Beach Whitman Cowdrey v. Robertson CA2/6

Filed 5/18/16 Beach Whitman Cowdrey v. Robertson CA2/6 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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 SIX

BEACH | WHITMAN | COWDREY, LLP, 2d Civil No. B259718 (Super. Ct. No. 56-2012-00416492- Plaintiff and Appellant, CU-BC-VTA) (Ventura County) v.

MARLENE Z. ROBERTSON et al.,

Defendants and Respondents.

A law firm and its clients entered into an agreement that the clients' obligation to pay the firm for past and future legal services was secured by a trust deed on the clients' real property. The law firm's complaint alleged that it was induced to enter into the agreement by the clients' misrepresentation as to the value of the property, and that it did not learn the property's true value was much less until after it made a full credit bid at the foreclosure sale. The complaint prayed for damages arising from intentional and negligent misrepresentation. The full credit bid rule does not preclude the law firm from maintaining its action. We reverse the summary judgment in favor of the clients. FACTS Beach | Whitman | Cowdrey, LLP, now known as Beach | Cowdrey | Owen, LLP (hereafter "Beach") is a law firm. Beach represented Marlene Z. Robertson and others (hereafter collectively "Robertson") in matters related to Robertson's business.

In June 2008, Beach's legal fees for services rendered exceeded $183,119. On June 13, 2008, the parties reached an agreement. Robertson agreed to pay Beach $50,000 and execute a promissory note bearing interest at 8 percent for the balance. The agreement also provided that any future fees for services rendered would be added to the principal balance. The note was secured by a trust deed on two parcels of real property in Adelanto, California. By 2011, Robertson was in default and Beach initiated a nonjudicial foreclosure. On July 21, 2011, the trustee under the trust deed held a foreclosure sale. Beach made a full credit bid in the amount of $211,759.23. The trustee's deed to Beach was recorded thereafter. Beach filed the instant action against Robertson on May 1, 2012. The first amended complaint states causes of action for intentional and negligent misrepresentation. Beach alleges that at the time of the parties' agreement in 2008, Robertson represented the secured parcels were valued at $435,375, approximately 239 percent of the amount owed to Beach; that Robertson had no reasonable grounds to believe the representations to be true or knew them to be false; that Beach relied on the representations in accepting the trust deed; that Beach did not learn of the true value of the properties until after it made a credit bid at the foreclosure sale; and that Beach sold the properties and received only $63,541.50. Beach prayed for damages in the amount of $111,613.24, calculated by deducting the $63,541.50 received from the sale from the $175,154.74 original amount owed to Beach. Robertson moved for summary judgment on the grounds, among others, that she did not misrepresent the value of the properties in 2008 when the agreement was made, and that due to Beach's full credit bid, it suffered no damages. In support of her motion, Robertson introduced evidence to show that Beach's bid at the foreclosure sale was a full credit bid; that is, the bid represented the full amount secured by the trust deed.