Developments of Interest

New Cases of Interest - August 19, 2013

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Roberts v. Packard, Packard & Johnson (2013) 217 Cal. App. 4th 822.  A trial court awarded attorneys' fees on a petition brought to compel arbitration upon the determination that the petition to compel arbitration should be granted.  The petition involved an underlying lawsuit which had been brought which alleged various causes of action against the party who sought to compel arbitration.

The Court of Appeal held that the granting of an attorney's fees award was premature and had to await the resolution of the merits of the various claims in order to determine who the prevailing party was, and that fees were not properly awardable solely on the basis of prevailing on a petition to compel arbitration.

Diamond v. Sup. Ct. (2013) 217 Cal.App. 4th 1172.  This is a homeowner's association action for judicial foreclosure brought against an owner of an individual unit and arises in the context of the owner's motion for summary judgment which the trial court denied.  The owner had raised a number of procedural defects in the Association's action which sought to foreclose based on the owner's failure to pay a special assessment.

The Court of Appeal issued a preemptory writ of mandate reversing the trial court's order and directing that the court enter summary judgment in favor of the owner of the property.  The court held that notice requirements (Civ. Code §§1367.1 and 1367.4) are to be strictly construed and are mandatory.  The notice of recordation had been untimely, and the dispute resolution options should not have been described in the disjunctive as they were in the Association's notice.  The court also noted that personal service of notice of the Board's vote to foreclose under Civ. Code §§1367.4(c)(4) is a condition precedent statutorily to the filing of a judicial foreclosure action.  (Civ. Code §1436.)  The Court of Appeal therefore determined that the Association's lien was invalid and as a consequence, unenforceable by way of judicial foreclosure.

Enloe v. Kelso (2013) 217 Cal. App. 4th 877.  This is an action brought under CCP §580b in which the sellers of property had attempted to disguise the purchase money nature of the loan transaction they had engaged in with the buyer.  The parties had originally agreed that the sellers would finance part of the purchase price of a single family residence, but the primary lender obtained by the buyer refused to fund if there was a junior deed of trust encumbering the property and buyer and seller therefore agreed that the seller's deed of trust would be recorded immediately after the close of escrow.  There was an escrow check issued by escrow to the seller and the seller then made a check back to the buyer all on the same day.  The escrow document indicated that escrow had been fully funded prior to closing.

The Court of Appeal held that 580b applied because the seller's trust deed secured part of the purchase price and a deficiency was therefore prohibited.  It was not material that the purchase money transaction had not been completed simultaneously with the close of escrow.  It also didn't matter whether the transaction could have been completed without the purchase money loan.  The seller's deed of trust secured a portion of the purchase price which violated the statutory prohibition against a deficiency judgment under 580b.

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