Lewis v. Edmonds

Opinion

RACANELLI, P. J.

This is an appeal from a judgment of the superior court dismissing a petition requesting payment from the Real Estate Recovery Account (the Account) (Bus. & Prof. Code, § 10470 et seq.) for fraudulent acts committed by a real estate licensee.

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We affirm the judgment.

The minimal record before us, consisting of an agreed statement and designated documents from the clerk’s transcript, reveals the following procedural events:

On March 10, 1982, appellants Rufus Lewis and Willie Lee Lewis filed a complaint for damages, cancellation of a promissory note and trust deed, declaratory and injunctive relief. The named defendants included Richard Adams, a licensed real estate salesman, William J. Nikiforuk, a notary public, and the holders and transferors of the note and trust deed. The complaint alleged that appellants were illiterate and were defrauded by the actions of Adams and Nikiforuk, who induced them to execute a note and trust deed, forged their signatures on other documents and converted the proceeds of

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the resulting loan. The note and trust deed were assigned to Beneficial Management Corporation and Benevest of California, which began foreclosure proceedings when payments were not made on the loan.

A demurrer was sustained without leave to amend as to the fourth cause of action against Nikiforuk for “notary fraud” on the theory that only the lenders, who relied on the authenticity of the loan documents, could assert that cause of action. On August 17, 1983, a default judgment was entered against Richard Adams in the amounts of $2,700 “principal,” $1,425.69 interest, $5,000 punitive damages, costs of $202.50 and attorney fees of $7,500.

On October 19, 1983, appellants filed an application for payment of the judgment (excluding punitive damages) from the Account, alleging that the judgment against Adams was predicated on his fraudulent conduct while acting as a licensed real estate salesman when he negotiated the loan; and that a diligent search had located no assets to satisfy the judgment. The Real Estate Commissioner appeared and objected to any payment of attorney fees or any other damages prior to exhaustion of remedies against Nikiforuk as required by Business and Professions Code section 10472, subdivision (b)(6). Appellants responded that the sustaining of the demurrer left them without a remedy against Nikiforuk, and that attorney fees should be reimbursed under the “tort of another” theory. Following an agreement to settle with all parties except Adams and Nikiforuk, the application was heard and denied resulting in a judgment of dismissal with prejudice.