Keefe v. Arbuckle CA3

Filed 12/4/13 Keefe v. Arbuckle CA3 NOT TO BE PUBLISHED

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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 THIRD APPELLATE DISTRICT (San Joaquin) ----

HOWARD M. KEEFE, as Trustee, etc.,

Plaintiff and Respondent, C068492

v. (Super. Ct. No. CV031382)

SCOTT E. ARBUCKLE, as Trustee, etc.,

Defendant, Cross-complainant and Respondent;

ALBERT SEASTRAND et al.,

Defendants, Cross-defendants and Appellants.

Plaintiff Howard M. Keefe, as trustee of the Sunrise Trust, and defendant Scott Arbuckle, as trustee of the Arbuckle Trust, separately invested in the construction of a Stockton house. Both received and recorded assignments of deeds of trust securing their

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investments. Arbuckle subsequently pursued nonjudicial foreclosure proceedings without notifying Keefe, and bought the property for less than half of its appraised value. Keefe’s interest was wiped out by the sale. In pursuing nonjudicial foreclosure, Arbuckle retained defendant California Foreclosure, LLC (which was owned and operated by defendants Albert and Loretta Seastrand) to conduct the trustee’s sale. The Seastrands were aware of the recorded junior interests held by Keefe and Monique Bjorndal, another investor, and knew they were entitled to notice before the sale. But Keefe claimed the Seastrands back-dated and falsified their proof of compliance with the statutory notice requirement. After Arbuckle sold the property to others, Keefe sued to set aside the sale and reinstate his trust deed. Keefe later amended his complaint to seek damages and to add allegations of intentional misconduct. Before trial, Keefe assumed Bjorndal’s interest in the property. A jury found defendants liable to Keefe for fraud and other torts. Keefe was awarded $442,500 in general damages, and California Foreclosure and the Seastrands were ordered to pay $57,500 in punitive damages. California Foreclosure and the Seastrands (collectively the Seastrands) now contend (1) Keefe is not a holder in due course of the relevant promissory note, and thus he has no standing in this action; (2) the note and trust deed that Keefe acquired from Bjorndal were both fabricated; and (3) the trial court erred in excluding evidence regarding whether Keefe was a holder in due course. We conclude Keefe has standing and a basis to sue. The Civil Code requires prior notice to others in the chain of title as a condition of conducting a trustee’s sale. (Civ. Code, § 2924b.) Lack of notice is substantial and prejudicial and can give rise to legal action, and when a senior lienholder conducts a nonjudicial foreclosure sale in a manner that includes material irregularities, tort remedies are available to the junior lienholder.