Takahashi v. Delap

Filed 4/30/08 Takahashi v. Delap CA2/1

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION ONE

APPEAL from a judgment of the Superior Court of Los Angeles County, Tracy Moreno Grant, Judge. Affirmed.

Casello & Lincoln and James H. Casello for Plaintiff and Appellant.

Halavais & Associates, Coby R. Halavais and Thomas G. Kemerer for Defendant and Respondent.

_____________________

INTRODUCTION

Plaintiff Gloria Takahashi appeals from a judgment of dismissal in favor of defendant John Delap entered after the trial court sustained defendants demurrer to plaintiffs lawsuit for quiet title without leave to amend.[1] We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

In her first amended complaint, plaintiff alleged that she was the owner of a residence in Long Beach. On February 23, 2005, Michael D. Kowal, a licensed real estate broker, and his wife, Kathleen M. Kowal, as trustees of a family trust, loaned money to plaintiff.[2] Plaintiff executed a promissory note in favor of the family trust secured by a trust deed on her residence. The note specifically provided: The entire balance of principal plus accrued interest due thereon shall become all due and payable on or before March 23, 2005. [] This note is subject to Section 2966 of the Civil Code, which provides that the holder of this note shall give written notice to the trustor, or his successor in interest, of prescribed information at least 90 and not more than 150 days before any balloon payment is due. (Emphasis omitted.) The note was purchased in December 2005 by defendant, who instituted a non-judicial foreclosure. Although the note was payable one month after it was executed, plaintiff alleged that the foreclosure was invalid since notice was not given pursuant to Civil Code section 2966 (section 2966).[3]

Defendant demurred on the ground section 2966 was inapplicable, in that it applies only to transactions for which the term of repayment is more than one year, notwithstanding the specific provisions of the promissory note. The trial court sustained the demurrer without leave to amend as to the quiet title cause of action then entered a judgment of dismissal.

DISCUSSION

Standard of Review

On appeal from a judgment of dismissal entered after the trial court sustains a demurrer without leave to amend, we first review the complaint de novo in order to determine whether it alleges facts sufficient to state a cause of action under any legal theory. (Cantu v. Resolution Trust Corp. (1992) 4 Cal.App.4th 857, 879.) If we conclude that the complaint does not state a cause of action, then the trial court properly sustained the demurrer. (Ibid.) If the demurrer properly was sustained, we then consider whether the trial court abused its discretion by not granting plaintiff leave to amend the complaint. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) In both steps of our review, we must assume the truth of the complaints properly pleaded or implied factual allegations and give the complaint a reasonable interpretation, reading it as a whole and its provisions in context. (Ibid.)

Quiet Title

Plaintiff contends that the promissory note was subject to section 2966, and since notice was not given pursuant to that section, the due date of the note never arrived, foreclosure prior to the due date was improper, and plaintiff was entitled to have her title to the real property restored. We disagree.

The promissory note was on a pre-printed form. The provision that the note was subject to Section 2966 of the Civil Code was part of the pre-printed form. The balance and due date were inserted into the form.

Plaintiff contends that since the note recited that it was subject to section 2966, it is conclusively presumed that it is. Plaintiff relies on Evidence Code section 622, which provides that facts recited in a written instrument are conclusively presumed to be true as between the parties thereto, except as to recital[s] of a consideration. Plaintiff argues that the presumption in the note in question that it was subject to section 2966 cannot be contradicted by the parties and the trial court was obligated to find it to be true. We disagree.

Plaintiffs reliance on Sanders Construction Co. v. San Joaquin First Fed. Sav. & Loan Assn. (1982) 136 Cal.App.3d 387 is misplaced. Sanders involved an action by a landowner for breach of a contract with a savings and loan association, under which the savings and loan association was to construct a building on the owners land and the owner was to lease the major portion of the building to the savings and loan association. In discussing the lease, the appellate court stated that the savings and loan was bound by a statement in a written document, since the recital in a written instrument is conclusively presumed to be true as to the parties, relying on Evidence Code section 622. (Sanders Construction Co., supra, at p. 395.) However, the facts in Sanders are distinguishable. In Sanders, the question was whether the savings and loan was bound by a factual recital in the lease. In the instant case, however, the question is which of two inconsistent provisions in the contract applies.

Moreover, as pointed out in Cordasco v. Scalero (1962) 203 Cal.App.2d 95, the presumption in Evidence Code section 622 is not applied under certain circumstances. If a contract is ambiguous, parol evidence may be used to show the true significance of the language, and notwithstanding the statutory presumption, the court will adopt the more reasonable interpretation. (Cordasco, supra, at p. 107.) Similarly, where it is clear that a boilerplate provision in a contract does not apply under the facts of the case, the court should be free to ignore the statutory presumption and interpret the contract in a manner that is the most reasonable under the circumstances.

Section 2966, subdivision (a), applies to a note which has a term for repayment in excess of one year and includes a balloon payment. It requires 90 days notice before the balloon payment is due. The contract at issue here is a 30-day note which requires payment in full at the end of the 30-day period. It includes no balloon payment.[4] Since section 2966 by its terms does not apply, the provisions are inconsistent.

In ruling in favor of defendant, the trial court stated: [T]he parties agreed that the loan would all be due and payable in one month and this term was inserted into the form. [] On the other hand, the boiler plate form itself said the note was subject to [section] 2966 of the Civil Code. A one-month payment is fundamental is fundamentally irreconcilable with a notice to be issued 90 days prior to the loan being due and payable. [] The ambiguity then exists with the inserted terms versus the printed terms which then leads us to [section] 1862 of the Code of Civil Procedure.

Code of Civil Procedure section 1862 provides: When an instrument consists partly of written words and partly of a printed form, and the two are inconsistent, the former controls the latter. Pursuant to this section, the trial court properly determined that the one-month payment provision would prevail.

Since the note was not subject to section 2966, the trial court properly sustained defendants demurrer to the quiet title case of action. The burden of proving that there is a reasonable possibility that the defect in pleading may be cured is on the plaintiff. (McKelvey v. Boeing North American, Inc. (1999) 74 Cal.App.4th 151, 163.) Plaintiff has not shown that the defect in pleading the cause of action for quiet title is curable. Inasmuch as the demurrer was properly granted without leave to amend, the judgment of dismissal was proper.

DISPOSITION

The judgment is affirmed.

NOT TO BE PUBLISHED

JACKSON, J.*

We concur:

VOGEL, Acting P. J.

ROTHSCHILD, J.

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[1] At the hearing on defendants demurrer, the trial court sustained the demurrer as to plaintiffs quiet title cause of action without leave to amend but granted leave to amend as to causes of action for wrongful eviction, conversion of personal property, and trespass to real property. Plaintiff then filed a dismissal without prejudice to the latter causes of action. The trial court entered the judgment of dismissal following plaintiffs failure to amend.

[2] The Kowals were defendants below but are not parties to this appeal.

[3] Section 2966, subdivision (a), provides as follows: In a transaction regulated by this article, which includes a balloon payment note when the term for repayment is for a period in excess of one year, the holder of the note shall, not less than 90 nor more than 150 days before the balloon payment is due, deliver or mail by first-class mail, with a certificate of mailing obtained from the United States Postal Service, to the trustor, or his or her successor in interest, at the last known address of such person a written notice, to include [specified information regarding the balloon payment].

[4] A balloon payment is a final payment which is more than twice the amount of any of the immediately preceding six regularly scheduled payments. (Civ. Code,  2957, subd. (b).)

* Judge of the Los Angeles Superior Court assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.