tourt ~tate of <talifornia

<tountp of ~an Jjernarbino Appellate Division

DECLARATION OF SERVICE BY MAIL

STATE OF CALIFORNIA

COUNTY OF SAN BERNARDINO vs. Case# ACIAS 1100016

Trial Court# UDRS 1000279

The undersigned hereby declares: I am a citizen of the United States of America, over the age of eighteen years, a resident of the above-named State, and not a party to nor interested in the

·proceedings named in the title of the annexed document. I am a Deputy Appellate Clerk of said County. I am readily familiar with the business practice for collection and processing of correspondence for mailing with the United States Postal Service. Correspondence would be deposited with the United States Postal Service that same day in the ordinary course of business. On the date of mailing shown below, I placed for collection and mailing following ordinary business practices, at the request and under the direction of the Superior Court in and for the State of

~ California and County above-named, whose office is at the Courthouse, San Bernardino, California, a sealed envelope which contained a true copy of each annexed document, and which envelope was addressed to the addressee, as follows:

JOSEPH L. DE CLUE, JR., ESQ. 17632 IRVINE BLVD., SUITE 265 TUSTIN, CA 92780 .

ALVARADO SMITH 1 MACARTHUR PLACE SUITE 200 SANTA ANA, CA 92707

cc: Honorable Judge BARRY L. PLOTKIN, Rancho Cucamonga Courthouse

Date and Place of Mailing: February 1, 2013, San Bernardino, California.

Document Mailed: PER CURIAM OPINION

I declare under penalty of perjury that the foregoing is true and correct.

Executed on February 1, 2013, at San Bernardino, California.

c~ 'S::J>~ ii Deputy Clerk CAROLN SOlBERG