Attacking the Sale or Defending Possession in Unlawful Detainer Proceedings

1 Feb

Generally, the purchaser at a trustee’s sale may institute an unlawful detainer action to obtain possession if the “property has been duly sold in accordance with Section 2924 of the Civil Code” and if “title under the sale has been duly perfected.” [Code of Civ. Proc. § 1161a(b) (3). ] A transferee of the purchaser also has standing to use the unlawful detainer process. [See Evans v. Superior Court (1977) 67 Cal.App.3d 162, 169-70; 136 Cal.Rptr. 596.] The action may be brought after the failure to vacate following the service of a three-day notice to quit. [Code of Civ. Proc. § 116la(b).] However, unlawful detainer proceedings may be used against a tenant or subtenant only after the service of notice to quit at least as long as the periodic tenancy but not exceeding 30 days. [Code Civ. Pro. § 1161a(c).] The remedy is cumulative to common law actions such as ejectment which may be brought to obtain possession. [See Duckett v. Adolph Wexler Bldg. & Fin. Corp. (1935) 2 Cal.2d 263, 265-66; 40 P.2d 506; Mutual Bldo. & Loan Assn. v. Corum (1934) 3 Cal.App.2d 56, 58; 38 P.2d 793.] With very rare exceptions, the purchaser will invoke summary unlawful detainer proceedings rather than other proceedings to gain possession.
However, the purchaser is precluded from invoking unlawful detainer if a local ordinance, such as a rent control law, does not permit eviction after foreclosure. [See Gross v. Superior Court (1985) 171 Cal.App.3d 265; 217 Cal.Rptr. 284.] The purchaser may also be bound to rent ceilings. [See People v. Little (1983) 141 Cal.App.3d Supp. 14; 192 Cal.Rptr. 619.]
The courts have charted inconsistent paths in determining what defenses may be raised in unlawful detainer proceedings and to what extent the trustor may be able to attack the purchaser’s title. In the early cases, the courts concluded that the purchaser had the burden of proving that the purchaser acquired the property in the manner expressed in the unlawful detainer statute; i.e., the property was duly sold and the purchaser duly perfected title. No other questions of title could be litigated. [See e.g., Nineteenth Realty Co. v. Diacrs (1933) 134 Cal.App. 278, 288-89; 25 P.2d 522; Hewitt v. Justice’s Court (1933) 131 Cal.App. 439, 443; 21 P.2d 641.]

This rule was adopted by the Supreme Court in Cheney v. Trauzettel (1937) 9 Cal.2d 158; 69 P.2d 832. The Supreme Court held that:
… in the summary proceeding in unlawful detainer the right to possession alone was involved, and the broad question of title could not be raised and litigated by cross-complaint or affirmative defense. [Citations omitted.] It is true that where the purchaser at a trustee’s sale proceeds under section 1161a of the Code of Civil Procedure he must prove his acquisition of title by purchase at the sale; but it is only to this limited extent, as provided by statute, that the title may be litigated in such a proceeding. [Citations omitted.] . . . the plaintiff need only prove a sale in compliance with the statute 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. 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, nor are they concluded by the judgment. (Id. at 159-60.)
Accordingly, in numerous cases trustors have been forbidden from defending against the unlawful detainer on grounds other than showing that the sale was not conducted pursuant to Civil Code § 2924. [See e.g., California Livestock Production Credit Assn. v. Sutfin, supra, 165 Cal.App.3d 136, 140 n.2; Evans v. Superior Court, supra, 67 Cal.App.3d 162, 170-71; MCA. Inc. v. Universal Diversified Enterprises Corp. (1972) 27 Cal.App.3d 170, 176-77; 103 Cal.Rptr. 522; Cruce v. Stein, supra, 146 Cal.App.2d 688, 692; Abrahamer v. Parks, supra, 141 Cal.App.2d 82, 84; Hiaoins v. Covne (1946) 75 Cal.App.2d 69, 72-73, 75; 170 P.2d 25; Delov v. Ono (1937) 22 Cal.App.2d 301, 303; 70 P.2d 960.]
Other courts, on the other hand, have considered defenses extrinsic to compliance with statutory foreclosure procedure in determining unlawful detainer matters. In Seidell v. Anglo-California Trust Co. (1942) 55 Cal.App.2d 913, 921; 132 P.2d 12, the Court of Appeal construed Cheney to prohibit only equitable but not legal defenses. Therefore, the Court thought that lack of consideration and other issues going to the validity of the note and the trust deed were proper defenses. (Id. at 922.) Other cases have permitted the unlawful detainer defenses whether or not the grounds were technically legal or equitable. [See e.g., Kartheiser v. Superior Court (1959) 174 Cal.App.2d 617, 621; 345 P.2d 135 (beneficiary’s waiver of default); Freeze v. Salot, supra, 122 Cal.App.2d 561; (no default); Kessler v. Bridge (1958) 161 Cal.App.2d Supp. 837; 327 P.2d 241 (rescission, lack of delivery); Altman v. McCollum. supra, 107 Cal.App.2d Supp. 847; (estoppel to assert default).]
The issue of what defenses can or should be raised also significantly affects the application of the res judicata doctrine to any action by the trustor after the unlawful detainer to challenge the trustee’s sale. Cases, proceeding from Seidell, which hold that potential defenses are far ranging, have also held that issues which were, or might have been, determined in the unlawful detainer proceeding are barred by res judicata in subsequent proceedings. [See Freeze v. Salot. supra, 122 Cal.App.2d 561, 565-66; Bliss v. Security-First Nat. Bank (1947) 81 Cal.App.2d 50, 58; Seidell v. Analo-California Trust Co., supra, 55 Cal.App.2d 913.]
The Court of Appeal, however, ruled differently in Gonzales v. Gem Properties, Inc., supra, 37 Cal.App.3d 1029, 1036. The court recognized the extreme difficulty of conducting complicated defenses in the context of a summary proceeding; investigation and discovery procedures are limited, and the proceeding is too swift to afford sufficient time for preparation. Therefore, the court denied a res judicata effect to issues such as fraud.
The resolution of the problems raised by these cases appears in Vella v. Hudoins (1977) 20 Cal.3d 251; 142 Cal.Rptr. 414 and Asuncion v. Superior Court (1980) 108 Cal.App.3d 141; 166 Cal.Rptr.
306. In Vella, the Supreme Court held generally that only claims “bearing directly upon the right of immediate possession are permitted; consequently, a judgment in unlawful detainer usually has very limited res judicata effect and will not prevent one who is dispossessed from bringing a subsequent action to resolve questions of title [citations omitted], or to adjudicate other legal and equitable claims between the parties [citations omitted].” (20 Cal.3d at 255.) The purchaser, however, must show that the sale was regularly conducted and that the purchaser’s title was duly perfected. (Id.)
The court reaffirmed the holding in Cheney that claims dealing with the validity of the trust deed or the obligation or with other basic defects in the purchaser’s title should not be litigated in unlawful detainer proceedings, and that determination made regarding such claims should not be given res judicata effect. (Id. at 257.) Defenses which need not be raised may nonetheless be considered if there is no objection. [See Stephens, Partain & Cunningham v. Hollis, supra, 196 Cal.App.3d 948, 953.] Res judicata will apply only to defenses, including those ordinarily not cognizable but raised without objection, if there is a fair opportunity to litigate, rvella v. Hudgins, supra, 20 Cal.3d 251, 256-57.] Since complex claims, such as for fraud, can very rarely be fairly litigated in summary unlawful detainer proceedings, the trustor is not required to raise those issues as a defense. (Id.at 258.)
Although not required and ordinarily not allowed to litigate critical issues involving the obligation, the trust deed, and title, the homeowner-trustor is practically impelled to litigate these issues or be dispossessed since an unlawful detainer hearing will certainly precede a trial on a quiet title action. [See Code of Civ. Proc. § 1179a; Kartheiser v. Superior Court, supra, 174 Cal.App.2d 617, 621-23.] The California Supreme Court, citing Justice Douglas, aptly observed:
. . . the home, even though it be in the slums, is where man’s roots are. To put him into the street . . . deprives the tenant of a fundamental right without any real opportunity to defend. Then he loses the essence of the controversy, being given only empty promises that somehow, somewhere, someone may allow him to litigate the basic question in the case. S. P. Growers Assn. v. Rodriguez (1976) 17 Cal.3d 719, 730; 131 Cal.Rptr. 761.
Accordingly, the Court of Appeal held in Asuncion, supra, that “homeowners cannot be evicted, consistent with due process guaranties, without being permitted to raise the affirmative defenses which if proved would maintain their possession and ownership.” (108 Cal.App.3d at 146.) Nonetheless, the Court was mindful that an unlawful detainer action was “not a suitable vehicle to try complicated ownership issues. …” [Id. at 144; see Mehr v. Superior Court (1983) 139 Cal.App.3d 1044, 1049; 189 Cal.Rptr. 138; Gonzales v. Gem Properties, Inc., supra, 37 Cal.App.3d 1029, 1036.] The Court thus prescribed the following procedure when the trustor had on file a superior court action contesting title: (a) the municipal court should transfer the unlawful detainer proceeding to the superior court because that action ultimately involves the issue of title which is beyond the municipal court’s jurisdiction; and (b) the superior court should stay the eviction action, subject to a bond if appropriate, until trial of the action dealing with title, or (c) the superior court should consolidate the actions. (Id. at 146-47.)
If the challenge to title is based on fraud in the acquisition of title, improper sales methods, or other improprieties that directly impeach the unlawful detainer plaintiff’s title or the procedures followed in the foreclosure sale, Asuncion and Mehr dictate that the unlawful detainer should be stayed. On the other hand, if the challenge to title is based on a claim unrelated to the specific property in question, such as a fraud not directly related to the obtaining of title to the property that is the subject of the unlawful detainer, the rule in Asuncion does not apply. [See Old National Financial Services, Inc. v. Seibert (1987) 194 Cal.App.3d 460, 464-67.]

Asuncion should also be distinguished from Mobil Oil Corp. v. Superior Court (1978) 79 Cal.App.3d 486; 145 Cal.Rptr. 17, which is frequently cited in opposition to the procedure authorized in Asuncion♦ In Mobil, the court ruled that statutory procedure accorded unlawful detainer proceedings precluded staying the unlawful detainer action until the tenant gas station operator could try his action alleging unfair practices in the termination of his franchise. (Id. at 494.) The Asuncion court noted some procedural distinctions: the commercial lessee did not seek a preliminary injunction and obtained a stay on apparently inadequate factual grounds, while the Asuncions had not yet had the opportunity to present facts on which a preliminary injunction might issue. (See 108 Cal.App.3d at 146 n. 1.)
In addition, the differences between the interests presented in commercial and residential transactions suggest that different considerations may apply to each. The courts have recognized a distinction between commercial and residential cases and have been more willing to allow affirmative defenses in residential cases. [See S. P. Growers Assn., supra, 17 Cal.3d 719, 730; 131 Cal.Rptr. 761; Custom Parking, Inc. v. Superior Court (1982) 138 Cal.App.3d 90, 96-100; 187 Cal.Rptr. 674; Schulman v. Vera (1980) 108 Cal.App.3d 552, 560-63; 166 Cal.Rptr. 620; Asuncion v. Superior Court, supra, 108 Cal.App.3d 141, 145, 146 n. 1; Mobil Oil Corp.v, Handlev (1976) 76 Cal.App.3d 956, 966;- 143 Cal.Rptr. 321; see generally, Union Oil Co. v. Chandler (1970) 4 Cal.App.3d 716, 725; 84 Cal.Rptr. 756.]
The commercial lessee may be able to establish its rights in an action apart from the unlawful detainer. The trustor, however, will lose possession of the trustor’s home. While the lessee’s loss is likely compensable in money, the loss of the home and the attendant adverse impact on the psychological well being of the residents and the family structure will not as easily be amenable to compensation. Moreover, the family cast out onto the streets may be unable to maintain an action which may come to trial years later. [See S. P. Growers Assn. v. Rodriguez, supra, 17 Cal.3d 719, 730.] In addition, the affirmative defenses alleged in the recent commercial lease cases have presented substantial and complex issues [see e.g., Mobil Oil Corp. v. Superior Court, supra, 79 Cal.App.3d 486, 495 (unfair business practice charge involving all Mobil service station operators); Onion Oil Co. v. Chandler, supra, 4 Cal.App.3d 716, 725-26 (antitrust violations)] and would likely consume more trial time than most trustee’ s sale cases.
Moreover, the court’s decision on whether to recognize various affirmative defenses in unlawful detainer proceedings results from a balancing of the public policies furthered by protecting the tenant or property owner from eviction against the state’s interest in the expediency of a summary proceeding. [See e.g., Barela v. Superior Court (1981) 30 Cal.3d 244, 250; 178 Cal.Rptr. 618; S. P. Growers Assn. v. Rodriguez, supra, 17 Cal.3d 719, 729-30; Custom Parking, Inc. v. Superior Court, supra, 138 Cal.App.3d 90.] There is a strong public policy supporting homeownership and the conservation of neighborhoods from destabilizing influences. [See discussion in Chapter III B 1 “Propriety of Injunctive Relief”.] These interests when coupled with the due process concerns mentioned in Asuncion militate for the hearing of affirmative defenses in accord with the procedure set forth in Asuncion.
As an alternative to an Asuncion motion prior to the hearing of the unlawful detainer action, the homeowner’s counsel could file a superior court action to challenge title and to restrain the purchasers from initiating or prosecuting an unlawful detainer. If the homeowner has lost the unlawful detainer, the injunction could be aimed at restraining the purchasers from enforcing the writ of possession or from taking possession of the premises.
Counsel should not direct the injunction against the municipal court or the sheriff or marshall since the superior court has no jurisdiction to enjoin a judicial proceeding or a public officer’s discharge of regular duties. [See e.g., Code of Civ. Proc. § 526.]
The courts have not ruled on whether traditional landlord-tenant defenses could ever be invoked in unlawful detainer,proceedings between the purchaser at the foreclosure sale and the person in possession. However, these defenses do not apply if the person in possession has no independent right to possession after the foreclosure. [See California Livestock Production Credit Assn. v. Sutfin. supra, 165 Cal.App.3d 136, 143.] In Sutfin, for example, the court held that a trustor could not invoke a retaliatory eviction defense because the trustor had no lease agreement giving the trustor a right to possession and the trustor’s only claim to possession derived from his title to the property which was lost at a valid foreclosure sale. (Id.)

One Response to “Attacking the Sale or Defending Possession in Unlawful Detainer Proceedings”

  1. filespeedy March 27, 2013 at 3:00 pm #

    I like it when people come together and share ideas. Great site, stick with it!

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