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Tentative Ruling
Judge Colleen Sterne
Department 5 SB-Anacapa
1100 Anacapa Street P.O. Box 21107 Santa Barbara, CA 93121-1107

CIVIL LAW & MOTION

AMSS LLC vs Los Meganos Homeowners Association

Case No: 1417328
Hearing Date: Mon Jul 08, 2013 9:30

Nature of Proceedings: Demurrer

Santa Barbara County Superior Court Judge Colleen K. Sterne Civil Law & Motion July 8, 2013 CASE: AMSS, LLC v. Los Meganos Homeowners Association Case No. 141732 MATTER: Demurrer to Unlawful Detainer Complaint TENTATIVE RULING: The demurrer is overruled. Defendant Los Meganos Homeowners’ Association shall have to and including July 12, 2013 to file its answer to the complaint. DISCUSSION: This is an unlawful detainer action following a foreclosure sale. On November 17, 2009, plaintiff AMSS, LLC, as lender, and DLG Family Limited Partnership, as borrower, entered into a loan agreement in the principal sum of $250,000 that was secured by a deed of trust on real property located at 4729 Sandyland Road, Unit 11, Carpinteria, California 93013. On October 19, 2010, defendant Los Meganos Homeowners’ Association recorded a notice of delinquent assessment and lien against the subject property after DLG failed to pay more than $14,387.27 in monthly assessments and other charges. On January 7, 2013, Los Meganos foreclosed on its homeowners’ association lien and received from the trustee a certificate of sale that gave Los Meganos equitable title to the premises, subject to a 90-day redemption period. On April 7, 2013, following expiration of the redemption period, the trustee recorded a trustee’s deed upon sale that vested legal title in the property in Los Meganos. On May 22, 2013, AMSS foreclosed on its loan and the trustee recorded a trustee’s deed upon sale, vesting legal title in the subject property in AMSS. On May 29, 2013, AMSS caused a three-day notice to quit to be served on Los Meganos. After Los Meganos failed and refused to give up possession of the subject property, AMSS filed the present unlawful detainer action seeking possession of the property and damages. Los Meganos now demurs to the complaint claiming there is a misjoinder of parties because it does not occupy the subject property. Los Meganos also claims that plaintiff has failed to allege the necessary elements of an unlawful detainer action under Code of Civil of Civil Procedure Section 1161a. ANALYSIS: A defendant in an unlawful detainer action may object by demurrer if it is contended that the complaint fails to state a cause of action. Code Civ. Proc. §1170. However, a demurrer can be used only to challenge defects that appear on the face of the complaint or from matters outside the complaint that are judicially noticeable. Blank v. Kirwan (1985) 39 Cal.3d 311, 318. In reviewing the sufficiency of a cause of action against a demurrer, the court assumes the truth of all facts properly pleaded. Stop Youth Addiction, Inc. v. Lucky Stores, Inc. (1998) 17 Cal.4th 553, 558. The court also assumes the truth of reasonable inferences that may be drawn from the properly pleaded facts. Reynolds v. Bement (2005) 36 Cal.4th 1075, 1083. Defendant’s demurrer will be overruled as plaintiff has alleged the requisite elements of an unlawful detainer action under Code of Civil Procedure Section 1161a. That section provides, in relevant part: “(b) In any of the following cases, a person who holds over and continues in possession of a manufactured home, mobilehome, floating home, or real property after a three-day written notice to quit the property has been served on the person, or if there is a subtenant in actual occupation of the premises, also upon such subtenant, as prescribed in Section 1162, may be removed therefrom as prescribed in this chapter. * * * (3) 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 the sale has been duly perfected.” Here, the complaint alleges (1) that plaintiff had a deed of trust secured by the subject property on Sandyland Road, (2) that on May 22, 2013, plaintiff foreclosed on the property pursuant to Civil Code Section 2924, with title being duly recorded in plaintiff’s name on May 24, 2013, (3) that on May 29, 2013, plaintiff caused a three- day notice to quit to be served on Los Meganos, and (4) that Los Meganos remains in possession of the property without plaintiff’s permission or consent. (Complaint, ¶¶ 6, 10, 11, Exs. 5, 6.) These allegations must be taken as true. The complaint also alleges proper service of the three-day notice on defendant. (Complaint, ¶11.) Attached to and incorporated in the complaint as Exhibit 6 is a copy of the proof of service, which states that service of the three-day notice was effected by posting a copy of the notice in a conspicuous place on the property and thereafter mailing a copy to Los Meganos at the address where the property is located. (Complaint, Ex. 6.) Service in this manner satisfies the requirements of Code of Civil Procedure Section 1162. Los Meganos complains that plaintiff’s title and right to possession of the property are “hotly contested” and the subject of a related lawsuit between the parties, Santa Barbara Superior Court Case No. 1415519, DLG Family Limited Partnership v. Los Meganos Homeowners Association, et al. However, unlawful detainer is a summary proceeding and not the proper forum in which to litigate disputed title to property. As the court explained in MCA, Inc. v. United Diversified Enterprises Corporation (1972) 27 Cal.App.3d 170, 176: “The extent, however, to which a plaintiff’s title may be a triable issue in an action brought pursuant to Code of Civil Procedure section 1161a, subdivision 3, was discussed by the California Supreme Court in Cheney v. Trauzettel, 9 Cal.2d 158, 160 [19 P.2d 832]: ‘In our opinion the plaintiff need only prove a sale in compliance with the statute [Civ. Code §2924] 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.’ [Citations.] ‘Irrespective of the merits of [other] defenses raised by the answer, the alleged equitable grounds of attack on plaintiff’s title have no place in the present summary proceeding, for if such issues are permissible, the proceeding entirely loses its summary character. . . . Matters affecting the validity of the trust deed or primary obligation itself, or other basic defects in the plaintiff’s title, are neither properly raised in this summary proceeding for possession [Code Civ. Proc., §1161a, subd. 3], nor are they concluded by the judgment.” For purposes of this unlawful detainer action, the complaint alleges that the foreclosure sale was properly conducted under Civil Code Section 2924 and that plaintiff has title to the property. (Complaint, ¶10, Ex. 5.) Although the complaint alleges that Los Meganos foreclosed on the property five months earlier, on January 7, 2013 (Complaint, ¶8), when title is transferred in a foreclosure sale, the grantee takes title subject to all existing deeds of trust, liens, or other encumbrances. Nguyen v. Calhoun (2003) 105 Cal.App.4th 428, 438-439. Thus, Los Meganos’s title to the property was subject to plaintiff’s deed of trust. Plaintiff, the senior lien holder, foreclosed on the property on May 22, 2013. (Complaint, ¶10.) Los Meganos next argues that it is not a proper party defendant because it does not “occupy” the subject property. However, the unlawful detainer statute, Code of Civil Procedure Section 1161a, subdivision (b), deals with possession, not occupancy (“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 on the person . . . may be removed therefrom. . . .”) As noted above, the complaint alleges that Los Meganos was in possession of the property by virtue of the fact that it had foreclosed on its homeowner’s lien. (Complaint, ¶¶ 8, 9.) When a party forecloses, it has an immediate right to possession. Farris v. Pacific States Auxiliary Corporation (1935) 4 Cal.2d 103, 105. Because Los Meganos has remained in possession after plaintiff, in turn, foreclosed on its deed of trust, it can be removed from possession by an unlawful detainer action. Code Civ. Proc. §1161(a)(b)(3). Lastly, Los Meganos argues that no facts are alleged in the complaint that would justify the claim for punitive damages. The court disagrees. Punitive damages in unlawful detainer actions are specifically authorized by statute. Code of Civil Procedure Section 1174, subdivision (b), provides: “If the defendant is found guilty of . . . unlawful detainer, and malice is shown, the plaintiff may be awarded statutory damages of up to six hundred dollars ($600), in addition to actual damages, including rent found due. The trier of fact shall determine whether actual damages, statutory damages, or both, shall be awarded, and judgment shall be entered accordingly.” In paragraph 13, plaintiff alleges that defendant’s continued possession of the property is malicious because it is “intentional, wrongful and done without the intention of paying rent, or returning possession . . . .” (Complaint, ¶13.) These allegations are sufficient for purposes of Section 1174(b). Based on the foregoing, the court will overrule Los Meganos’s demurrer to the complaint. Defendant is ordered to file an answer to the complaint on or before July 12, 2013.