In re: Gold Strike Heights Homeowners Association

Filing 28

ORDER signed by District Judge John A. Mendez on 4/30/19 ORDERING for the foregoing reasons, we determined that Appellant failed to demonstrate that the foreclosure violated applicable California law and was improper. Consequently, judgment was properly granted to Appellees on all six of Appellant's claims. Accordingly, the Court AFFIRMS the bankruptcy court's Judgment. CASE CLOSED (Becknal, R)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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In re:

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GOLD STRIKE HEIGHTS
HOMEOWNERS ASSOCIATION,

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No.

Appellee.

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2:18-cv-00973-JAM

ORDER AFFIRMING BANKRUPTCY
COURT’S JUDGMENT

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I.

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INTRODUCTION

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Appellant Indian Village Estates, LLC (“Indian Village”)

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filed a complaint in Calaveras County Superior Court against Gold

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Strike Heights Association, Gold Strike Heights Homeowners

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Association, and Community Assessment Recovery Services (“CARS”),

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alleging causes of action related to nonjudicial foreclosure in

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March 2015.

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the case to the bankruptcy court following Gold Strike Heights

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Homeowners Association’s filing of a Chapter 7 Bankruptcy

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Petition.

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claims.

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the reasons set forth below, the judgment of the bankruptcy court

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is affirmed.1

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Chapter 7 Trustee Gary Farrar (“Trustee”) removed

The bankruptcy court found in favor of Trustee on all
Indian Village appeals the ruling to this Court.

For

This appeal was determined to be suitable for decision without
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II.

BACKGROUND

A. Background Facts and Allegations in Indian Village’s
Complaint

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In 2004, Indian Village, LLC purchased 31 of 49 lots in the

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Gold Strike Heights Subdivision, a small residential subdivision

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in Calaveras County owned by Westwind Development, Inc.

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Appellant Appendix (“AA”) 414, ECF No. 16.

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a manufactured home on one lot and left the other thirty

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undeveloped.

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Indian Village placed

AA 6.

In 2002, prior to the sale of any lots, the principal of

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Westwind Development, Frank Meagher, incorporated a homeowners

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association (“HOA”) as a non-profit mutual benefit corporation

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for the subdivision.

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Strike Heights Association” (“Gold Strike 2002”).

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Meagher was the sole board member of Gold Strike 2002 until Mark

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Weiner (“Weiner”), principal of Indian Village, and Don Lee

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(“Lee”) were added to the board as a condition of Indian

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Village’s lot acquisition.

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AA 100, 393.

The HOA was named “Gold
AA 393.

AA 393, 414.

Around 2007, Weiner and Lee determined that Gold Strike 2002

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had been suspended by the state for failing to file required

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forms with the Secretary of State and failure to pay required

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annual fees to the Franchise Tax Board.

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incorporated a new HOA, “Gold Strike Heights Homeowners

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Association” (“Gold Strike 2007”).

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forward, Gold Strike 2007 was the operative HOA for the

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subdivision.

AA 417.

AA 415.

oral argument.

Lee

From that point

Lee amended the subdivision’s Covenants,

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AA 414–16.

E.D. Cal. L.R. 230(g).
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Conditions & Restrictions (CC&Rs) to reflect the change.

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The Amendment provided that “the new corporation formed in May of

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2007 identified as the GOLD STRIKE HEIGHTS HOMEOWNERS ASSOCIATION

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is the full successor in interest to the old corporation

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identified as the GOLD STRIKE HEIGHTS ASSOCIATION formed in March

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of 2002 by WESTWIND DEVELOPMENT, INC.,” and amended Article 1,

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Section 1.3, page 2 of the CC&Rs to define the “Association” as

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“GOLD STRIKE HEIGHTS HOMEOWNERS ASSOCIATION” instead of "GOLD

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STRIKE HEIGHTS ASSOCIATION.”

AA 144–45.

AA 416.

The parties used the

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names “Gold Strike Heights Association” and “Gold Strike Heights

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Homeowners Association” interchangeably.

AA 440.

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For three years, Weiner controlled the HOA through his

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majority ownership in the subdivision as the sole member of

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Indian Village.

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board of directors comprised of only individuals who lived within

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the subdivision, ousting Weiner and Lee.

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sought to overturn the election through lawsuits, and residents

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countered with their own suits against Indian Village, Weiner,

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and Lee for violations of California elder abuse laws.

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The parties mediated their disputes in 2011 and came to an

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agreement: local residents would be the only board members of the

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HOA for three years in return for Indian Village receiving a

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reduction in its monthly assessments.

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AA 7.

In 2010, however, HOA members elected a

AA 7.

Indian Village

AA 8.

AA 450.

The next year, Indian Village refused to continue paying its

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discounted monthly assessments because it disapproved of the

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HOA’s management.

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HOA, recorded a Notice of Delinquent Assessment against each of

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Indian Village’s 31 lots in the name of Gold Strike 2002.

AA 450.

In March 2013, CARS, on behalf the

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AA 21–

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CARS held a nonjudicial foreclosure sale in September 2014,

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in which the HOA bid its claims for delinquent assessments

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against each lot, again in the name of Gold Strike 2002.

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33.

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Calaveras County Recorder’s Office.

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deeds state that the lots were conveyed to Gold Strike 2007.

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In March 2015, Indian Village and Lee filed lawsuits in

AA 28–

CARS recorded the 31 Trustee’s Deeds Upon Sale with the
AA 32–33.

The recorded

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Calaveras County Superior Court related to the foreclosure.

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3–18.

Id.

AA

Indian Village’s Complaint alleged causes of action

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related to the nonjudicial foreclosure, including: (1) for

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declaratory relief; (2) to set aside the trustee’s sale; (3) to

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cancel trustee’s deeds; (4) for wrongful foreclosure; (5) for

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quiet title; and (6) for slander of title.

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that year, Gold Strike 2007 filed a Chapter 7 Bankruptcy

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Petition.

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the bankruptcy court.

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AA 162.

Id.

In August of

The Trustee removed both state court cases to
AA 393.

In Lee’s case, the bankruptcy court granted the Trustee’s

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motion for judgment on the pleadings, which the Ninth Circuit

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Bankruptcy Appellate Court affirmed.

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Heights Homeowners Ass’n, No. AP 15-09062-E, 2018 WL 3405473

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(B.A.P. 9th Cir. July 12, 2018).

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following two motions for summary judgment and trial, the

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bankruptcy court found in favor of Trustee and quieted title to

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the 31 lots in favor of Gold Strike 2007 and its successor

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bankruptcy estate.

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concerns Indian Village’s appeal of that ruling.

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AA 454–62.

See In re Gold Strike

In Indian Village’s case,

The matter before this Court

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III.

JURISDICTION AND STANDARD OF REVIEW

The Court hears this appeal pursuant to 28 U.S.C. § 158(a).

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District courts and circuit courts share the same role in the

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bankruptcy appellate process.

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F.3d 1133, 1138 (9th Cir. 2016) (citing Microsoft Corp. v. DAK

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Indus., Inc. (In re DAK Indus., Inc.), 66 F.3d 1091, 1094 (9th

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Cir. 1995)).

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evaluating whether the findings of fact contain clear error and

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assessing the conclusions of law de novo.

Both review the bankruptcy court decision directly,

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IV.
A.

Gladstone v. U.S. Bancorp, 811

Id.

DISCUSSION

The Bankruptcy Court’s Factual Determinations Were Not
Clearly Erroneous

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“What’s in a name? That which we call a rose by any other name

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would smell as sweet.”

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–WILLIAM SHAKESPEARE, ROMEO AND JULIET act 2, sc. 2.
While this HOA dispute bears little resemblance to a

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Shakespearean tragedy, both feuds boil down to a name.

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Specifically, Indian Village challenges the nonjudicial

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foreclosure of its lots, arguing that use of an incorrect HOA

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name on foreclosure notices rendered the foreclosure invalid.

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Indian Village argues that the bankruptcy court committed

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error by evaluating the credibility of witnesses, stating that

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credibility determinations were not relevant.

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No. 6, pp. 39–41.

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evaluated the credibility, knowledge, and intent of the parties

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because so much of the case was “factually driven.”

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bankruptcy court’s credibility determinations were essential to

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determining who the parties understood was foreclosing on the

The Court disagrees.

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Appellant Br., ECF

The bankruptcy court

AA 395.

The

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property, whether Indian Village received sufficient notice of

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foreclosure, and whether Indian Village suffered any prejudice on

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account of the missing word in the HOA’s name.

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has not pointed to any specific examples of factual error, other

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than its disagreement that credibility was an issue in the case.

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See Appellant Br. at 39–41.

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Indian Village

The bankruptcy court’s findings of fact detailed how CARS,

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on behalf of the HOA, initiated a nonjudicial foreclosure in the

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name of Gold Strike 2002 after Indian Village withheld its

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discounted assessments from Gold Strike 2007.

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findings concluded that Indian Village knew that Gold Strike 2007

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was the foreclosing entity.

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Weiner, directed Lee, Indian Village’s legal and business service

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provider, to create Gold Strike 2007.

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Weiner that chose to create Gold Strike 2007 with a name that was

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nearly identical to Gold Strike 2002.

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names differ only by the addition of the word “Homeowners” in the

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successor HOA.

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continuously referred to Gold Strike 2007 by Gold Strike 2002’s

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name, even though Gold Strike 2002 ceased any operations in 2007.

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AA 440.

Id.

AA 416.

AA 392–445.

These

Indian Village’s principal,

AA 394.

It was Lee and

AA 408–09.

The two HOAs’

As the bankruptcy court noted, parties

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There was no confusion that Indian Village was obligated to

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pay HOA fees, both as a condition of the lots’ purchase, AA 120,

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and as a condition of the 2011 settlement, AA 450.

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there was no confusion that by refusing to pay its HOA fees,

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Indian Village owed money to Gold Strike 2007.

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Indian Village received letters from CARS attempting to collect

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on behalf of Gold Strike 2002, Indian Village knew to which
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Similarly,

AA 440.

When

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entity it owed money.

AA 431.

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Gold Strike 2002’s board and knew that Gold Strike 2002 ceased

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operations in 2007.

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there was no genuine confusion about which HOA was conducting the

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foreclosure.

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advantage of a problem of its own creation: the similarity of

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Gold Strike 2002’s and Gold Strike 2007’s names and the tendency

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of individuals to continue using the former’s name.

AA 435.

AA 408.

Both Lee and Weiner remained on

As the bankruptcy court points out,

Rather, Indian Village sought to take

See AA 418.

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As an appellate court, this Court may not “disturb the

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‘quintessentially factual determination’ of credibility ‘in the

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absence of clear error.’ ”

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Cir. 1990) (quoting United States v. Lummi Indian Tribe, 841 F.2d

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317, 319 (9th Cir. 1988)).

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clear error in the bankruptcy court’s credibility determination.

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Similarly, the Court finds no clear error in the bankruptcy

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court’s factual determination that CARS was acting on behalf of

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Gold Strike 2007 at all times and the reference to Gold Strike

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2002 in documents was a typographical error.

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the bankruptcy court’s findings of fact.

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B.

In re Ashley, 903 F.2d 599, 606 (9th

The Court finds that there is no

The Court affirms

The Bankruptcy Court’s Legal Determinations Were
Correct

There is a presumption that a nonjudicial foreclosure sale

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was conducted regularly and fairly.

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Inc., 26 Cal. Rptr. 3d 413, 430 (Ct. App. 2005).

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presumption may only be rebutted by substantial evidence of

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prejudicial procedural irregularity.”

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the trustee’s sale bears the burden of proving such irregularity

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to overcome the presumption of regularity.
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Melendrez v. D & I Inv.,

Id.

“This

The party challenging

Id.

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Indian Village relies on Yvanova v. New Century Mortg.

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Corp., 365 P.3d 845 (Cal. 2016) for the proposition that any

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defect in the foreclosure process voids the foreclosure.

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Court does not read Yvanova quite so broadly.

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Supreme Court narrowly tailed its ruling in that case, holding

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“only that a borrower who has suffered a nonjudicial foreclosure

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does not lack standing to sue for wrongful foreclosure based on

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an allegedly void assignment merely because he or she was in

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default on the loan and was not a party to the challenged

The California

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assignment.”

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properly applied Yvanova in finding that Indian Village had

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standing to challenge the foreclosure; however, Indian Village

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failed to prevail on its foreclosure challenge at trial.

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Yvanova, 365 P.3d at 848.

The

The bankruptcy court

“To successfully challenge a foreclosure sale based on a

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procedural irregularity, the plaintiff must show both that there

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was a failure to comply with the procedural requirements for the

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foreclosure sale and that the irregularity prejudiced the

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plaintiff.”

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Rptr. 3d 372, 378 (Ct. App. 2019) (holding that mere technical

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violations of the foreclosure process, which did not prejudice

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the landowner, did not give rise to a wrongful foreclosure

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claim).

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reasonable person are not actionable.

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JPMorgan Chase Bank, N.A., 213 Cal. Rptr. 3d 210, 215 (Ct. App.

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2017) (rejecting a claim based on the misspelling of the

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borrower’s name on the notices of the trustee’s sale).

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Citrus El Dorado, LLC v. Chicago Title Co., 244 Cal.

Minor, nonprejudicial defects that would not confuse a

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See, e.g., Gillies v.

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1. CARS Complied with California’s Procedural

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Requirements
The Davis–Stirling Common Interest Development Act, Cal.

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Civ. Code § 4000 et seq., governs common interest developments in

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California and provides statutory requirements for nonjudicial

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foreclosures by HOAs.

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(repealed effective Jan. 1, 2014).

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listed six provisions that an HOA must include when notifying an

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owner about delinquent assessments.

See also Cal. Civ. Code § 1350 et seq.
In March 2013, Section 1367.1

Cal. Civ. Code

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§ 1367.1(a)(1)–(6).

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of Delinquent Assessment, dated March 5, 2013, complied with

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those requirements.

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Village relies on Diamond v. Superior Court, 159 Cal. Rptr. 3d

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110 (Ct. App. 2013), Indian Village has not shown a violation of

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the statutory requirements, as seen in the judicial foreclosure

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in Diamond.

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days after recording was insufficient compliance where the

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statute required mailing within 10 days).

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Review of the record shows that the Notice

ECF No. 6-4, pp. 3–6.

Although Indian

See id. at 121–22 (mailing of notice of default 28

“Any sale by the trustee shall be conducted in accordance

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with Sections 2924, 2924b, and 2924c applicable to the exercise

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of powers of sale in mortgages and deeds of trust.”

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Code § 1367.1(g).

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include all of the following:

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Cal. Civ.

Section 2924 requires that a notice of default

(A) A statement identifying the mortgage or deed of
trust by stating the name or names of the trustor
or trustors and giving the book and page, or
instrument number, if applicable, where the
mortgage or deed of trust is recorded or a
description of the mortgaged or trust property.
(B) A statement that a breach of the obligation for
which the mortgage or transfer in trust is security
has occurred.
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(C) A statement setting forth the nature of each
breach actually known to the beneficiary and of his
or her election to sell or cause to be sold the
property to satisfy that obligation and any other
obligation secured by the deed of trust or mortgage
that is in default.
(D) If the default is curable pursuant to Section
2924c, the statement specified in paragraph (1) of
subdivision (b) of Section 2924c.

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Cal. Civ. Code § 2924(a)(1).

Review of the record indicates that

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the Notice of Default, dated October 22, 2013, satisfied all of

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the requirements of California Civil Code Section 2924.

ECF No.

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6-1, pp. 25–27.

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trustor, CARS, it did not require the name of the beneficiary,

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Gold Strike 2007.

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beneficiary does not impact compliance with this section.

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While the statute required the name of the

A typographical error in the name of the

“A nonjudicial foreclosure by an association to collect upon

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a debt for delinquent assessments shall be subject to a right of

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redemption.”

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requirements of Section 2924f, a notice of sale in connection

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with an association’s foreclosure of a separate interest in a

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common interest development shall include a statement that the

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property is being sold subject to the right of redemption” within

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ninety (90) days.

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requires that the notice of sale “contain the name, street

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address in this state, which may reflect an agent of the trustee,

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and either a toll-free telephone number or telephone number in

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this state of the trustee, and the name of the original trustor,”

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and a statement that the property will be sold at public sale

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unless the default is cured.

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(c)(3).

Cal. Civ. Code § 5715(b).

Id.

“In addition to the

California Civil Code Section 2924f

Cal. Civ. Code § 2924f(b)(5),

All of this information was provided in the Notice of
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Trustee’s Sale and the Certificate of Foreclosure Sale, following

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the September 30, 2014 public auction.

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ECF No. 6-1, pp. 28–31.

Section 2924f goes on to state that “[i]f a legal

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description or a county assessor’s parcel number and either a

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street address or another common designation of the property is

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given, the validity of the notice and the validity of the sale

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shall not be affected by the fact that the street address, other

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common designation, name and address of the beneficiary, or the

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directions obtained therefrom are erroneous or that the street

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address, other common designation, name and address of the

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beneficiary, or directions obtained therefrom are omitted.”

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Civ. Code § 2924f(b)(5).

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beneficiary need not be included, a typographical error in the

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beneficiary’s name has no impact on the notice’s compliance with

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statute.

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Cal.

Accordingly, as the name of the

2. Indian Village Did Not Suffer Prejudice
Even if the Court had found that CARS failed to comply with

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California statutory requirements, Indian Village’s failure to

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show prejudice would doom its challenge to the foreclosure.

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Citrus El Dorado, 244 Cal. Rptr. 3d at 378.

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Gillies, the typographical error here is not material such that a

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reasonable person would be confused.

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(dismissing claim based on a misspelling of the borrower’s name

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as “Dougles” instead of “Douglas” in the notice of default).

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HOA’s name, which was not required to be listed on the notice of

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default, contained a missing word.

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have been confused as to who was seeking foreclosure, and indeed,

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there was no genuine confusion on this issue.
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See

Much like in

213 Cal. Rptr. 3d at 215

The

A reasonable person would not

Indian Village has

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failed to show prejudice.

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3. The Bankruptcy Court Properly Found for The Trustee

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on All Claims

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The Court now reviews specifically the bankruptcy court’s

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adjudication of the six claims in Indian Village’s Complaint.

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Review of the evidence and applicable law illustrates that Gold

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Strike 2007 had the right to foreclose and that CARS carried out

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the foreclosure in compliance with state law.

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error did not prejudice Indian Village.

The typographical

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On Indian Village’s first claim, the bankruptcy court

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properly granted declaratory judgment to Appellants because Gold

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Strike 2007 had the right to foreclose and exercised that right,

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consistent with state law.

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was a typographical error in the notice of delinquent assessment,

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notice of default, and notice of sale.

That right was not lost because there

AA 440–41, 455.

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As to Indian Village’s second and third claims to set aside

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the Trustee’s sale and cancel the Trustee’s deed, the bankruptcy

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court found that Indian Village failed to show that the

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foreclosure sales were not conducted in compliance with state

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law.

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was correct, as the evidence has shown CARS complied with

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California statutory provisions.

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AA 441–42, 455.

The Court agrees that this determination

The Court also agrees that Indian Village’s fourth claim for

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wrongful foreclosure was correctly denied because CARS conducted

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the nonjudicial foreclosure sales for the properties in

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accordance with state law.

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supports denying Indian Village’s sixth claim for slander of

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title.

AA 442, 455–56.

Id.
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This finding also

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Finally, the Court affirms the bankruptcy court’s judgment

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as to Indian Village’s fifth claim to quiet title.

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bankruptcy court heard evidence and then accurately described the

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parties’ legal interests in the property.

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found that Gold Strike 2007 was the rightful owner of the

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property.

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bankruptcy court resolved the dispute about the use of Gold

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Strike 2002’s name on certain documents, finding that this minor

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defect did not impair Gold Strike 2007’s title.

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Id.

The

AA 441, 455–62.

It

In declaring the rights of the parties, the

Id.

Indian Village’s arguments about a break in the chain of

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title are unpersuasive.

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chain of title because the foreclosing entity never changed—it

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was always Gold Strike 2007.

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foreclose after Indian Village intentionally violated the 2011

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settlement by withholding its discounted assessments.

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Strike 2007 chose to exercise that right in seeking foreclosure.

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Indian Village cannot rely on an immaterial typo to avoid the

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consequences of its actions.

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V.

The foreclosure did not violate the

Gold Strike 2007 had the right to

Gold

CONCLUSION AND ORDER

For the foregoing reasons, we determined that Appellant

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failed to demonstrate that the foreclosure violated applicable

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California law and was improper.

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properly granted to Appellees on all six of Appellant’s claims.

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Accordingly, the Court AFFIRMS the bankruptcy court’s Judgment.

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Consequently, judgment was

IT IS SO ORDERED.
Dated: April 30, 2019

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