State Bank of Texas v. Parabia

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 STATE BANK OF TEXAS, Case No.: 14-cv-3031-L-KSC 12 Plaintiff, ORDER DENYING MOTION TO 13 v. QUASH WRIT OF POSSESSION 14 SAM PARABIA, ET AL., 15 Defendants. 16 17 Pending before the Court is Defendants’ motion to quash writ of possession (doc. 18 no. 319). Plaintiff filed an opposition and Defendants replied. For the reasons stated 19 below, the motion is denied. 20 By order filed September 15, 2017, the Court granted Plaintiff's motions for 21 summary adjudication against Defendant Citizens Business Bank and default judgment 22 against Defendants Sam and Perin Parabia, Farzin Morena and Ayer Capital Advisors, 23 Inc., thus allowing judicial foreclosure sale of the residence owned by Defendants 24 Parabia to go forward. (Doc. no. 84.) Judgement was issued the same day. (Docs. no. 25 85, 86.) 26 In an apparent effort to delay, Defendants Parabia (hereinafter “Defendants”) filed 27 a motion to reconsider, two bankruptcy proceedings, a state court action, a motion to 28 reconsider the default judgment entered in this case, and a motion for a temporary 1 restraining order. Accordingly, a judicial foreclosure sale was not held until October 9, 2 2019. 3 Plaintiff was the successful bidder at the foreclosure sale and became the purchaser 4 of Defendants’ property. Because the property was sold subject to the right of 5 redemption, Defendants retained a right to stay in possession for 90 days. During this 6 period, Defendants refused Plaintiff’s inspection of the property, necessitating the filing 7 of a motion for a temporary restraining order. (See doc. no. 295.) Defendants did not 8 object to the restraining order, except insofar as it required them to pay rent during their 9 possession. (See doc. no. 299.) Although the Court found that they were required to pay 10 rent pursuant to California Code of Civil Procedure § 729.090 (doc. no. 307), as of the 11 end of the redemption period on January 8, 2020, they had paid none (doc. no. 329-3 12 (“Hunt Decl.”) at 3 & Ex. 7.) 13 On January, 17, 2020, after the expiration of the redemption period, the U.S. 14 Marshal recorded the Deed of Sale of the property. On January, 21, 2020, Defendants 15 served a 3-Day Notice to Quit and a Notice to Any Renters. (Hunt Decl. at 2 & Exs. 3- 16 5.) On the same day and again on January 27, 2020, Plaintiff’s counsel contacted 17 Defendants’ counsel inquiring whether Defendants had vacated the property at the end of 18 the redemption period or would be willing to vacate voluntarily, and attached the 3-Day 19 Notice to Quit and Notice to Any Renters. (Id. at 2 & Exs. 7, 8.) Defendants’ counsel 20 did not respond. (Id. at 3.) 21 On January 29, 2020, Plaintiff sought a writ of possession from the Court, which 22 was issued the next day. (Doc. no. 316.) On February 19, 2020, Rajesh Patel, receiver 23 for the property, together with two U.S. Marshal’s deputies went to the property, which 24 appeared unoccupied. (Doc. no. 329-12 (“Patel Decl.”) at 2.) The deputies authorized 25 the locksmith to change locks and thus allow Plaintiff to take possession. (Id.) 26 Pending before the Court is Defendants’ motion to quash writ of possession 27 because they want to challenge validity of the judicial foreclosure sale in an unlawful 28 / / / 1 detainer proceeding, which they claim Plaintiff must file before it can obtain a writ of 2 possession. The Court disagrees because none of Defendants’ contentions support setting 3 aside the sale, and because an unlawful detainer judgment is not required for this Court to 4 issue a writ of possession. 5 First, Defendants contend that the sale was invalid because they did not get proper 6 notice of their right of redemption. Defendants’ reliance on Multani v. Witkin & Neal, 7 215 Cal.App.4th 1428 (2013), for the proposition that the sale of their property can be set 8 aside on this ground, is unavailing. Unlike a non-judicial foreclosure sale at issue in 9 Multani, a judicial foreclosure sale at issue here may be set aside subject to California 10 Code of Civil Procedure 701.680, which provides in pertinent part: 11 (a) Except as provided in paragraph (1) of subdivision (c), a sale of property pursuant to this article is absolute and shall not be set aside for any reason. 12 13 [¶]

14 (c) If the sale was improper because of irregularities in the proceedings, 15 because the property sold was not subject to execution, or for any other reason: 16 17 (1) The judgment debtor . . . may commence an action within 90 days after the date of sale to set aside the sale if the purchaser at the sale is the 18 judgment creditor. . . . [I]f the sale is set aside, the judgment of the 19 judgment creditor is revived to reflect the amount that was satisfied from the proceeds of the sale and the judgment creditor is entitled to interest on the 20 amount of the judgment as so revived as if the sale had not been made. . . . 21 22 Plaintiff, who purchased the property, is the judgment creditor. Defendants have not 23 commenced an action to set aside the sale, nor, given their multi-year history of non- 24 payment, does it appear that they would be able to satisfy the judgment which would be 25 immediately revived if the sale were set aside. After the expiration of the 90-day period, 26 the sale “is absolute and may not be set aside for any reason.” First Fed. bank of Cal. v. 27 Fegen, 131 Cal. App. 4th 798, 801 (2005). 28 / / / 1 Moreover, even if this were a non-judicial trustee’s foreclosure sale, and therefore 2 subject to strict compliance with statutory requirements, see Multani, 215 Cal. App. 4th 3 at 1448, Defendants would not have met the burden. 4 To set aside a foreclosure, a plaintiff must generally establish three elements: “(1) the trustee . . . caused an illegal, fraudulent, or willfully 5 oppressive sale of real property pursuant to a power of sale in a mortgage or 6 deed of trust; (2) the party attacking the sale . . . was prejudiced or harmed; and (3) in cases where the trustor . . . challenges the sale, the trustor . . . 7 tendered the amount of the secured indebtedness or was excused from 8 tendering.”

10 Id. at 1449 (ellipses in original). 11 Defendants contend the sale should be set aside for failure to receive notice of the 12 right of redemption pursuant to California Civil Procedure Code § 729.050, as was the 13 case in Multani. Unlike in Multani, Plaintiffs provided evidence that Defendants 14 received repeated actual notice of their right of redemption, including that the order 15 granting default judgment stated the sale was subject to the right of redemption (doc. no. 16 84 at 9, 11); on the day of the sale, Plaintiff’s counsel informed Defendants’ counsel that 17 they had a 90-day right of redemption (doc. no. 329-3 Ex. 1); and the order granting 18 Plaintiff’s motion for a temporary restraining order stated the redemption period would 19 expire on January 8, 2020 (doc. no. 295 at 1, 11). Accordingly, the sale conducted 20 pursuant to the Court’s order was not “illegal, fraudulent, or willfully oppressive.” 21 Defendants were not prejudiced because they received actual notice. Finally, they have 22 not shown that they could tender the amount they owe Plaintiff. Defendants have 23 therefore not shown could meet any of the requirements enumerated in Multani. 24 Alternatively, Defendants claim that they could set aside the sale because they 25 were entitled to a 1-year redemption period rather than 90 days. Defendants were on 26 notice since the date of sale that they had a 90-day period of redemption. Although they 27 had several opportunities to object, they have not done so. (See docs. no. 299 at 1; 312 at 28 / / / 1 2.) Moreover, their argument is negated by California Civil Procedure Code § 729.030, 2 which provides as follows: 3 The redemption period during which property may be redeemed from a foreclosure sale under this chapter ends: 4 5 (a) Three months after the date of sale if the proceeds of the sale are sufficient to satisfy the secured indebtedness with interest and costs of action 6 and of sale. 7 (b) One year after the date of sale if the proceeds of the sale are not 8 sufficient to satisfy the secured indebtedness with interest and costs of action 9 and of sale.

11 The Court has made a finding that the judgment was satisfied in full and Plaintiff was not 12 seeking a deficiency judgment against Defendants. (Doc. no. 312 at 2-3.) Accordingly, 13 their argument that the sale could be set aside because they are entitled to a 1-year 14 redemption period is rejected. 15 Finally, underlying all of Defendants’ arguments is the contention that the writ 16 should be recalled because Plaintiff was required to file an unlawful detainer action 17 before it could receive a writ of possession. This is not the case: 18 After entry of a judgment for possession or sale of property, a writ of possession or sale shall be issued by the clerk of the court upon application 19 of the judgment creditor . . .. 20 21 Cal. Code Civ. Proc. § 712.010. 22 Contrary to Defendants’ contentions, a judgment for sale of property was entered 23 in this case based on the order granting Plaintiff’s motion for default judgment. The 24 order expressly provided for foreclosure of the deed of trust, and ordered U.S. Marshal, 25 after the expiration of the right of redemption, to execute a deed of sale to the purchaser, 26 who could then take possession of the property. (Doc. no. 84 at 10-11 (order); see also 27 doc. no. 86 (judgment).) Plaintiff was the successful bidder and purchased the property / 28 / / / 1 || at the U.S. Marshal’s sale. Defendants did not redeem the property. After the expiration 2 ||of Defendants’ period of redemption, U.S. Marshal recorded the deed of sale. Plaintiff 3 || was therefore entitled under section 712.010 to obtain a writ of possession from the Clerk 4 || of Court. 5 For the foregoing reasons, Defendants’ motion to quash is denied. 6 IT IS SO ORDERED. 7 8 Dated: March 17, 2020 1 fee fp 10 H . James Lorenz, United States District Judge 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28