In its second noteworthy action during Wednesday’s conference, the California Supreme Court granted a request to publish an August 2013 opinion from the Appellate Division of the Santa Clara County Superior Court in The Bank of New York Mellon v. Preciado. Preciado carries noteworthy lessons about the perils of small errors in foreclosure cases.
Certain property in Alviso, California was owned and occupied until 2011 by the appellants. In the summer of 2011, the property was acquired by the respondent bank at a trustee’s sale pursuant to foreclosure. The bank served a written notice to quit, and 90 days later, filed two unlawful detainer complaints against appellants.
The actions were tried, and judgment was entered for the bank, awarding possession, rent and damages. But when the sheriff tried to execute the writ, he discovered that the property was actually in Alviso; the complaints – and therefore the writ – said it was in San Jose. The bank went back to court seeking an ex parte order to amend the judgment, which the trial court granted. The appellants appealed.
On appeal, the appellants argued that they were never properly served with the notices to quit. C.C.P. Section 1162 provides three methods of service: (1) personal delivery; (2) either leaving a copy with a person of suitable age and discretion at home or business, or mailing to the residence if the tenant is absent from both the home and business; or (3) if the home or business can’t be ascertained, or no person of suitable age and discretion can be found, then by posting conspicuously at the property, and mailing to the defendant’s attention at the property. Strict compliance is required.
At trial, the resident denied ever receiving the notice to quit. The bank responded with the declaration of its registered process server, who said that “after due and diligent effort,” he had posted a copy of the notices at the address, and mailed them to the owner’s post office box address. The trial court accepted that showing and entered judgment.
Not so fast, the Appellate Division said. Although substituted service was fine without a showing of reasonable diligence, it does require showing that personal service was attempted, and neither the resident nor a person of suitable age or discretion could be found. There was no such showing in the process server’s declaration. Since strict compliance was required, the judgment for possession had to be reversed.
But that wasn’t the only problem. In order to perfect its title, the bank was required to show strict compliance with Civil Code Section 2924. That requires proof of all elements of a valid sale.
Under a deed of trust, power to sell the property rests in the trustee. Well, the Deed of Trust in Preciado identified one entity as the Trustee. The Trustee’s Deed of Sale identified another entity entirely as “acting as Trustee.” Since there was no evidence that one entity had substituted for the other as trustee, the sale was faulty and the judgment had to be reversed.
The lesson of Preciado seems clear: at least in foreclosure cases, any error could be fatal.