Automatic Stay 4

automatic stay
In re Turner, 204 B.R. 988, 97 Cal. Daily Op. Serv. 1887, 97 Daily Journal D.A.R. 3428 (9th Cir.BAP
(Cal.),Jan 02, 1997)
Former employee of Chapter 7 debtor brought nondischargeability proceeding, seeking determination that debt for
sexual harassment was nondischargeable as willful and malicious injury. Employee moved for summary judgment
based on collateral estoppel. The United States District Court for the Eastern District of California, Jane Dickson
McKeag, J., granted motion, and debtor appealed. The Bankruptcy Appellate Panel, Jellen, J., held that: (1) under
California collateral estoppel law, municipal judgment was not final, but (2) there was sufficient identity of issues to
support collateral estoppel.
Reversed and remanded.
[3] Judgment 228 660.5
228 Judgment
228XIV Conclusiveness of Adjudication
228XIV(A) Judgments Conclusive in General
228k660.5 k. Void Judgments. Most Cited Cases
Void judgment cannot be given collateral estoppel effect.
[4] Bankruptcy 51 2442
51 Bankruptcy
51IV Effect of Bankruptcy Relief; Injunction and Stay
51IV(C) Relief from Stay
51k2435 Proceedings
51k2442 k. Determination and Relief; Conditions. Most Cited Cases
Bankruptcy judge may, in appropriate cases, retroactively annul automatic stay. Bankr.Code, 11 U.S.C.A. § 362.
[5] Judgment 228 636
228 Judgment
228k635 Courts or Other Tribunals Rendering Judgment
228k636 k. In General. Most Cited Cases
Principles of collateral estoppel apply in nondischargeability proceedings. Bankr.Code, 11 U.S.C.A. § 523(a).
51 Bankruptcy
51I In General
51I(A) In General
51k2002 k. Application of State or Federal Law in General. Most Cited Cases
Bankruptcy courts must look to state law to determine collateral estoppel effect of state court judgments. 28
U.S.C.A. § 1738.
228 Judgment
228k634 k. Nature and Requisites of Former Adjudication as Ground of Estoppel in General. Most Cited
Cases
For collateral estoppel under California law, (1) issue sought to be precluded from litigation must be identical to that
litigated in former proceeding, (2) issue must have been actually litigated in former proceeding, (3) issue must have
been necessarily decided in former proceeding, (4) **decision in former proceeding must have been final and on the
merits, and (5) party against whom preclusion is sought must be same as party to former proceeding, or in privity
with that party.
228 Judgment
228k650 k. Finality of Determination. Most Cited Cases
Generally, federal court judgments are considered final for collateral estoppel purposes, even when judgment is on
appeal.
[10] Judgment 228 650
228 Judgment
228k650 k. Finality of Determination. Most Cited Cases
**Under California law, pending appeal, trial court judgment is not final and will not be given res judicata effect.
West’s Ann.Cal.C.C.P. § 1049.
51 Bankruptcy
51IV(B) Automatic Stay
51k2394 Proceedings, Acts, or Persons Affected
51k2395 k. Judicial Proceedings in General. Most Cited Cases
Judgment 228 828.21(2)
228 Judgment
228XVII Foreign Judgments
228k828 Effect of Judgments of State Courts in United States Courts
228k828.21 Particular Federal Proceedings
228k828.21(2) k. Bankruptcy. Most Cited Cases
California municipal court judgment did not become final, for collateral estoppel purposes, where Chapter 7 debtor
filed his petition before time ran out for him to appeal or move for a new trial, and debtor filed motion for new trial;
automatic stay tolled debtor’s right to request new trial or appeal. Bankr.Code, 11 U.S.C.A. §§ 108(b), 362(a)(1).
[12] Judgment 228 828.21(2)
228 Judgment
228XVII Foreign Judgments
228k828 Effect of Judgments of State Courts in United States Courts
228k828.21 Particular Federal Proceedings
228k828.21(2) k. Bankruptcy. Most Cited Cases
There was sufficient identity of issues between state court verdict and willful and malicious injury discharge
exception to support collateral estoppel, though jury rendered general verdict against Chapter 7 debtor in employee’s
sexual harassment lawsuit; even negligent infliction of emotional distress cause of action alleged intentional
physical abuse of employee, resulting damage, and that debtor knew or should have known that actions would cause
employee severe emotional distress, which amounted to allegation that debtor negligently failed to realize that his
intentional wrongful act would cause emotional distress. Bankr.Code, 11 U.S.C.A. § 523(a)(6).
[13] Bankruptcy 51 3374(2)
51 Bankruptcy
51X Discharge
51X(C) Debts and Liabilities Discharged
51X(C)5 Torts and Crimes
51k3374 Willful or Malicious Injury
51k3374(2) k. Willful, Deliberate, or Intentional Injury. Most Cited Cases
(Formerly 51k3355(1.10))
Discharge exception for “willful and malicious injury” does not require specific intent to injure; rather, creditor must
show (1) wrongful act done intentionally, (2) that necessarily produces harm, and (3) is without just cause or excuse.
Bankr.Code, 11 U.S.C.A. § 523(a)(6).
OPINION
JELLEN, Bankruptcy Judge:
The debtor appeals a bankruptcy court order granting the creditors’ motion for summary judgment on their
nondischargeability complaint under Bankruptcy Code § 523(a)(6) (willful and malicious injury) FN2. The
bankruptcy court grounded its ruling on the collateral estoppel effect of a prebankruptcy judgment. We REVERSE
and REMAND.
FACTS
Appellee Pamela L. Wright (“Wright”) is a former employee of the debtor, Richard L. Turner (“Turner”). Prior to
Turner’s chapter 7 petition, Wright filed a complaint against Turner in the California municipal court alleging that
Turner, while Wright’s employer, had trapped her in a car and subjected her to abusive physical behavior and sexual
advances. Wright’s complaint alleged five causes of action: assault, battery, false imprisonment, intentional
infliction of emotional distress, and negligent infliction of emotional distress.
Following trial, the jury came down with a general verdict awarding Wright general damages in the sum of $10,000
and punitive damages in the sum of $15,000. The jury made no findings, and its verdict did not specify the causes of
action on which it based its award.
On October 6, 1992, Turner filed his chapter 7 petition. Thereafter, on October 15, 1992, the municipal court entered
its judgment on the verdict (the “Municipal Judgment”). On October 23, 1992, Turner filed in the municipal court a
notice of intention to move for a new trial. On November 4, 1992, Wright and her municipal court counsel, appellee
Barr, Sinclair & Hill (the “Barr firm”), filed a motion in the municipal court seeking an award of attorneys’ fees
pursuant to California Government Code § 12965(b) (West 1996) FN3. The municipal court never heard or ruled on
Turner’s motion for a new trial, nor Wright’s motion for an award of attorneys’ fees.
Subsequently, Wright filed a complaint against Turner under § 523(a)(6) FN4 . Wright then moved for summary
judgment, based on the collateral estoppel effect of the jury verdict and Municipal Judgment. The bankruptcy court
granted the motion, and concurrently awarded Wright and the Barr firm attorneys’ fees pursuant to California
Government Code § 12965(b).
FN4. Section 523(a)(6) provides:
A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual
debtor from any debt-
.....
6) for willful and malicious injury by the debtor to another entity or to the property of another entity;
The bankruptcy court held that the Municipal Judgment was final for collateral estoppel purposes notwithstanding
the automatic stay under § 362(a)(1) FN5 and the decision in *991 Ingersoll-Rand Financial Corp. v. Miller Mining
Co., 817 F.2d 1424 (9th Cir.1987). Ingersoll-Rand held that § 362(a)(1) stays appeals by the debtor of an adverse
judgment in a lawsuit originally brought against the debtor. Id. at 1426. The bankruptcy court reasoned that § 108(b)
FN6
provided Turner with an extended deadline to appeal the Municipal Judgment, which deadline had passed in the
absence of an appeal, and that this extended deadline “trumped” the tolling effect of § 362(a)(1)‘s stay of further
proceedings by Turner in the municipal court. Thus, according to the bankruptcy court, the Municipal Judgment
became final 60 days following the order for relief, by operation of § 108(b).
FN5. Section 362(a)(1) provides:
(a) Except as provided in subsection (b) of this section, a petition filed under section 301, 302, or 303 of this title ...
operates as a stay, applicable to all entities, of-
(1) the commencement or continuation, including the issuance or employment of process, of a judicial,
administrative, or other action or proceeding against the debtor that was or could have been commenced before the
commencement of the case under this title, or to recover a claim against the debtor that arose before the
commencement of the case under this title;
FN6. Section 108(b) provides:
(b) Except as provided in subsection (a) of this section, if applicable nonbankruptcy law, an order entered in a
nonbankruptcy proceeding, or an agreement fixes a period within which the debtor or an individual protected under
section 1201 or 1301 of this title may file any pleading, demand, notice, or proof of claim or loss, cure a default, or
perform any other similar act, and such period has not expired before the date of the filing of the petition, the trustee
may only file, cure, or perform, as the case may be, before the later of-
(1) the end of such period, including any suspension of such period occurring on or after the commencement of the
case; or
(2) 60 days after the order for relief.
The bankruptcy court also held that each cause of action of the municipal court complaint alleged facts sufficient to
exclude the debt from the discharge under § 523(a)(6), and that the general verdict therefore established facts for
collateral estoppel purposes sufficient to entitle Wright to summary judgment.
Turner’s timely appeal followed.
Some authority exists for the proposition that entry of a postbankruptcy judgment after a court has rendered a
prebankruptcy decision on the merits is a mere “ministerial act” that is not subject to the automatic stay. Rexnord
Holdings, Inc. v. Bidermann, 21 F.3d 522, 527 (2d Cir.1994). In this circuit, however, the question of a “ministerial
act” exception remains open. Authority also exists for the proposition that § 362(a) is subject to an implied
exception for a “technical violation” that does not cause damage. See In re Brooks, 79 B.R. 479 (9th Cir. BAP
1987), aff’d, 871 F.2d 89 (9th Cir.1989). In *992In re Schwartz, 954 F.2d 569, 575 (9th Cir.1992) , the court of
appeals declined to rule on the validity of this possible exception.
MAKE SURE YOU ATTACH PERTINENT PAGES OF

YOUR BK FILING AS PROOF; ALTHOUGH BK COURT
MAILS IT TO THEM., AND THEY ALSO CAN SEE IT
ONLINE
--- On Sun, 5/3/09, David Chey <davidchey@gmail.com> wrote:

From: David Chey <davidchey@gmail.com>
Subject: put cm-180 on your own pleading paper.
To: "KAREEM SALESSI" <salessi@sbcglobal.net>
Date: Sunday, May 3, 2009, 11:26 PM
Dear Kareem Salessi:
I would recommend that you put it on your own pleading paper. Using these
forms cause crooked judges to think they are dealing with ignorant litigants
and brings out the crookedness in corrupt judicial officers. Putting it on your
own pleading paper evidences that you are an independent thinker looking
to prosecute any corruption and bring to justice a crooked judicial officer.
Reply Forward
Your message has

been sent. Invite
KAREEM SALESSI
to Gmail
Reply
David Chey show details 8:01 AM (1 minute ago)
to salessi
SHOULD EVERYTHING THAT HAS BEEN FILED BE ATTACHED OR JUST THE PAGE
WHICH IDENTIFIES THE CASE NUMBER ACCORDING TO CALIFORNIA LANDLORD
AND TENANT PRACTICE;
ALSO WHAT IS THE DOCUMENT NOTICE OF COMMENCEMENT OF PROCEEDINGS

THAT IS IDENTIFIED IN THE NOTICE OF STAY CM-180, PARAGRAPH 3.
- Show quoted text -
In re Schwartz, 954 F.2d 569, 69 A.F.T.R.2d 92-548, 92-1 USTC P 50,069, 26 Collier Bankr.Cas.2d 649, 22
Bankr.Ct.Dec. 845, Bankr. L. Rep. P 74,539 (9th Cir.(Wash.),Jan 22, 1992)
Good case
51 Bankruptcy
51IV(D) Enforcement of Injunction or Stay
51k2462 k. Validity of Acts in Violation of Injunction or Stay. Most Cited Cases
Violations of automatic stay are void, not voidable. Bankr.Code, 11 U.S.C.A. § 362
Debtors Russell and Linda Schwartz appeal from a Bankruptcy Appellate Panel (BAP) decision that an IRS tax
penalty assessed in violation of the Bankruptcy Code’s automatic stay provision is voidable but not void. We reverse
the judgment of the BAP.
BACKGROUND
The essential facts of this case are not in dispute. On February 25, 1983, the Schwartzes and their corporation, R.H.
Schwartz Construction Specialties, Inc., filed a Chapter 11 bankruptcy petition. On October 8, 1984, the IRS,
apparently unaware of the bankruptcy filing, assessed a 100% tax penalty, totaling $65,819.25, against Russell
Schwartz pursuant to 26 U.S.C. § 6672 (1988). The Schwartzes did not challenge the tax assessment within the
Chapter 11 bankruptcy and stipulated to their dismissal from the Chapter 11 bankruptcy on March 27, 1985.
In August 1987, the IRS filed a Federal Tax Lien with the King County Auditor pursuant to the penalty assessment.
The IRS claimed that the penalty had increased to $86,296.60. On October 8, 1987, the Schwartzes filed a Chapter
13 bankruptcy petition. The IRS filed a Proof of Claim in the Chapter 13 bankruptcy on February 19, 1988, alleging
that the Schwartzes owed the IRS $90,787.67 for the 1984 tax assessment.
The Schwartzes objected to the IRS claim. They argued that the tax assessment, which originally occurred during
their prior Chapter 11 bankruptcy, violated the automatic stay provision of the Bankruptcy Code and was therefore
void. The bankruptcy court agreed and ruled that the IRS tax assessment was void and without effect. The
government appealed to the BAP, which rejected the Schwartzes’ argument and reversed the judgment of the
bankruptcy court. In re Schwartz, 119 B.R. 207 (1990). The BAP held that acts in violation of the automatic stay are
voidable, not void. Because the tax assessment was not affirmatively challenged by the Schwartzes in the original
Chapter 11 bankruptcy, the BAP held that the assessment was valid and enforceable in the subsequent Chapter 13
bankruptcy. This appeal followed.
[1] The sole issue before us is whether creditor violations of the Bankruptcy *571 Code’s automatic stay provision
are void or simply voidable. If violations of the automatic stay are void, the IRS tax assessment made against the
Schwartzes in the Chapter 11 bankruptcy is without effect. If, however, such violations are merely voidable, the
assessment is valid because the Schwartzes made no attempt to have the assessment voided in the Chapter 11
bankruptcy. The issue in this appeal is one of law; we review the BAP’s conclusions of law de novo. In re Taylor,
884 F.2d 478, 480 (9th Cir.1989); In re 268 Ltd., 877 F.2d 804, 805 (9th Cir.1989).
It is undisputed that the IRS tax assessment violated the Bankruptcy Code’s automatic stay provision. 11 U.S.C. §
362(a)(4)-(6) (1988).FN1 **The Ninth Circuit has stated generally that violations of the automatic stay are “void”.
See, e.g., In re Shamblin, 890 F.2d 123, 125 (9th Cir.1989) ( “Judicial proceedings in violation of [the] automatic
stay are void.”); In re Stringer, 847 F.2d 549, 551 (9th Cir.1988) (“Any proceedings in violation of the automatic
stay in bankruptcy are void.”). Although Shamblin and Stringer suggest that violations of the automatic stay are void
and not merely voidable, the void/voidable distinction was not dispositive in those cases, and the Ninth Circuit has
not directly addressed the precise issue presented in this appeal. See Shamblin, 890 F.2d at 124-26 (debtor
affirmatively challenged and litigated potential automatic stay violation); Stringer, 847 F.2d at 550 (same).
FN1. Section 362 reads in pertinent part:
(a) ... a petition filed under ... this title ... operates as a stay, applicable to all entities, of-
.....
(4) any act to create, perfect, or enforce any lien against property of the estate;
(5) any act to create, perfect, or enforce against property of the debtor any lien to the extent that such lien secures a
claim that arose before the commencement of the case under this title;
(6) any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case
under this title;
11 U.S.C. § 362(a)(4)-(6) (citations omitted).

[2][3] Our decision today clarifies this area of the law by making clear that violations of the automatic stay are void,
not voidable. See In re Williams, 124 B.R. 311, 316-18 (Bankr.C.D.Cal.1991) (recognizing that the Ninth Circuit
adheres to the rule that violations of the automatic stay are void and criticizing the BAP decision in this case).
11 U.S.C. § 362(a)(1) of the Bankruptcy Code automatically stays the commencement or continuation of judicial
proceedings against the debtor that were or could have been commenced before the bankruptcy petition was filed.
**Any proceedings in violation of the automatic stay in bankruptcy are void. Kalb v. Feuerstein, 308 U.S. 433, 438-
39, 60 S.Ct. 343, 345-46, 84 L.Ed. 370 (1940); 2 L. King, Collier on Bankruptcy ¶ 362.03 (15th ed. 1988).
It is undisputed that the IRS tax assessment violated the Bankruptcy Code’s automatic stay provision. 11 U.S.C. §
362(a)(4)-(6) (1988).FN1 **The Ninth Circuit has stated generally that violations of the automatic stay are “void”.
See, e.g., In re Shamblin, 890 F.2d 123, 125 (9th Cir.1989) ( “Judicial proceedings in violation of [the] automatic
stay are void.”); In re Stringer, 847 F.2d 549, 551 (9th Cir.1988) (“Any proceedings in violation of the automatic
stay in bankruptcy are void.”). Although Shamblin and Stringer suggest that violations of the automatic stay are void
and not merely voidable, the void/voidable distinction was not dispositive in those cases, and the Ninth Circuit has
not directly addressed the precise issue presented in this appeal. See Shamblin, 890 F.2d at 124-26 (debtor
affirmatively challenged and litigated potential automatic stay violation); Stringer, 847 F.2d at 550 (same).
FN1. Section 362 reads in pertinent part:
(a) ... a petition filed under ... this title ... operates as a stay, applicable to all entities, of-
.....
(4) any act to create, perfect, or enforce any lien against property of the estate;
(5) any act to create, perfect, or enforce against property of the debtor any lien to the extent that such lien secures a
claim that arose before the commencement of the case under this title;
(6) any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case
under this title;
11 U.S.C. § 362(a)(4)-(6) (citations omitted).
[2][3] Our decision today clarifies this area of the law by making clear that violations of the automatic stay are void,
not voidable. See In re Williams, 124 B.R. 311, 316-18 (Bankr.C.D.Cal.1991) (recognizing that the Ninth Circuit
adheres to the rule that violations of the automatic stay are void and criticizing the BAP decision in this case).
Given the important and fundamental purpose of the automatic stay and the broad debtor protections of the
Bankruptcy Code, we find that Congress intended violations of the automatic stay to be void rather than voidable.
Nothing in the Code or the legislative history suggests that Congress intended to burden a bankruptcy debtor with an
obligation to fight off unlawful*572 claims.
[T]he fundamental importance of the automatic stay to the purposes sought to be accomplished by the Bankruptcy
Code requires that acts in violation of the automatic stay be void, rather than voidable.
Our conclusion is supported by the great weight of authority. The majority of courts have long stated that violations
of the automatic stay are void and of no effect. See, e.g., Kalb v. Feuerstein, 308 U.S. 433, 438, 60 S.Ct. 343, 345-
46, 84 L.Ed. 370 (1940);
The more important potential conflict with interpreting the automatic stay as voiding violations is provided by
section 549 of the Code. See, e.g., Sikes, 881 F.2d at 179 (court determining that § 549 is inconsistent with
automatic stay voiding violations). Section 549 allows the bankruptcy trustee to avoid certain authorized transfers
and all unauthorized transfers of estate property.FN2 **Section 549 includes a statute of limitation which requires the
trustee to commence an action to void a transfer either within two years of the transfer or before the close of the
case, whichever is earlier. 11 U.S.C. § 549(d). The Code’s definitions dictate that section 549 can apply to a wide
variety of transactions. “Transfer” is defined as “every mode, direct or indirect, absolute or conditional, voluntary or
involuntary, of disposing of or parting with property or with an interest in property....” 11 U.S.C. § 101(50) (1988).
**Further, “property of the estate” includes all legal interests in property. 11 U.S.C. § 541 (1988).
FN2. Section 549 reads in part:
(a) Except as provided in subsection (b) or (c) of this section, the trustee may avoid a transfer of property of the
estate-
(1) that occurs [made] after the commencement of the case; and
(2)(A) that is authorized only under section 303(f) or 542(c) of this title; or
(B) that is not authorized under this title or by the court.
11 U.S.C. § 549(a) (1988).

[6] Section 362‘s automatic stay does not apply to sales or transfers of property initiated by the debtor. Thus, section
549 has a purpose in bankruptcy beyond the potential overlap with section 362. In other words, the automatic stay
can void any violation and still leave section 549 with a valid and important role in bankruptcy. Section 549 exists
as a protection for creditors against unauthorized debtor transfers of estate property. Although there are
circumstances where section 362 overlaps section 549 and renders it unnecessary, this overlap falls far short of
rendering section 549 meaningless.
Similarly, subsection 549(c)’s protection of good faith purchasers carves out an extremely specific and narrow
exception to the automatic stay when section 362 overlaps subsection 549(c). There is no reason to infer from this
narrow exception that violations of the automatic stay are not void.
**Collier on Exceptions to the Stay Involving Certain Residential

Property Evictions
By Collier
December 14, 2007
The stay exception under subsection (b)(22) applies only if the

prepetition judgment for possession relates to rental property in
which the debtor resides under a lease or rental agreement. **It does
not apply, for example, to an eviction judgment obtained by a
purchaser of property at foreclosure who does not have a lease or
rental agreement with a debtor occupying the property. n3
n3
3. See In re McCray, 342 B.R. 668 (Bankr. D.D.C. 2006).
Bad case
**Creditor, which had contracted prepetition with Chapter 13 debtor to

provide work and materials for new construction on property owned by
debtor and his nondebtor wife as tenants by the entirety, was not
entitled to stay relief in order to pursue, perfect, and enforce a
mechanics’ lien against the property; under applicable Maryland law,
property held as tenants by the entirety was not subject to the
establishment of a mechanics’ lien when, as here, only one owner was
liable for the debt. In re Slacum, Bkrtcy.D.Md.2001, 272 B.R. 335.
Bankruptcy 2422.5(4.1)
**Chapter 13 debtor had equity in mortgaged property and property was

needed for her reorganization, and thus mortgagee was not entitled to
relief from automatic stay to foreclose on property; debtor had
equitable interest in property under Alabama law, even if she had
signed quitclaim deed for property, and debtor’s stable residence was
essential to her successful reorganization. In re Thomas,
Bkrtcy.N.D.Ala.1990, 121 B.R. 94. Bankruptcy 2424; Bankruptcy
2429(3)
In view of market value of debtors’ home in excess of $20,000,

debtors’ need for the home for effective reorganization under Chapter
13 and fact that balance on note was $1,146.69, deed of trust holder
failed to satisfy burden of proving lack of equity, and motion for
relief from automatic stay would be denied. In re Johnson,
Bkrtcy.D.Md.1985, 45 B.R. 618. Bankruptcy 2439(4)
Mortgagee was not entitled to relief from automatic stay for cause in
order to foreclose on mortgaged property on theory that, because
debtor no longer held legal title to property after transferring deed
to nonoperative Pennsylvania corporation of which debtor was principal
shareholder, property was not an asset of bankruptcy estate since
debtor, by virtue of fact that he resided in property, had an
equitable interest in property that made automatic stay applicable. In
re Gallagher, Bkrtcy.E.D.Pa.1984, 43 B.R. 410. Bankruptcy 2424
**Denial of creditor-mortgagee’s motion for stay relief for "cause" to

proceed with ejectment action was warranted where there were
"sufficiently serious questions going to the merits" of the issue of
whether, should Chapter 13 debtor-mortgagor recover equity of
redemption in her primary residence in her avoidance action, she could
decelerate, cure, and reinstate the mortgage debt. In re Fitzgerald,
Bkrtcy.D.Conn.1999, 237 B.R. 252. Bankruptcy 2422.5(5)
Mortgagee that had submitted high bid on Chapter 13 debtor-mortgagors’

residential property at foreclosure auction conducted before debtors’
bankruptcy filing was not entitled to relief from stay, to enable it
to complete transfer of title by recording its deed, where mortgagee
appeared to be adequately protected by regular mortgage payments that
debtors were making to Chapter 13 trustee, and it appeared that
subject property was necessary for debtors to effectively complete
their Chapter 13 plan. In re Beeman, Bkrtcy.D.N.H.1999, 235 B.R. 519.
Bankruptcy 2422.5(5)
case defining state of being necessary for effective reorganization.
Enforcement of writ of possession against Chapter 7 debtor-tenants,

pursuant to California statute permitting execution of valid writ of
possession in an unlawful detainer case despite tenant’s filing of
postjudgment bankruptcy petition, without first obtaining relief from
stay, violated automatic stay provisions of the Bankruptcy Code;
whether deemed to be commencement of new action, continuation of
unlawful detainer case, or enforcement of judgment against debtors,
attempted eviction was prohibited by Code because debtors had
equitable possessory interest in the rented premises under California
law and, thus, estate property was involved. In re Di Giorgio,
C.D.Cal.1996, 200 B.R. 664, vacated 134 F.3d 971. Bankruptcy 2398
**Bankruptcy statute providing for granting of relief from stay upon

showing that property is not necessary to debtor’s effective
reorganization has no application in Chapter 13 bankruptcy proceeding.
In re Fischer, D.Alaska 1992, 136 B.R. 819. Bankruptcy 2429(1)
In re Fischer, 136 B.R. 819 (D.Alaska,Feb 04, 1992)
[2][3][4] The decision to grant relief under § 362(d)(2), however, is not purely
discretionary, because the necessary conditions are defined with some precision. The
“court shall grant relief from the stay” if the two conditions specified in § 362(d)(2)
(A) and (B) are met. 11 U.S.C. § 362(d) (emphasis added). The decision must rest on
findings of fact which are, however, subject to a review under a clearly erroneous
standard. Bankruptcy Rule 8013. The Bankruptcy Court does have broad discretion in
determining the nature of the relief to be granted where the conditions of § 362(d)(2)
are satisfied. The court may terminate, annul, modify or merely condition the stay, as
it deems appropriate. 11 U.S.C. § 362(d).FN6
FN6. The highly subjective nature of the inquiry and response makes explicable the Mac
Donald court's characterization of the standard of review under § 362(d) generally as
one of abuse of discretion. Cf. Mac Donald, 755 F.2d at 716, 717 (not distinguishing
standards applicable to § 362(d)(1) and § 362(d)(2)).
The standard of review is not relevant since, as it explained below, this Court
concludes that the reference in § 362(d)(2) to “reorganization,” and the policies of
Chapter 13, preclude the application of that ground for relief from the stay in Chapter
13. Even if the section does apply, however, this Court finds that the property is
necessary to an effective rehabilitation of the debtor.
2. Analysis
[5] The Supreme Court in United Savings Ass'n of Texas v. Timbers of Inwood Forest
Assoc., Ltd., 484 U.S. 365, 372, 108 S.Ct. 626, 630, 98 L.Ed.2d 740 (1988) , addressed
the issue of what the creditor's interest in the property should be under 11 U.S.C. §
361.FN7 The Court interpreted § 506(a) as follows:
FN7. Section 361 provides:
When adequate protection is required under section 362, 363, or 364 of this title of
an interest of an entity in property, such adequate protection may be provided by-
(1) requiring the trustee to make periodic cash payments to such entity, to the extent
that the stay under section 362 of this title, use, sale, or lease under section 363 of
this title or any grant of a lien under section 364 of this title results in a decrease
in the value of such entity's property;
(2) providing to such entity an additional or replacement lien to the extent that such
stay, use, sale, lease, or grant results in a decrease in the value of such entity's
interest in such property; or
(3) granting such other relief, other than entitling such entity to compensation
allowable under section 503(b)(1) of this title as an administrative expense, as will
result in the realization by such entity of the indubitable equivalent of such entity's
interest in such property.
In subsection (a) of the provision the creditor's “interest in property” obviously means
his security interest without taking account of his right to immediate possession of the
collateral on default. If the latter were included, the “value of such creditor's
interest” would increase, and the proportions of the claim that are secured and
unsecured would alter, as the stay continues-since the value of the entitlement to use
the collateral from the date of bankruptcy would rise with the passage of time.... The
phrase “value of such creditor's interest” in § 506(a) means “the value of the
collateral.”*825 We think, the phrase “value of such entity's interest” in § 361(1) and
(2), when applied to secured creditors, means the same.
Id. at 372, 108 S.Ct. at 630. The value of the property should be the same whether
being analyzed under § 506 or § 361. Therefore, the value of the creditor's interest
that must be adequately protected does not include the value of the mortgage insurance.
[6] Lomas also contends that Fischer has no equity in the condominium and that it is
not necessary to the reorganization. For this reason, argues Lomas, the Bankruptcy
Court should have made foreclosure possible by granting relief from the stay under §
362(d)(2). Courts are not in agreement whether § 362(d)(2)(B) applies to Chapter 13
relief. See In re Scott, 121 B.R. 605, 607-08 (E.D.Okla.Bankr.1990) (subsection does
apply to Chapter 13); but see In re Rhoades, 34 B.R. 164, 166-67 (D.Vermont Bankr.1983)
(subsection does not apply to Chapter 13); In re Feimster, 3 B.R. 11, 14
(N.D.Ga.Bankr.1979) (subsection does not apply to Chapter 13).
The Bankruptcy Court of the District of Vermont in Rhoades stated:
If the subsection applies, a debtor who has no equity in property which is not necessary
to consummate a Chapter 13 plan may be, through lift-stay actions, exposed to
involuntary dispossession of such property. The purpose, however, of Chapter 13 is to
enable individual debtors with regular incomes to develop and perform a plan for the
repayment of debts over an extended period of time. **The emphasis is on providing
individuals with regular incomes an alternative to liquidation. Hence, it is the
ability of the individual debtors to furnish the creditor with the value of his claim,
in the form of property or from current earnings, which is the key to the protection of
the creditor under a Chapter 13 plan. **Whether the collateral being retained by the
debtor is necessary to the subsistence or rehabilitation of the Chapter 13 debtor, or
whether the debtor has any equity in the collateral, are not factors of concern
applicable or relevant to Chapter 13 proceedings.
Rhoades, 34 B.R. at 167 (citations omitted).
The court in Scott determined that this section did apply to Chapter 13. It stated:
“Since there is no specific section under Chapter 13 which will narrow the general
application § 103(a), we must find that it was intended to be applicable in Chapter 13.”
The Ninth Circuit has not yet faced this issue. This Court predicts that when it does
it will agree with the analysis in Rhoades. It would defeat the purpose of Chapter 13
in many instances if this section was found to apply. A Chapter 13 proceeding is not a
reorganization of a business entity and therefore should not require the same standards
as a Chapter 11 reorganization.
[7] In the alternative, the Court finds that the property in question is necessary to
an effective rehabilitation. The property under the Plan provides a positive cash flow
which is being applied to the Plan. The Plan pays the total secured claim and
approximately eight percent of the unsecured portion.
Therefore, the Bankruptcy Court's decision that Lomas was adequately protected and
relief from the automatic stay was unnecessary is AFFIRMED.
Holder of first mortgage on debtor’s property was not entitled to

relief from automatic stay under statute authorizing court to grant
relief from stay of an act against property if debtor did not have
equity in the property and it was not necessary to an effective
reorganization where, though debtor had no equity in the property, it
represented all of debtor’s property and would be necessary to a
reorganization; issue whether an effective reorganization would be
possible was not relevant in a relief from automatic stay proceeding.
Matter of Holt County Grain Storage, Inc., Bkrtcy.D.Neb.1982, 25 B.R.
271. Bankruptcy 2429(3)
Matter of Holt County Grain Storage, Inc., 25 B.R. 271, 273,

(Bankr.D.Neb.,Dec 14, 1982)
Reorganization of farm
I conclude that that inquiry has no place in a complaint for a relief from
stay proceeding because the statute does not suggest it. The inquiry
regarding the debtor's inability to effectuate a reorganization has relevance
in a motion to dismiss or convert hearing, which touches all creditors'
rights, but not here.
**Irrebuttable presumption arose that Chapter 13 debtor’s home was

necessary for his effective reorganization, so as to preclude lifting
of stay to allow mortgage foreclosure to proceed based on debtor’s
lack of equity in property, where debtor’s primary purpose in filing
his Chapter 13 petition was to save his home. In re Donahue,
Bkrtcy.D.Vt.1998, 231 B.R. 865, reversed 232 B.R. 610. Bankruptcy
2439(2)
In re Donahue, 231 B.R. 865 (Bankr.D.Vt.,Jun 01, 1998)
51 Bankruptcy
51k2421 k. Vacation, Continuance, Modification, or Dissolution in
General. Most Cited Cases
Bankruptcy statute providing that court shall grant relief from stay upon appropriate
showing is applicable in cases under Chapter 13. Bankr.Code, 11 U.S.C.A. § 362(d).
[15] Bankruptcy 51 2439(2)
51 Bankruptcy
51k2435 Proceedings
51k2439 Evidence
51k2439(2) k. Presumptions and Burden of Proof. Most
Cited Cases
Irrebuttable presumption arose that Chapter 13 debtor's home was necessary for his
effective reorganization, so as to preclude lifting of stay to allow mortgage
foreclosure to proceed based on debtor's lack of equity in property, where debtor's
primary purpose in filing his Chapter 13 petition was to save his home. Bankr.Code, 11
U.S.C.A. § 362(d)(2).
[14][15] Debtor argues § 362(d) is inapplicable in chapter 13 cases. This is contrary

to the weight of authority that § 362(d) is applicable in chapter 13 cases. Grundy
National Bank v. Stiltner, 58 B.R. 593 (W.D.Va.1986), In re Garner, 18 B.R. 369, 371
(S.D.N.Y.1982). In a decision reached by a District Court decided on appeal from a
bankruptcy court in a chapter 13 case, it was held that the “Bankruptcy Court erred in
failing to apply section 362(d)(2) to [a] Chapter*873 13 proceeding.” In re Garner,
supra at 371. The court went on to conclude that “[i]t is undoubtedly ‘necessary to an
effective reorganization’ to maintain the stay and prevent foreclosure where thel main
objective of the proceeding is to save [a debtor's] home.” Id. In further support of
this proposition, the court in Grundy noted that “an irrebuttable presumption is
created in a Chapter 13 case as to the debtor's home as necessary to effective
reorganization where the debtor's primary purpose in filing the Chapter 13 petition is
to save his home.” Grundy National Bank v. Stiltner, 58 B.R. 593, 596 (W.D.Va.1986).
The only secured debt listed by Debtor is Creditor's claim. The remaining debt is
$4,354.62 in unsecured claims. The petition was filed ‘on the eve of foreclosure.’ We
think it is obvious that Debtor filed this case in an effort to save his residence.
Creditor disputes the assumption that Debtor's home is necessary for survival and thus
for an effective reorganization by citing In re Kornhauser, 184 B.R. 425
(Bkrtcy.S.D.N.Y.1995). We decline to follow Kornhauser here, as it is a chapter 11
case, and the test applying § 362(d) to a case under chapter 13 is decidedly different
where the debtor's home is at issue. Again, there is an irrebuttable presumption that a
chapter 13 debtor's home is necessary for an effective reorganization. In re Garner,
supra at 371, Grundy National Bank v. Stiltner, supra at 596.
**Automatic stay would not be annulled, in order to validate post-

petition deed of trust foreclosure sale that creditor innocently
conducted without notice of debtor’s Chapter 13 filing one day
earlier, where it appeared that debtor might have equity in deed of
trust property, where property, which consisted of debtor’s residence,
was necessary to an effective reorganization, and where creditor, had
it moved for relief from stay prior to conducting sale, would not have
been granted such relief in light of early stage of debtor’s
bankruptcy case and court’s inability, at that time, to say that
feasible plan could not be confirmed. In re Adams, Bkrtcy.W.D.Mo.1997,
215 B.R. 194. Bankruptcy 2422.5(5)
Debtor’s residence is necessary to an effective reorganization
**Automobile securing Chapter 13 debtor’s loan was necessary to

effective reorganization and, thus, creditor was not entitled to
relief from stay in order to retain automobile; automobile was
debtor’s only means of transportation to and from her employment which
was source for funding her plan despite creditor’s allegation that
automobile was luxury vehicle. In re Sharon, Bkrtcy.S.D.Ohio 1996, 200
B.R. 181, affirmed 234 B.R. 676. Bankruptcy 2429(2)
**Debtors’ contention that sole motivation for their Chapter 13 filing

was to keep their home did not establish that home was necessary to
effective reorganization, so as to prevent mortgagee-bank from
obtaining relief from automatic stay to pursue foreclosure; although
there was nothing inherently wrong with debtor’s motivation, that
subjective intent did not satisfy effective reorganization test. In re
White, Bkrtcy.S.D.Ohio 1997, 216 B.R. 232. Bankruptcy 2429(3)
**Landlord was properly granted relief from stay in order to proceed

with pending eviction proceeding against Chapter 13 debtor; though
debtor claimed that residential premises were necessary to effective
reorganization, evidence did not support assertions that he was using
premises as home office for law practice or that he was generating
income as attorney. In re Jones, D.N.H.1994, 176 B.R. 645, dismissed
53 F.3d 327. Bankruptcy 2429(3)
**Real property was not necessary to Chapter 13 debtors’ effective

reorganization, for purpose of granting vendors relief from automatic
stay in order to pursue state contract remedies, absent showing that
property would generate income or increase value of business and
thereby benefit estate; cow-calf operation carried out on property was
not profitable and, though debtors proposed to provide for loss
through their employment income, debtors’ estate would be better
served by using funds to pay current creditors. In re Kessler,
Bkrtcy.C.D.Ill.1988, 86 B.R. 134. Bankruptcy 2429(3)
**Creditor need not allege lack of equity, no possibility of an

effective reorganization, or lack of adequate protection in order to
gain relief from the stay as the court can grant relief from the stay
for cause, including any of those reasons. In re Anderson,
Bkrtcy.D.Hawai’i 1983, 36 B.R. 120. Bankruptcy 2435.1
**Bankruptcy court could sua sponte deny creditor’s motion for relief
from stay, based on creditor’s failure to satisfy its initial burden
of production, even in absence of any motion by debtor challenging
sufficiency of creditor’s prima facie case. In re Anthem
Communities/RBG, LLC, Bkrtcy.D.Colo.2001, 267 B.R. 867. Bankruptcy
2442
**Creditor’s application for order modifying automatic stay would be

dismissed, given failure to sufficiently set forth cause of action
offering chance of some recovery. In re Reisor Co., Inc.,
Bkrtcy.W.D.La.1985, 46 B.R. 290. Bankruptcy 2442
Debtor’s possession of premises at time bankruptcy petition was filed

was a tenancy at sufferance which was an equitable interest protected
by automatic stay, but such interest was forfeited when preliminary
hearing was not held within 30 days of lessors’ filing of complaint
seeking to modify automatic stay. In re Trang, Bkrtcy.S.D.Tex.1985, 58
B.R. 183. Bankruptcy 2398
**Requirement of hearing within 30 days of motion for relief from

automatic stay applied only to secured creditors asserting interest in
real property and/or nonconsumer personalty, and thus, where party
seeking relief was debtors’ landlord, automatic stay was not lifted by
failure to hold hearing within 30 days. In re Small, Bkrtcy.D.Md.1984,
38 B.R. 143. Bankruptcy 2440
Trustee under deed of trust is party in interest in proceeding seeking

relief from automatic stay under this section. In re Golden Plan of
California, Inc., Bkrtcy.E.D.Cal.1982, 25 B.R. 183. Bankruptcy 2438
Because a court cannot properly adjudicate validity of a lien during

relief from automatic stay proceedings, party also cannot "admit,"
with preclusive, binding effect, to claim’s validity. Grella v. Salem
Five Cent Sav. Bank, C.A.1 (Mass.) 1994, 42 F.3d 26. Bankruptcy 2440
**Dispute as to whether Chapter 13 debtor’s lease terminated

prepetition was not properly resolved in context of landlord’s motion
for relief from automatic stay to pursue state court eviction,
inasmuch as summary proceeding was limited to determining whether
property at issue was adequately protected and necessary for debtor’s
reorganization; given debtor’s at least colorable claim to assumable
interest in leased premises, lease termination question had to be
determined in another context. In re Finkley, Bkrtcy.N.D.Ill.1996, 203
**Complexity of issues raised in opposition to motion for relief from

automatic stay filed by assignee of equipment lease and security
agreement executed by debtor, i.e., whether assignee had valid
security interest in equipment, required filing of adversary
proceeding or separate trial, and such complex issues were not to be
considered on motion to lift stay. In re Waste Alternatives, Inc.,
Bkrtcy.M.D.Fla.1994, 171 B.R. 147. Bankruptcy 2156
**Questions of validity and perfection of liens are not generally

finally determined at hearing on motion for relief from stay. In re
Midway Airlines, Inc., Bkrtcy.N.D.Ill.1994, 167 B.R. 880. Bankruptcy
2442
**In order to meet its burden of production in moving to vacate

automatic stay, landlord, which alleged that debtor failed to pay two
months postpetition rent, would be required to demonstrate that it had
legitimate lease rights to payments, and thus, bankruptcy court would
be required to rule on respective lease rights of parties in making
automatic stay determination, where debtor, in refuting cause, argued
that its obligation to pay rent had been suspended by operation of law
on basis of alleged partial eviction. In re Compass Van & Storage
Corp., Bkrtcy.E.D.N.Y.1986, 61 B.R. 230. Bankruptcy 2439(2)
**Claim by debtor to avoid fraudulent conveyance could not be properly

urged in action seeking relief from automatic stay. In re Miller,
Bkrtcy.S.D.Tex.1985, 58 B.R. 192. Bankruptcy 2436
677. Defenses, relief from stay
**Bankruptcy court in which mortgagee, who had filed for foreclosure

of the mortgage, sought relief from the stay of that proceeding
resulting automatically from the filing of the bankruptcy petition did
not have jurisdiction of the debtor’s defenses and counterclaims
against the mortgagee alleging usury, fraud, breach of contract, and
negligence, since those issues did not direct themselves to
termination of the stay but rather to the validity of the mortgagee’s
security interest and other matters not before the bankruptcy court.
Matter of Essex Properties, Ltd., N.D.Cal.1977, 430 F.Supp. 1112.
Bankruptcy 2436
**Subsequent validation of tax foreclosure sale conducted in clear

violation of automatic stay, without prejudice to rights of party
asserting claim to proceeds, set forth condition to validity of sale
(i.e., that parties’ rights to proceeds be preserved) and prevented
Chapter 7 trustee from claiming that foreclosure sale cut off debtor’s
homestead exemption in proceeds. In re Cunningham,
Bkrtcy.W.D.Wash.1994, 163 B.R. 593. Bankruptcy 2462; Bankruptcy
2797.1
**Hearing on motion for lifting automatic stay on ground of lack of

equity in collateral is not appropriate time in which to consider full
blown merits of defenses not directly related to three statutory
issues, and extent to which evidence on indirect defenses may be
admitted is matter left to court’s discretion. In re Grand Traverse
Development Co. Ltd. Partnership, Bkrtcy.W.D.Mich.1993, 150 B.R. 176.
Bankruptcy 2440
**Defenses of nonperfection of security interest, unconscionability,

challenges to outstanding indebtedness, usury, statute of frauds, and
lack of consideration generally constitute "direct defenses" to
lienholder’s request for relief from automatic stay and should be
determined as part of stay litigation. National Westminster Bank,
U.S.A. v. Ross, S.D.N.Y.1991, 130 B.R. 656, affirmed 962 F.2d 1.
Bankruptcy 2436
**In context of motion for relief from stay, indirect defenses going
to offset amount of secured debt are not, unless by agreement of
parties, subject to full-scale trial on merits; issue is instead
limited to whether debtors have presented sufficient evidence of bona
fides of their claim for court to deny motion for relief from stay.
Matter of Shehu, Bkrtcy.D.Conn.1991, 128 B.R. 26. Bankruptcy 2440
Defense of rescission of creditor’s mortgage struck at very heart of

validity of creditor’s secured claim and could be asserted in response
to creditor’s motion for relief from stay. In re Gurst,
Bkrtcy.E.D.Pa.1987, 75 B.R. 575. Bankruptcy 2436
**Defenses raised by debtor in response to motion for relief from

stay, attacking state court judgment and other aspects of state court
procedures invoked by movant in scheduling sheriff’s sale of debtor’s
premises, including allegations that judgment violated state law and
Federal Constitution, could be asserted as defenses to motion for
relief from stay, where claims, if proven, would invalidate judgment
and bar execution on judgment. In re Souders, Bkrtcy.E.D.Pa.1987, 75
**Affirmative defenses and other arguments in opposition proffered by

debtor that contest validity of rights asserted by movant seeking
relief from stay are often determinative of whether relief from stay
is appropriate and, in such circumstances, bankruptcy court’s
consideration of germane affirmative defenses is appropriate. In re
Compass Van & Storage Corp., Bkrtcy.E.D.N.Y.1986, 61 B.R. 230.
Bankruptcy 2436
**Bankruptcy court in a stay relief hearing under Bankruptcy Code

section [11 U.S.C.A. § 362] can consider allegations of extraneous
issues raised by an attempt to assert affirmative defenses or
counterclaims and their apparent substance or lack thereof, in
deciding whether to exercise equitable discretion in granting relief
from stay. In re Gellert, Bkrtcy.D.N.H.1985, 55 B.R. 970. Bankruptcy
2440
**Trustee’s § 502(d) and § 549 claims regarding allegedly avoidable

postpetition transfers by debtor to mortgagee bank were claims which
challenged validity of bank’s lien, and, as such, claims would be
considered, though not adjudicated, at hearing on bank’s motion for
relief from stay, since such defenses were apparently incapable of
being raised at state court hearing on foreclosure. In re Pappas,
Bkrtcy.D.Mass.1985, 55 B.R. 658. Bankruptcy 2440
**Debtor’s claim that its chance for rehabilitation would be destroyed

if lease was declared forfeited would be a valid defense to landlord’s
petition for relief from automatic stay to evict debtor only if there
was something which could be salvaged; if there was nothing left to
salvage, the debtor’s proposition was legally a non sequitur. Matter
of Racing Wheels, Inc., Bkrtcy.M.D.Fla.1980, 5 B.R. 309. Bankruptcy
2429(3)
678. Counterclaims, relief from stay
**Counterclaims against creditor seeking to lift stay on largely

unrelated matters are not to be handled in summary fashion required by
expedited nature of lift from stay proceeding; instead, they will be
subject of more complete proceedings to recover property of estate or
to object to allowance of claim. D-1 Enterprises, Inc. v. Commercial
State Bank, C.A.5 (Tex.) 1989, 864 F.2d 36. Bankruptcy 2436
**Counterclaims against debtor which seek to lift stay and involve

largely unrelated matters are not to be handled in summary fashion of
hearing to lift stay; rather, such counterclaims will be subject of
more complete proceedings by trustee to recover property of estate or
object to allowance of claim. National Westminster Bank, U.S.A. v.
Ross, S.D.N.Y.1991, 130 B.R. 656, affirmed 962 F.2d 1. Bankruptcy
2436
**Assertion of counterclaim in relief from stay litigation is

improper. In re Wade, 9th Cir.BAP (Ariz.) 1990, 115 B.R. 222, affirmed
948 F.2d 1122. Bankruptcy 2436
**Counterclaim raised in response to relief from stay motion was

subject to dismissal as issues raised in counterclaim were totally
extraneous to motion for relief from stay. In re Franklin,
Bkrtcy.E.D.Tex.1989, 111 B.R. 582. Bankruptcy 2436
**Although on a hearing for relief of automatic stay the court

generally will not hear counterclaims that do not go to essence of the
request for relief sought, bankruptcy court has discretion to hear and
adjudicate such claims in particular instances on appropriate showing
for such treatment and would entertain counterclaim for imposition of
constructive trust and cause of action for unreasonable disposition of
collateral as they are amenable to swift disposition and were clearly
without merit. In re Sunshine Books, Ltd., Bkrtcy.E.D.Pa.1984, 41 B.R.
712. Bankruptcy 2441
**Debtor was required to pursue her voidable transfer claim against

mortgagees in separate action in bankruptcy court, not as counterclaim
in proceeding by mortgagees to lift automatic stay. Vastola v. Milks,
W.D.N.Y.1981, 14 B.R. 15. Bankruptcy 2436
**Party opposing creditor’s motion for relief from stay, and not
creditor itself, had burden of showing that security interest upon
which creditor sought to foreclose was not properly perfected in
accordance with state law. In re Allstar Bldg. Products, Inc., C.A.11
(Ala.) 1987, 834 F.2d 898. Bankruptcy 2439(3.1)
Burden is on creditor seeking relief from stay based on debtor’s

alleged lack of equity in certain property, as well as on creditor
seeking to avoid its obligation to turn over estate property on ground
that property in question is of inconsequential value or benefit to
the estate, to demonstrate estate’s lack of equity; until creditor
satisfies this burden, debtor should not have to show why he is
entitled to right of possession but is accorded that right
automatically as incident to the stay. In re Yates, 10th Cir.BAP
(Wyo.) 2005, 332 B.R. 1. Bankruptcy 2439(4); Bankruptcy 3066(6)
**Burden of proof on a motion for stay relief "for cause" shifts from
movant’s initial showing of "cause" to the party opposing the motion;
that is, party seeking stay relief must establish a prima facie case
of cause for relief, and, if this prima facie case is established,
burden shifts to debtor to prove cause does not exist. In re George,
Bkrtcy.S.D.Ga.2004, 315 B.R. 624. Bankruptcy 2439(2); Bankruptcy
2439(5.1)
**Chapter 11 debtor-corporation, to which distressed property was

transferred six months before petition was filed, failed to
demonstrate good faith business reason for transfer and its bankruptcy
filing, so as to defeat prima facie case of bad faith arising from
transfer under new debtor syndrome, and therefore creditor with
interest in transferred property was entitled to relief from automatic
stay for cause; obligor on note secured by property arranged for
debtor’s incorporation and for transfer of property from defaulting
subsequent purchaser to debtor, transfer was made to protect obligor’s
credit and equity in property and to avoid possible violation of
obligor’s probation for committing housing code violations, transfer
was solely for obligor’s benefit, debtor had no equity in transferred
property, and petition was filed to prevent foreclosure. In re Duvar
Apt., Inc., 9th Cir.BAP (Cal.) 1996, 205 B.R. 196. Bankruptcy 2426
**Once creditor demonstrates debtor’s lack of equity in collateral,

burden shifts to debtor to show that collateral is necessary for plan
of reorganization that is in prospect within reasonable time, in order
to preclude lifting of stay. In re Colonial Center, Inc.,
Bkrtcy.E.D.Pa.1993, 156 B.R. 452. Bankruptcy 2439(7)
**Creditor seeking relief from stay had burden of proof, or risk of

nonpersuasion, to show that its security agreement was valid--that a
genuine, authentic, and binding agreement was entered into between
debtors and creditor by which debtors granted to creditor security
interest, that the agreement had priority--that it was prior to other
competing liens or interests, if any, and that the lien was of
particular extent--what property was subject to security agreement or
what amount of creditor’s claims was secured by the property in
question. In re Greives, Bkrtcy.N.D.Ind.1987, 81 B.R. 912. Bankruptcy
2439(3.1)
**Moving party, to make out prima facie cause of relief from automatic
stay on ground of lack of adequate protection, must do more than
merely prove that it holds validly perfected security interest and
establish amount of debt and other allowable costs secured by its
claim, rather, movant must establish legal cause for relief. In re
Planned Systems, Inc., Bkrtcy.S.D.Ohio 1987, 78 B.R. 852. Bankruptcy
2439(1)
Grundy Nat. Bank v. Stiltner, 58 B.R. 593, 596 (W.D.Va.,Feb 28, 1986)
Good case
FN1. In effect, an irrebuttable presumption is created in a Chapter 13 case as to the debtor's home as
necessary to effective reorganization where the debtor's primary purpose in filing the Chapter 13 petition is
to save his home.
73 alr fed 324
Who is "party in interest" entitled to request relief from automatic stay provision of bankruptcy code of 1978
(11 U.S.C.A. § 362(d))
Is there a legal theory that the non bona fide purchaser is not the
real party in interest.
[The court in Re Comcoach Corp. (1983, CA2 NY) 698 F2d 571, 9 BCD 1439, 7 CBC2d 1191, CCH Bankr L Rptr
¶69034, 73 ALR Fed 317, held that a bank, holding a mortgage on a lessor’s property, was not a party in interest in a
bankruptcy proceeding filed by a lessee of the property, and could not seek to have the automatic stay vacated and
modified under § 362(d) so as to name the debtor a party defendant in a pending state foreclosure action on the
property. The court stated that when interpreting the meaning of terms such as "party in interest," it was governed by
the Bankruptcy Code’s purposes. One such purpose, the court said, is to convert the debtor’s estate into cash and
distribute it among the creditors; another is to provide a fresh start for the debtor. The court noted that the
bankruptcy courts were established to provide a forum wherein creditors and debtors could settle their disputes and
thereby effectuate the objectives of the statute. Necessarily, therefore, the court reasoned, the bank must be either a
creditor or a debtor to invoke the court’s jurisdiction, and it was neither. The court stated that support for its view
was found in the Bankruptcy Code’s legislative history, which suggested that, notwithstanding the use of the term
"party in interest," it was only creditors who could obtain relief from the automatic stay. The court stated that the
bank was not a creditor of the debtor since the bank had no right of payment from the debtor; that the debtor had no
obligation on the mortgage, and the debtor’s duty to pay rent on its lease ran only to the lessor, and not to the bank.
The court said, moreover, that the bank lacked any right to equitable relief against the debtor arising out of the
renter’s breach of performance giving rise to a right of payment. Accordingly, the court affirmed the district court’s
affirmance of the bankruptcy court’s denial of the bank’s request for relief from the stay.[8]
**Dismissing a complaint for relief from the automatic stay provision, the court, in Re Tour Train Partnership
(1981, BC DC Vt) 15 BR 401, 5 CBC2d 731, held that a corporation that had a judgment against one of the debtor’s
secured creditors was not a party in interest under § 362(d). The corporation was seeking to enforce the judgment
against the secured creditor, a railroad, by attaching goods of the railroad in possession of the debtor as trustee. The
corporation sought to have the automatic stay in favor of the debtor lifted so that it could proceed against the debtor
and obtain an order requiring the debtor to hold for the benefit of the corporation the amount of its judgment from
any distribution to the railroad under the latter’s allowed secured claim of $85,000. Noting that the corporation
admitted it was not a creditor of the debtor, the court declared that the purpose of the automatic stay is to protect the
property of the estate, the property of the debtor, or the property in the custody of the estate; that, furthermore, relief
from such stay is not intended to permit a nonparty to the proceeding to collect a judgment entered by a state court.
The court also pointed out that there were established prior liens against the property of the railroad that were
entitled to satisfaction before any payment was made to the railroad. The court stated that any distribution to the
railroad by the bankruptcy court should not be impaired by a claim of a creditor that held a judgment execution
subordinate to prior liens and that was obtained in violation of the automatic stay.[9] Thus, the court concluded, the
corporation was a stranger to the proceeding in that it had no direct interest in the subject matter at issue.]
"Real party in interest," such as could seek relief from stay applicable in debtor-mortgagor’s
bankruptcy case for purpose of pursuing its rights under mortgage and mortgage loan which had been
securitized, was trustee of securitization trust and not the servicing agent, so that even if bank continued
as servicer of mortgage loan following assignment, it was not real party in interest and was not a proper
party to file motion for stay relief. 11 U.S.C.A. § 362(d); Fed.Rules Bankr.Proc.Rules 4001, 7017, 9014,
11 U.S.C.A. In re Kang Jin Hwang, 396 B.R. 757 (Bankr. C.D. Cal. 2008).
Bank, as holder of mortgage note, which may even have retained servicing rights following
assignment of note to another entity, plainly had standing to move for relief from stay in order to enforce
note, even though it was not real party in interest following assignment. 11 U.S.C.A. § 362(d); Fed.Rules
Bankr.Proc.Rule 7017, 11 U.S.C.A.; Fed.Rules Civ.Proc.Rule 17(a)(1), 28 U.S.C.A. In re Kang Jin
Hwang, 396 B.R. 757 (Bankr. C.D. Cal. 2008).
While servicer of mortgage loan that it had previously transferred to other entity might have right, as
entity’s agent, to take steps to enforce mortgage on entity’s behalf by moving for relief from automatic
stay, it was not "real party in interest" and could not move for such relief in its own name, but only in
name of entity to which it had transferred mortgage loan. 11 U.S.C.A. § 362(d). In re Kang Jin Hwang,
393 B.R. 701 (Bankr. C.D. Cal. 2008).
Alleged servicing agent that failed to present any record evidence of its authority to enforce deed of
trust note or even as to who was holder of note, and whose own bankruptcy specialist imprecisely
declared that he was servicing loan for named entity, "its successors and/or assigns," failed to establish
that it had standing to pursue motion for relief from stay in order to enforce deed of trust, and stay relief
motion had to be denied for lack of standing and as not being prosecuted by "real party in interest." 11
U.S.C.A. § 362(d); Fed.Rules Bankr.Proc.Rules 4001, 7017, 9014, 11 U.S.C.A. In re Jacobson, 402 B.R.
359 (Bankr. W.D. Wash. 2009), as modified, (Mar. 10, 2009).
Kalb v. Feuerstein, 308 U.S. 433, 60 S.Ct. 343, 84 L.Ed. 370 (U.S.Wis.,Jan 02, 1940)
Good case
Appeals from the Supreme Court of the State of Wisconsin.
Action by Ernest Newton Kalb and Margaret Kalb, his wife, against Henry Feuerstein and Helen Feuerstein, his
wife, for restoration of possession of a farm, for cancellation of a sheriff’s deed, and for removal of defendants from
the farm, and action by Ernest Newton Kalb against Roscoe R. Luce and others to recover damages for conspiracy to
deprive plaintiff of possession of his farm, for assault and battery, and for false imprisonment. Judgments dismissing
the complaints were affirmed by the Supreme Court of Wisconsin, 285 N.W. 431, and plaintiffs appeal.
Judgments in both cases reversed and causes remanded to the Supreme Court of Wisconsin.
Judgment 228 470
228 Judgment
228XI Collateral Attack
228XI(A) Judgments Impeachable Collaterally
228k470 k. Judgments Presumed Valid in General. Most Cited Cases
Generally, a judgment by a court of competent jurisdiction bears a presumption of regularity and it is not thereafter
subject to collateral attack, but Congress, because its power over the subject of bankruptcy is plenary, may by
specific bankruptcy legislation create an exception to that principle and render judicial acts taken with respect to the
person or property of a debtor whom the bankruptcy law protects nullities and vulnerable collaterally.
51 Bankruptcy
51I In General
51I(C) Jurisdiction
51k2060 Exclusive, Conflicting, or Concurrent Jurisdiction
51k2062 k. Bankruptcy Courts and State Courts. Most Cited Cases
(Formerly 51k213)
Although a Wisconsin county court had general jurisdiction over mortgage foreclosures under Wisconsin law, the
peremptory prohibition of the Frazier-Lemke Act enacted by Congress in the exercise of its supreme power over
bankruptcy denying to any state court jurisdiction over a petitioning farmer-debtor or his property rendered the
confirmation of a mortgage foreclosure sale and its enforcement without bankruptcy court’s consent beyond the
county court’s power and nullities subject to collateral attack. Laws Wis.1907, c. 234; Bankr.Act § 75, subs. n, o(2,
6), p, 11 U.S.C.A. § 203, subs. n, o(2, 6), p.
[4] States 360 18.1
360 States
360I Political Status and Relations
360I(B) Federal Supremacy; Preemption
360k18.1 k. In General. Most Cited Cases
(Formerly 360k4.7, 360k4)
The states cannot, in the exercise of control over local laws and practice, vest state courts with power to violate the
supreme law of the land.
51 Bankruptcy
51I In General
51I(C) Jurisdiction
51k2060 Exclusive, Conflicting, or Concurrent Jurisdiction
51k2062 k. Bankruptcy Courts and State Courts. Most Cited Cases
(Formerly 51k213)
The language and broad policy of the Frazier-Lemke Act conclusively show that Congress deprived a Wisconsin
county court of jurisdiction to continue or maintain in any manner mortgage foreclosure proceedings against farmer-
debtors without consent, after hearing, of bankruptcy court in which farmer-debtors’ petition was pending, and
hence confirmation of mortgage foreclosure sale, execution of sheriff’s deed, writ of assistance, and ejection of
farmer-debtors from their property, to the extent based upon county court’s actions, were all unlawful. Bankr.Act §
75, subs. n, o(2, 6), p, 11 U.S.C.A. § 203, subs. n, o(2, 6), p.
Congress, because its power over the subject of bankruptcy *439 is plenary, may by specific bankruptcy legislation
create an exception to that principle and render judicial acts taken with respect to the person or property of a debtor
whom the bankruptcy law protects nullities and vulnerable collaterally
a peremptory prohibition by Congress in the exercise of its supreme power over bankruptcy that no State court have
jurisdiction over a petitioning farmer-debtor or his property, would have rendered the confirmation of sale and its
enforcement beyond the County Court’s power and nullities subject to collateral attack.FN10The States cannot, in the
exercise of control over local laws and practice, vest State courts with power to violate the supreme law of the
land.FN11 **The Constitution grants Congress exclusive power to regulate bankruptcy and under this power
Congress can limit that jurisdiction which courts, State or Federal, can exercise over the person and property of a
debtor who duly invokes the bankruptcy law. If Congress has vested in the bankruptcy courts exclusive jurisdiction
over farmer-debtors and their property, and has by its Act withdrawn from all other courts all power under any
circumstances to maintain and enforce foreclosure proceedings against them, its Act is the supreme law of the land
which all courts-State and Federal-must observe
*440 [8][9] We think the language and broad policy of the Frazier-Lemke Act conclusively demonstrate that
Congress intended to, and did deprive the Wisconsin County Court of the power and jurisdiction to continue or
maintain in any manner the foreclosure proceedings against appellants without the consent after hearing of the
bankruptcy court in which the farmer’s petition was then pending.FN12
FN12 That a State court before which a proceeding is competently initiated may-by operation of supreme Federal
law-lose jurisdiction to proceed to a judgment unassailable on collateral attack is not a concept unknown to our
Federal system. See Moore v. Dempsey, 261 U.S. 86, 43 S.Ct. 265, 67 L.Ed. 543. Cf. Johnson v. Zerbst, 304 U.S.
458, 58 S.Ct. 1019, 82 L.Ed. 1461.
‘(p) The prohibitions * * * shall apply to all judicial or official proceedings in any court or under the direction of any
official, and shall apply to all creditors, public or private, and to all of the debtor’s property, wherever located. All
such property shall be under the sole jurisdiction and control of the court in bankruptcy, and subject to the payment
of the debtor farmer’s creditors, as provided for in (this section) section 75 of this Act.’(Italics supplied.)
Thus Congress repeatedly stated its unequivocal purpose to prohibit-in the absence of consent by the bankruptcy
court in which a distressed farmer has a pending petition-a mortgagee or any court from instituting, or maintaining if
already instituted, any proceeding against the farmer to sell under mortgage foreclosure, to confirm such a sale, or to
dispossess under it
This congressional purpose is more apparent in the light of the Frazier-Lemke Act’s legislative history. Clarifying
and altering the sweeping provisions for exclusive Federal jurisdiction in the original Act,FN13 Congress made several
important changes in 1935.FN14It was then that subsection (p) was amended so that the prohibitions in subsection (o)
of any steps against a farmer-debtor or his property once his petition is filed were made specifically applicable ‘to all
judicial or official proceedings*442 in any court or under the direction of any official, and * * * to all creditors,
public or private, and to all of the debtor’s property, wherever located. All such property shall be under the sole
jurisdiction and control of the court in bankruptcy, and subject to the payment of the debtor farmer’s creditors, as
provided for in (this section) Section 75 * * *.’
The Congressional purpose is similarly set out in the House Judiciary Committee’s Report: ‘The amendment to
subsection (n) in fact construes, interprets, and clarifies both subsections (n) and (o) of section 75. By reading
subsections (n) and (o) as now amended in this bill, it becomes clear **348 that it was the intention of Congress
when it passed section 75, that the farmer-debtor and all of his property should come under the jurisdiction of the
court of bankruptcy, and that the benefits of the act should extend to the farmer, prior to confirmation of sale, during
the period of redemption, and during a moratorium; and that no proceedings after the filing of the petition should be
instituted, or if instituted prior to the filing of the petition, should not be maintained in any court, or otherwise.’FN16
FN16House Report No. 1808, 74th Cong., 1st Sess.
In harmony with the general plan of giving the farmer an opportunity for rehabilitation, he was relieved-after filing a
petition for composition and extension-of the necessity of litigation elsewhere and its consequent expense. This was
accomplished by granting the bankruptcy court exclusive jurisdiction of the petitioning farmer and all his property
with complete and self-executing statutory exclusion of all other courts.
FN1747 Stat. 1473, s 75, sub. q, 11 U.S.C.A. s 203, sub. q.
The mortgagees who sought to enforce the mortgage after the petition was duly filed in the bankruptcy court, the
Walworth County Court that attempted to grant the mortgagees relief, and the sheriff who enforced the court’s
judgment, were all acting in violation of the controlling Act of Congress. Because that State court had been deprived
of all jurisdiction or power to proceed with the foreclosure, the confirmation of the sale, the execution of the
sheriff’s deed, the writ of assistance, and the ejection of appellants from their property-to the extent based upon the
court’s actions-were all without authority of law.
The judgments in both cases are reversed and the causes are remanded to the Supreme Court of Wisconsin for
further proceedings not inconsistent with this opinion.
Reversed and remanded
See
federal_supremacy_preemption_digest
In re Stringer, 847 F.2d 549, 56 USLW 2695, 19 Collier Bankr.Cas.2d 233, 17 Bankr.Ct.Dec. 1169, Bankr.
L. Rep. P 72,297 (9th Cir.(Cal.),May 24, 1988)
Bad case
Following filing of petition in bankruptcy, state court granted motion of debtor’s ex-wife for increase in child
support, and debtor moved to have the child support modification order declared void. The Bankruptcy Court denied
the motion and was affirmed by the United States District Court for the Northern District of California, Thelton E.
Henderson, J. Debtor appealed. **The Court of Appeals, Sneed, Circuit Judge, held that: (1) modification of child
support order is not permitted by exemption from automatic stay in bankruptcy for “collection of alimony,
maintenance or support,” and (2) the exemption applies only to proceedings to collect support that has been awarded
by an order entered prior to the filing of petition in bankruptcy.
Reversed.
11 U.S.C. § 362(a)(1) of the Bankruptcy Code automatically stays the commencement or continuation of judicial
proceedings against the debtor that were or could have been commenced before the bankruptcy petition was filed.
Any proceedings in violation of the automatic stay in bankruptcy are void. Kalb v. Feuerstein, 308 U.S. 433, 438-39,
60 S.Ct. 343, 345-46, 84 L.Ed. 370 (1940);
§ 541. Property of the estate
11 U.S.C. 541. Property of the estate provides:
(a) The commencement of a case under section 301, 302, or 303 of this
title creates an estate. Such estate is comprised of all the following
property, wherever located and by whomever held:
(1) Except as provided in subsections (b) and (c)(2) of this section,

all legal or equitable interests of the debtor in property as of the
commencement of the case.
Under applicable California foreclosure law,

Under applicable California foreclosure law, a void foreclosing deed
does not effect a conveyance of a property interest and title remains
in the original owner.
Bernhardt, Roger, California Mortgage And Trust Deed Practice (CEB 3d

ed., 2009 update) § 7.67 pages 580-582
“A completed sale may be set aside on the same grounds that would
support an action to enjoin the sale (see §§7.25-7.38), unless the
property has been purchased by a BFP (see §7.65), in which case the
plaintiff may be limited to money damages. See Weingard v. Atlantic
Sav. & Loan Ass’n (1970) 1 C3d 806, 819, 83 CR 650.
See also §7.70. Justifications in reported cases for setting aside the
trustee sale include the following:
Assertions that no breach occurred or that the trustee did not have
power to foreclose. Hauger v. Gates (1954) 42 C2d 752, 269 P2d 609
(setoff equaled amount owed); Bank of America v. La Jolla Group II
(2005) 129 CA4th 706, 28 CR3d 825 (reinstatement of loan); System Inv.
Corp. v Union Bank (1971) 21 CA3d 137, 98 CR 735 (waiver of breach);
Saterstrom v. Glick Bros. Sash Door & Mill Co. (1931) 118 CA 379, 5
P2d 21 (void deed of trust); Van Noy v. Goldberg (1929) 98 CA 604, 277
P 538 (debt not matured).
...
Purported sale conducted by a former trustee who was substituted out

before the sale was completed and a trustee’s deed delivered. Dimock
v. Emerald Props. (2000) 81 CA4th 868, 97 CR2d 255. But see Jones v.
First Am. Title Ins. Co. (2003) 107 CA4th 381, 131 CR2d 859 cited in
§§2.22, 2.25-2.26, 2.74, 2.98.”
In Saterstrom v. Glick Bros. Sash, Door & Mill Co., (1931) 118
Cal.App. 379, 383 [5 P.2d 21], the court held on a foreclosure sale on a
deed of trust that is “void for a lack of sufficient description of the
property conveyed, the sale and all proceedings under the deed of trust would
likewise be wholly ineffective and void.”
in a foreclosure proceeding under a deed of trust that where a “deed of trust being
void for lack of a sufficient description of the property conveyed, the sale and
all proceedings under the deed of trust would likewise be wholly ineffective and
void.”
held under a foreclosure sale on a deed of trust that is “void for a lack of
sufficient description of the property conveyed, the sale and all proceedings under
the deed of trust would likewise be wholly ineffective and void.”
adjudged that d, “The deed of trust
held that a foreclosure proceeding under a deed of trust where, “The deed of
trust being void
held under a foreclosure sale (of a property) on a deed of trust that is void for a
lack of sufficient description of the property conveyed, the sale and all
proceedings under the deed of trust would likewise be wholly ineffective and void.”
Would be a
wrongful foreclosure that did not comply with the statutory
restrictions on the power of sale
causes the sale to become void, renders the sale void

The court stated that a “deed of trust being void for lack of a sufficient
description of the property conveyed, the sale and all proceedings under the
deed of trust would likewise be wholly ineffective and void.”
In Stirton v. Pastor 177 Cal.App.2d 232, 234, 2 Cal.Rptr.
135, The court stated,” It is a general rule that if a delivery
of mortgage or trust deed is upon conditions, there is no
effective delivery and no lien is created unless the conditions
are fulfilled. (Citations) (4) It is recognized in California
that where a foreclosure sale is had pursuant to a power of sale
contained in a trust deed, the sale may be attacked upon proper
showing in an equitable action”
Miller & Star, California Real Estate 3D, Holding Title,
p. 12-80 states,
“Execution sale after death of a debtor joint tenant.
Although the execution lien is recorded before the death of the
debtor joint tenant, and the lien is only on the interest of that
joint tenant, if there is no execution sale before the debtor’s
death, an attempt to sell the debtor’s interest after death is
not effective because the interests of the deceased joint tenant
have already passed by right of survivorship to the surviving
joint tenant. The surviving joint tenant acquires the entire

10
title, free and clear of the lien
10
Grothe v. Cortlandt Corp. 11 Cal.App.4th 1313, 1321, 15
Cal.Rptr.2d 38 (4th Dist. 1992); Clark v. Carter, 265 Cal.App.2d
291, 294, 70 Cal.Rptr. 923 (4th Dist. 1968) (rejected on other grounds
by Riddle v. Harmon, 102 Cal.App.3d 524, 162 Cal.Rptr. 530, 7
A.L.R.4th 1261 1st Dist. 1980)); Hamel v. Gootkin, 202 Cal.App.2d 27,
28-29, 20 Cal.Rptr.372 (2d. Dist. 1962); Ziegler v. Bonnell, 52
Cal.App.2d 217, 220, 126 P.2d 118 (1st Dist.
1942)”
in examining the legal and factual basis for setting aside trustee
sales
in examining the legal and factual basis for setting aside the
foreclosure sale
the validity of a transfer of a residence in a foreclosure sale
in examining the legal and factual basis for invalidating a

foreclosure sale
was of effect or of no effect. in examining whether the title obtained

from a deed of trust from a trustee sale is void or not void, of
effect or of no effect. is void or of effect.
in examining whether a failure to comply with the requirements

in examining whether a failure to comply with the statutory
requirements in the procedure of the foreclosure sale
In in re Worcester 811 F.2d 379, (9th Cir. 1987)
With the foreclosing deed of trust void because of lack of ownership

lack of capacity and forgery of the interspousal transfer Bank of the
West tried to cover this fraud by selling at a void trustee sale to
create a second layer of fraud by and
The sale was improperly held and that the trustee’s deed was
wrongfully executed, delivered and recorded in that there was absence
of a valid lien.
The trustee’s deed is invalid and void and of no force or effect

regarding plaintiff’s interest in the real property
void deed by trying to get the effect of recitals to perpetrate the

fraud
Pro Value v. Quality 170 Cal.App.4th
Original trustee is First Santa Clara Corporation
The trustee listed in the notice of default is Alliance Title Company,

a California Corporation as for the beneficiary and the
by North American Title Company., As Agent
There was never a recording of a Notice of a substitution of trustee
Miller and Starr California Real Estate s 10:8, Substitution of

trustee--statutory procedure (2008) HN: 6 (Cal.Rptr.2d)
There is no evidence that there was a public notice posted.
Lack of specificity in the amount due.
What place did you publicly post notice of the sale?
What newspaper was the sale advertised in? (looking for the
appropriate place, time and manner.)
In re Worcester, 811 F.2d 1224, 16 Collier Bankr.Cas.2d 589, 7

Fed.R.Serv.3d 733, Bankr. L. Rep. P 71,637 (9th Cir.(Cal.),Feb 26, 1987)
[6] Mortgages 266 529(7)
266 Mortgages
266X Foreclosure by Action
266X(M) Sale
266k529 Opening or Vacating and Actions to Set Aside
266k529(7) k. Inadequacy of Price in Connection with
Other Objections. Most Cited Cases
Inaccurate description of property in notice of trustee’s sale, that appeared
to refer to land in addition to four-acre parcel containing residence that
was subject to deeds of trust securing loans, was “material irregularity”
relating to foreclosure sale, for purposes of California **law permitting
sale to be set aside if gross inadequacy of price were coupled with even
slight unfairness or irregularity; full description of property referred to
oil and gas rights and to particular conveyances relating to 40-acre parcel,
and bidders interested in smaller lot who would have researched described
plot would thus have been deterred from attending foreclosure sale.
For Bank of the West to have standing to have performed the

nonjudicial foreclosure sale they must have had standing to bring the
nonjudicial foreclosure sale. The real party in interest is
generally the entity that possesses the right sought to be enforced.
FN 45 With narrow exceptions, the plaintiff must have legal or
equitable right title or interest in the action. Of course the
current holder of the note and mortgage is always a party in interest
in a foreclosure proceeding. FN 46 The question of standing, and a
party’s right to invoke the jurisdiction of the court typically
becomes an issue when the foreclosing entity was not properly assigned
the note and mortgage, or the true holder of the loan is in doubt FN
47 In that instance, courts often require proof of assignment to
verify the identity of the holder. (NCLC Foreclosure, 4.3.4 Real
Party In Interest in a Judicial Proceeding, 4.3.4.1 Introduction, page
81)...
Without an interest in the debt, as evidence by a properly assigned

promissory note the party does not have standing to foreclose.
Once
Is evasion to receive notice of one day postponement and

inrregularity?
Look into agency relationships
11 usc 541 property of estate
Whether property is part of the estate is dependent on applicable

nonbankruptcy law
In re Kitts, 274 B.R. 491 (Bankr.E.D.Tenn.,Feb 28, 2002)
Is there time is of the essence in the contract?
Is there a requirement for describing the accurate amount of default.
Is there a requirement to register the trust deed with the under UCC-1
with the Secretary of State?
obligor: a person who binds himself to another by contract.
Get certified copies of the lis pendens on title, at the Orange County
Clerk Recorder and in the Central Justice Center case file.
Get certified copies of the notice of stay filed in the Harbor Justice
Center, Newport Beach Facility
And the order recalling the writ of execution.
Nobody has standing to seek relief from stay because the Trust
Deed Is void.
And the holder of the original note is not a party
Restoration of capacity cc 40
Wic 5005 rights of person complained against
**Prepetition deed of trust foreclosure sale that was conducted by

party other than trustee identified in deed of trust, and without
complying with deed of trust’s default notice provisions, was void
under Tennessee law, such that title to deed of trust property
remained in debtor, and property was included in Chapter 13 estate
upon commencement of debtor’s Chapter 13 case. In re Kitts,
Bkrtcy.E.D.Tenn.2002, 274 B.R. 491. Bankruptcy 2535(5); Mortgages
353

Fed.R.Serv.3d 733, Bankr. L. Rep. P 71,637 (9th Cir.(Cal.),Feb 26,
1987)
[6] Mortgages 266 529(7)
266 Mortgages
266X(M) Sale
266k529(7) k. Inadequacy of Price in Connection
with Other Objections. Most Cited Cases
Inaccurate description of property in notice of trustee’s sale, that
appeared to refer to land in addition to four-acre parcel containing
residence that was subject to deeds of trust securing loans, was
“material irregularity” relating to foreclosure sale, for purposes of
California **law permitting sale to be set aside if gross inadequacy
of price were coupled with even slight unfairness or irregularity;
full description of property referred to oil and gas rights and to
particular conveyances relating to 40-acre parcel, and bidders
interested in smaller lot who would have researched described plot
would thus have been deterred from attending foreclosure sale.
[9] Finally, Rosner and Little argue that, as bona fide purchasers,
the foreclosure sale cannot be set aside because they had no actual or
constructive notice of Worcester’s suit against National Mortgage and
Trust Services, filed in June 1981, or of the misdescription of the
property contained in the foreclosure documents.FN12 This argument fails
under California law.
FN12. Rosner and Little also claim that under the “relation back
doctrine,” title taken at a foreclosure sale cannot be affected by
adverse claims or interests arising after the execution of the deed of
trust. Hohn v. Riverside County Flood Control and Water Conservation
Dist., 228 Cal.App.2d 605, 39 Cal.Rptr. 647 (1964). This doctrine only
applies to title taken at a valid foreclosure sale, and so is
inapplicable here. Id. at 613-14, 39 Cal.Rptr. at 652.
In re Hernandez, 244 B.R. 549 (Bankr.D.Puerto Rico Feb 03, 2000)
La Jolla Mortg. Fund v. Rancho El Cajon Associates, 18 B.R. 283, 8 Bankr.Ct.Dec. 1035 (Bankr.S.D.Cal.
Mar 11, 1982)
Holder of two notes secured by deeds of trust on single family residence filed complaint seeking relief from
automatic stay. The Bankruptcy Court, James W. Meyers, J., held that holder of notes was entitled to relief from
automatic stay, where debtor had no equity in property and failed to show that property was necessary to effective
reorganization.
Ordered accordingly.
On Motion for summary judgment

Error due to mitstake of law. Soon Chey believed that Robinson
stated issue of notice meant notice to a BFP
In re Van Ness, 399 B.R. 897 (Bankr.E.D.Cal. Jan 23, 2009)
Background: Creditor, whose efforts to obtain possession of Chapter 7 debtor’s residence through unlawful
detainer proceedings attendant to foreclosure were stayed when debtor filed his bankruptcy petition, filed motion for
stay relief, seeking injunctive and extraordinary “in rem” relief, including a ban on filing future bankruptcy petitions
by other persons to whom the subject property may be transferred, a ban on automatic stays in future cases, and an
order providing for the sheriff to evict debtor and any other occupants from the subject property notwithstanding a
future bankruptcy case.
Holdings: The Bankruptcy Court, Klein, J., held that:
(1) much of the relief requested by creditor was only available, if at all, through an adversary proceeding, and not by
way of a motion for relief from stay, and
(2) where a motion for stay relief also sought relief available only by adversary proceeding, the court would deem
the contested matter to be an adversary proceeding and require payment of the adversary proceeding filing fee.
So ordered.
51 Bankruptcy
51k2422 Cause; Grounds and Objections
51k2429 Necessity of Asset for Reorganization or Rehabilitation
51k2429(1) k. In General. Most Cited Cases
Bankruptcy 51 2442
51 Bankruptcy
51k2435 Proceedings
51k2442 k. Determination and Relief; Conditions. Most Cited Cases
Bankruptcy court’s authority to adjust the automatic stay is constrained by subsection (d) of the section of the
Bankruptcy Code governing the automatic stay, which delineates four bases for the court to grant stay relief, such as
by terminating, annulling, modifying, or conditioning such stay; those four bases are cause, lack of equity in
property not needed for an effective reorganization, failure timely to file a plan of reorganization or commence
monthly payments in a single asset real estate case, and certain instances of the filing of a petition as part of a
scheme to delay, hinder, and defraud creditors secured by interests in real property. 11 U.S.C.A. § 362(d).
Fed.Rules Bankr.Proc.Rule 7001(7), 11 U.S.C.A.
51 Bankruptcy
51II Courts; Proceedings in General
51II(B) Actions and Proceedings in General
51k2156 k. Nature and Form; Adversary Proceedings. Most Cited Cases
While an “adversary proceeding” is essentially indistinguishable from a civil action, a “contested matter” is a motion
procedure susceptible of more expeditious resolution than an adversary proceeding, as, in a contested matter, the
pleading rules that entail complaint, answer, counterclaim, crossclaim, and third-party practice are dispensed with in
favor of a simple motion procedure. Fed.Rules Bankr.Proc.Rules 7001, 9014, 11 U.S.C.A.
51 Bankruptcy
Motion under the bankruptcy rule governing contested matters cannot be used to circumvent the requirement of an
adversary proceeding. Fed.Rules Bankr.Proc.Rule 9014, 11 U.S.C.A.
51 Bankruptcy
Constitutional Law 92 4478
92 Constitutional Law
92XXVII Due Process
92XXVII(G) Particular Issues and Applications
92XXVII(G)25 Other Particular Issues and Applications
92k4478 k. Bankruptcy. Most Cited Cases
Where creditor, whose efforts to obtain possession of Chapter 7 debtor’s residence through unlawful detainer
proceedings attendant to foreclosure were stayed upon debtor’s bankruptcy filing, sought injunctive and
extraordinary “in rem” relief, including a ban on filing future bankruptcy petitions by other persons to whom the
subject property may be transferred, a ban on automatic stays in future cases, and an order providing for sheriff to
evict debtor and any other occupants from the subject property notwithstanding a future bankruptcy case, the relief
requested by creditor was only available, if at all, through an adversary proceeding, and not by way of a motion for
relief from stay; relief sought by creditor was not grounded on specific provisions of the Bankruptcy Code, but was
based upon the court’s general equity jurisdiction, and to the extent the relief affected third parties, due process
concerns virtually compelled the more formal process of an adversary proceeding. U.S.C.A. Const.Amend. 5; 11
U.S.C.A. § 362; Fed.Rules Bankr.Proc.Rule 7001(2, 7), 11 U.S.C.A.
51 Bankruptcy
While it is not permissible to seek adversary proceeding relief as part of a contested matter, the converse is not true;
there is no impediment to including a contested matter issue in an adversary proceeding. Fed.Rules
Bankr.Proc.Rules 7001, 9014, 11 U.S.C.A.
51 Bankruptcy
51II(A) In General
51k2127 Procedure
51k2128 k. Filing Fees. Most Cited Cases
Bankruptcy 51 2156
51 Bankruptcy
Where creditor’s motion for stay relief also sought relief available only by adversary proceeding, the bankruptcy
court would deem the contested matter to be an adversary proceeding and require payment of the adversary
proceeding filing fee. 11 U.S.C.A. § 362; Fed.Rules Bankr.Proc.Rules 4001(a)(1), 7001, 9014, 11 U.S.C.A
[Cited 0 times for this legal issue]

In re Tri-Growth Centre City, Ltd., 136 B.R. 848
Bankr.S.D.Cal.,1992
“Equity” for purposes of determining whether secured creditor is entitled to relief from stay is difference between
value of debtor’s interest in property and total of all encumbrances against property. Bankr.Code, 11 U.S.C.A. §
362(d)(2), (d)(2)(A) .See publication Words and Phrases for other judicial constructions and definitions.
Copr. (C) West 2008 No Claim to Orig. U.S. Govt. Works
** [Cited 0 times for this legal issue]

In re Mellor, 734 F.2d 1396
C.A.9.Cal.,1984
Fact that debtor has no equity in the estate is not sufficient, standing alone, to grant relief from the automatic stay.
Bankr.Code, 11 U.S.C.A. § 362(d)(1) .Copr. (C) West 2008 No Claim to Orig. U.S. Govt. Works

In re Colorado Spanish Peaks Ranch, Inc., 661 F.2d 759
C.A.9.Cal.,1981
In determining whether there is present equity for purposes of determining whether creditor is entitled to relief from
automatic stay in bankruptcy proceeding, indebtedness underlying lien must be measured against the then market
value of the property.Copr. (C) West 2008 No Claim to Orig. U.S. Govt. Works
**c. [8:1145] Litigation in nonbankruptcy forum as "cause": Bankruptcy

courts may, and sometimes must, abstain from hearing disputes that are
only tangentially related to the bankruptcy case. [See 28 USC §
1334(c); In re Tucson Estates, Inc. (9th Cir. 1990) 912 F2d 1162,
1169; and discussion at ¶ 1:736 ff.]
Thus, abstention may constitute "cause" for lifting the stay to allow
the action to proceed to judgment in a nonbankruptcy forum (state
court, federal district court, tax court, or any arbitration panel or
administrative tribunal, etc.). [See In re Universal Life Church, Inc.
(ED CA 1991) 127 BR 453, 455]
(1) [8:1146] Compare--enforcement of resulting judgment stayed: **Relief
from the stay on this ground is usually limited to permitting a
pending proceeding to proceed to judgment (and possibly an appeal
therefrom). Collection or enforcement of the judgment, however,
remains subject to the stay. Otherwise, the creditor could obtain the
equivalent of a preference. [See In re Neal (BC D ID 1994) 176 BR 30,
34; (divorce proceeding) Matter of Rabin (BC D NJ 1985) 53 BR 529, 531;
(inconclusive case) In re Humphreys Pest Control Co., Inc. (BC ED PA
1984) 35 BR 712, 714](reversed by In re Stranahan 67 B.R. 834)
=> [8:1147] PRACTICE POINTER FOR CREDI-TORS: Any resulting judgment
should be filed as a claim in the bankruptcy case.
If a deadline for filing claims will expire before the nonbankruptcy
action is reduced to judgment (or even filed), file a proof of claim
containing a liability estimate (usually in the same amount as prayed
for in the complaint). The claim can later be amended to conform to
the amount of the judgment.
In fact, a plaintiff in litigation against the debtor should not
necessarily seek relief from the stay. A trial in a nonbankruptcy
forum is usually more expensive for both debtor and plaintiff than
liquidating the claim (e.g., by having plaintiff file a claim in the
bankruptcy case and then litigating any objection to the claim under
11 USC § 502; see Ch. 17).
[8:1148-1154] Reserved.
**c. [8:1145] Litigation in nonbankruptcy forum as "cause": Bankruptcy courts may, and sometimes must, abstain
from hearing disputes that are only tangentially related to the bankruptcy case. [See 28 USC § 1334(c); In re Tucson
Estates, Inc. (9th Cir. 1990) 912 F2d 1162, 1169; and discussion at ¶ 1:736 ff.]
Thus, abstention may constitute "cause" for lifting the stay to allow the action to proceed to judgment in a
nonbankruptcy forum (state court, federal district court, tax court, or any arbitration panel or administrative tribunal,
etc.). [See In re Universal Life Church, Inc. (ED CA 1991) 127 BR 453, 455]
(1) [8:1146] Compare--enforcement of resulting judgment stayed: Relief from the stay on this ground is usually
limited to permitting a pending proceeding to proceed to judgment (and possibly an appeal therefrom). Collection or
enforcement of the judgment, however, remains subject to the stay. Otherwise, the creditor could obtain the
equivalent of a preference. [See In re Neal (BC D ID 1994) 176 BR 30, 34; Matter of Rabin (BC D NJ 1985) 53 BR
529, 531; In re Humphreys Pest Control Co., Inc. (BC ED PA 1984) 35 BR 712, 714]
=> [8:1147] PRACTICE POINTER FOR CREDI-TORS: Any resulting judgment should be filed as a claim in the
bankruptcy case.
If a deadline for filing claims will expire before the nonbankruptcy action is reduced to judgment (or even filed), file
a proof of claim containing a liability estimate (usually in the same amount as prayed for in the complaint). The
claim can later be amended to conform to the amount of the judgment.
In fact, a plaintiff in litigation against the debtor should not necessarily seek relief from the stay. A trial in a
nonbankruptcy forum is usually more expensive for both debtor and plaintiff than liquidating the claim (e.g., by
having plaintiff file a claim in the bankruptcy case and then litigating any objection to the claim under 11 USC §
502; see Ch. 17).
[8:1148-1154] Reserved.
**3. [8:1230] Relief From Stay Where Debtor Lacks Equity and Property Not Needed for Reorganization (11
USC § 362 (d)(2)): Relief from the stay "shall" be granted with respect to an act against property if:
**• The debtor does not have an equity in the property; and
**• The property is not necessary to an effective reorganization. [11 USC § 362(d)(2)]
a. [8:1231] Chapter 11, 12 or 13 reorganizations: Where the debtor is given the opportunity to reorganize (Chapter 11,
12 or 13), **the court can grant relief from the stay under § 362(d)(2) provided both prongs of the test are met.
**Thus, when the property is needed for an effective reorganization, § 362(d)(2) relief from the stay will be denied
even if the debtor has no equity in the property. [La Jolla Mortg. Fund v. Rancho El Cajon Assocs. (BC SD CA
1982) 18 BR 382, 289-290; In re Elmore (BC CD CA 1988) 94 BR 670, 677; In re Dahlquist (BC ND AL 1983) 34
BR 476, 483--no § 362(d)(2) relief where debtors had no equity in livestock, crops, equipment and other farm
products but property needed for effective reorganization]
Compare--Chapter 7 liquidations: See ¶ 8:1291.
[8:1232] Reserved.
b. [8:1233] First prong of § 362(d)(2) test--"no equity" in property: The first prong of § 362(d)(2) requires a showing
that the debtor does not have "an equity" in the property that is subject to the movant’s interest. [See 11 USC §
362(d)(2)(A)]
(1) [8:1234] Movant’s burden: The party seeking relief from the stay has the burden of proving the debtor has no equity
in the property. [11 USC § 362(g)(1); see In re Bialac (9th Cir. 1983) 712 F2d 426, 432; Matter of Sutton (5th Cir.
1990) 904 F2d 327, 330; In re Dahlquist (BC D SD 1983) 34 BR 476, 481, 483]
(a) [8:1235] Including validity of movant’s lien: Although not expressly stated in § 362(g), the movant must also
establish the validity and perfection of its security interest and the amount of the debt and other allowable costs
secured by its claim. [In re Dahlquist, supra, 34 BR at 481]
(b) [8:1236] Compare--opposing party’s burden: The party opposing relief from the stay (i.e., debtor or trustee) has
the burden of proof on all other issues (e.g., that the property is needed for an effective organization). [11 USC §
362(g)(2); In re San Clemente Estates (BC SD CA 1980) 5 BR 605, 609; In re Dahlquist, supra, 34 BR at 481, 483;
see ¶ 8:1295 ff.]
(2) [8:1237] Proving "equity": "Equity" as used in § 362(d)(2)(A) is the property’s fair market value above all secured
claims (not just those of the moving party and superior lienholders)--i.e., the amount that can be realized from a sale
of the property for the benefit of the unsecured creditors. [See In re Mellor (9th Cir. 1984) 734 F2d 1396, 1400, fn.
2; Stewart v. Gurley (9th Cir. 1984) 745 F2d 1194, 1196; In re Faires (BC WD WA 1983) 34 BR 549, 551-552]
Consequently, to prove equity, the movant must establish the fair market value of the property, and the existence and
amount of its lien and all other liens on the property. Most courts will also take costs of sale into account (¶ 8:1275).
(a) [8:1238] "Fair market value": For relief from stay purposes, "fair market value" is the sum a willing buyer and
willing seller would agree to, given a reasonable period of time for the transaction. [See Matter of Sutton (5th Cir.
1990) 904 F2d 327, 329]
1) [8:1239] Calculated as of motion date: Fair market value is determined as of the date the motion for relief from the
stay is brought (rather than the date the bankruptcy petition was filed). [In re Paolino (BC ED PA 1986) 68 BR 416,
419]
2) [8:1240] Methods of proving fair market value: Fair market value may be proved by any admissible evidence.
a) [8:1241] Appraiser’s expert opinion: The most accurate method of proving fair market value is by expert testimony,
usually in the form of a declaration by a certified appraiser.
=> [8:1242] PRACTICE POINTER: Merely attaching an appraiser’s report to the pleadings is insufficient. To be
admissible, a proper foundation must be established. The usual method is to obtain a declaration from the appraiser
that states his or her qualifications and the scope of the appraisal performed, and to attach the report as an exhibit to
the appraiser’s declaration.
b) [8:1243] Broker’s expert opinion: For smaller properties, the declaration of a real estate broker who is familiar with
the area may suffice, although it generally is less persuasive than a qualified appraiser’s testimony.
c) [8:1244] Opinion evidence from financial institution employee: Movants who are financial institutions often use a
declaration from an in-house employee as to fair market value. If the employee is an appraiser and has examined the
property, there is foundation for the opinion. However, if the employee is merely a loan officer or records custodian,
his or her opinion may be objectionable for lack of foundation.
d) [8:1245] Property owner’s opinion: The property owner is qualified to give an opinion of value, and usually does so
through a declaration. If the debtor’s valuation testimony is uncontroverted, the court may accept it to support a
conclusion that there is equity in the property. [See In re Cooper (BC ED PA 1982) 22 BR 718, 719-720]
e) [8:1246] Circumstantial evidence: Fair market value can also be established by circumstantial evidence, such as
offers made by potential buyers or, conversely, by evidence that no offers have been made despite listing for several
months.
c. [8:1290] Second prong of § 362(d)(2) test--whether property "necessary to an effective reorganization": The
second prong of the § 362(d)(2) test for stay relief requires a showing that the property is "not necessary to an
effective reorganization" of the debtor. [11 USC § 362(d)(2)(B)]
(c) [8:1315] Application--debtor’s residence usually necessary to Chapter 13 reorganization: In a Chapter 13 case,
the debtor’s principal residence "is virtually always necessary to an effective reorganization ... If the home is not
saved, the Chapter 13 reorganization is not effective." (A rare exception is where confirmation of the Chapter 13
plan is delayed so long that there is "no effective reorganization in prospect"; see ¶ 8:1302.) [In re Elmore (BC CD
CA 1988) 94 BR 670, 677]
1) [8:1316] Compare--§ 362(d)(1) relief for "cause": Even when need for the home precludes relief under § 362(d)(2),
the secured creditor can still seek relief for "cause" under § 362(d)(1). See ¶ 8:1060 ff.
[8:1317-1319] Reserved.
In re Dahlquist, 34 B.R. 476, 11 Bankr.Ct.Dec. 214 (Bankr.D.S.D. Oct 21, 1983)
Debtors’ major secured creditor filed motion for ex parte relief from stay, and an objection to venue. The
Bankruptcy Court, Peder K. Ecker, J., held that: (1) creditor bank was not entitled to relief from automatic stay on
ground of either lack of adequate protection, or that debtors **lacked equity in property and property was not
necessary for effective reorganization; (2) venue was proper in Nebraska; and (3) debtors failed to prove by
preponderance of evidence that venue should be retained in South Dakota.
[3] Bankruptcy 51 2439(3.1)
51 Bankruptcy
51k2435 Proceedings
51k2439 Evidence
51k2439(3) Creditor’s Burden
51k2439(3.1) k. In General. Most Cited Cases
(Formerly 51k2439(3), 51k2439(2), 51k217.5(5), 51k217(6))
Under either of two statutory tests for relief from automatic stay, creditor must establish validity and perfection of its
security interest and amount of debt and other allowable costs secured by its secured claim and must carry ultimate
burden of proof with respect to equity; debtor opposing relief from stay has burden on remaining issues.
Bankr.Code, 11 U.S.C.A. § 362(a), (d)(1, 2).
[4] Bankruptcy 51 2439(7)
51 Bankruptcy
51k2435 Proceedings
51k2439 Evidence
51k2439(5) Debtor’s or Trustee’s Burden
51k2439(7) k. Necessity for Reorganization or Rehabilitation. Most Cited Cases
(Formerly 51k2439(2), 51k659(1))
**When creditor demonstrates that debtor has no equity in subject property, burden of showing necessity of property
for effective reorganization, for purposes of resisting relief from automatic stay on that ground under Bankruptcy
Code subparagraph, shifts to debtor. Bankr.Code, 11 U.S.C.A. § 362(a), (d)(2).
**c. [8:1290] Second prong of § 362(d)(2) test--whether property "necessary to an effective reorganization": The
second prong of the § 362(d)(2) test for stay relief requires a showing that the property is "not necessary to an
effective reorganization" of the debtor. [11 USC § 362(d)(2)(B)]
(1) [8:1291] Inapplicable in Chapter 7 cases: Because Chapter 7 deals solely with liquidation, property is never
necessary to an effective reorganization in a Chapter 7 case. Thus, the sole requirement for granting § 362(d)(2)
relief in a Chapter 7 bankruptcy is that the debtor does not have an equity in the property (¶ 8:1233 ff.). [In re
Casgul of Nevada, Inc. (9th Cir. BAP 1982) 22 BR 65, 66; In re Preuss (9th Cir. BAP 1981) 15 BR 896, 897]
[8:1292-1294] Reserved.
(2) [8:1295] Debtor’s burden: When relief is sought under § 362(d)(2), the debtor has the burden of proving that:
• the property is necessary for an effective reorganization; and
• there is a reasonable possibility of a successful reorganization within a reasonable time. [11 USC § 362(g)(2); In re
Bonner Mall Partnership (9th Cir. 1993) 2 F3d 899, 902]
(a) [8:1296] "Necessary": Property is "necessary to an effective reorganization" if the debtor needs it (i) in the operation
of its business; or (ii) to formulate a Chapter 11 plan. [See In re Koopmans (BC D UT 1982) 22 BR 395, 407]
1) [8:1297] Effect of liquidating Chapter 11 plan? Courts disagree whether property "necessary to an effective
reorganization" can include property necessary for a liquidating Chapter 11 plan. [In re Koopmans, supra, 22 BR at
407--property may be necessary to liquidation; compare In re Associated Investors Joint Venture (BC CD CA 1988)
91 BR 555, 558-559--liquidation usually not an effective "reorganization" in single asset case where debtor has no
equity in property; Matter of Sandy Ridge Develop. Corp. (5th Cir. 1989) 881 F2d 1346, 1354, fn. 19 --property in
liquidation not necessary to "reorganization" where no evidence it would bring greater price if liquidated with other
property as a unified whole]
(b) [8:1298] "Effective reorganization": "Effective reorganization" under § 362(d)(2)(B) is interpreted to mean a
"reasonable possibility of a successful reorganization within a reasonable time." This requires "not merely a showing
that if there is conceivably to be an effective reorganization, this property will be needed for it; but that the property
is essential for an effective reorganization that is in prospect." [United Sav. Ass’n of Texas v. Timbers of Inwood
Forest Assocs., Ltd. (1988) 484 US 365, 375-376, 108 S.Ct. 626, 633 (dictum) (emphasis in original)]
1) [8:1299] Confirmable plan: "Effective reorganization" requires the debtor to demonstrate that the proposed plan is
capable of confirmation. Therefore, to a degree, this showing implicates consideration of the plan confirmation
standards of 11 USC § 1129. **[In re Building 62 Ltd. Partnership (BC D MA 1991) 132 BR 219, 222--although
not subject to same scrutiny as a confirmation hearing, debtor’s proposed plan must not be obviously unconfirmable]
**a) [8:1300] No need to show likelihood of confirmation: In a § 362(d) proceeding, the debtor need not demonstrate
that its plan actually will be confirmed; nor must the debtor put forth the kind of evidence required at a confirmation
hearing (see Ch. 11). Instead, the debtor need only produce some evidence that its plan could be confirmed by a
reasonable bankruptcy judge. [In re Bonner Mall Partnership (9th Cir. 1993) 2 F3d 899, 902, fn. 4]
2) [8:1301] Confirmable within near future: "Effective reorganization" also requires a showing that confirmation of
the proposed reorganization plan in the near future is within the realm of possibility. [In re Teresi (BC ED CA 1991)
134 BR 392, 398; see also Grundy Nat’l Bank v. Tandem Mining Corp. (4th Cir. 1985) 754 F2d 1436, 1440--stay in
case more than 2 years old ordered lifted if plan not proposed and approved within 60 days]
a) [8:1302] Effect of delay in proposing plan: Evidence that the debtor has not proposed a plan in months or years
since the filing or has proposed a plan that is not feasible or otherwise confirmable may amount to proof that there is
no realistic prospect for an effective reorganization. [See In re Sun Valley Newspapers, Inc. (9th Cir. BAP 1994) 171
BR 71, 73-74, 77; In re Sun Valley Ranches, Inc. (9th Cir. 1987) 823 F2d 1373, 1376; In re Bonner Mall
Partnership (9th Cir. 1993) 2 F3d 899, 917; and 11 USC § 1129 (discussed in Ch. 11)]
=> [8:1303] PRACTICE POINTER: Because the Code manifests a congressional policy favoring reorganization, it is
frequently difficult to obtain a finding early in the case that no effective reorganization is in prospect. (The
exception is where the debtor fails to submit any evidence that the debtor can and will propose a plan and that the
property in question is needed for that plan.)
However, the longer the case has been pending without a proposed or confirmed plan, the easier it is to obtain a
ruling that no effective reorganization is in prospect.
[8:1304-1314] Reserved.
**(c) [8:1315] Application--debtor’s residence usually necessary to Chapter 13 reorganization: In a Chapter 13
case, the debtor’s principal residence "is virtually always necessary to an effective reorganization ... If the home is
not saved, the Chapter 13 reorganization is not effective." (A rare exception is where confirmation of the Chapter 13
plan is delayed so long that there is "no effective reorganization in prospect"; see ¶ 8:1302.) [In re Elmore (BC CD
CA 1988) 94 BR 670, 677]
1) [8:1316] Compare--§ 362(d)(1) relief for "cause": Even when need for the home precludes relief under § 362(d)(2),
the **secured creditor can still seek relief for "cause" under § 362(d)(1). See ¶ 8:1060 ff.
[8:1317-1319] Reserved.
In re Elmore, 94 B.R. 670, 20 Collier Bankr.Cas.2d 1589, 18

Bankr.Ct.Dec. 1097, Bankr. L. Rep. P 72,562 (Bankr.C.D.Cal.,Dec 14,
1988)
Scope of issues heard on motion for relief from automatic stay
In re Johnson, 756 F.2d 738, 12 Collier Bankr.Cas.2d 573, 13

Bankr.Ct.Dec. 431, Bankr. L. Rep. P 70,350 (9th Cir.(Cal.) Mar 28,
1985)
Debtors appealed from an order of the United States District Court for
the Northern District of California, Alfonso J. Zirpoli, J., reversing
the bankruptcy court’s order awarding the debtors attorney fees
incurred in opposing the creditors’ unsuccessful motion for relief
from the automatic stay. The Court of Appeals, Ferguson, Circuit
Judge, held that federal and not state law governed the substantive
issues involved in the creditors’ motion and, therefore, the
bankruptcy court should not have awarded attorney fees pursuant to a
California statute.
Affirmed
West Headnotes
[1] Bankruptcy 51 2435.1
51 Bankruptcy
51k2435 Proceedings
(Formerly 51k2435, 51k659.5(4))
Stay litigation is limited to issues of lack of adequate protection,
debtor’s equity in property and necessity of property to effective
reorganization; validity of claim or contract underlying claim is not
litigated during hearing. Bankr.Code, 11 U.S.C.A. § 362(d).
51 Bankruptcy
51k2435 Proceedings
51k2436 k. Set-Off and Counterclaim; Affirmative
Defenses. Most Cited Cases
(Formerly 51k217.5(5))
Action seeking relief from automatic stay is not assertion of claim
which would give rise to right or obligation to assert counterclaim.
Bankr.Code, 11 U.S.C.A. § 362(d).
51 Bankruptcy
51k2435 Proceedings
51k2440 k. Hearing. Most Cited Cases
State law governing contractual relationships is not considered in
automatic stay litigation. Bankr.Code, 11 U.S.C.A. § 362(d).
After a debtor files a Chapter 11 petition, he is protected by the

automatic stay provision of 11 U.S.C. § 362(a) until an adequate plan
takes hold. See Revisor’s Note to 11 U.S.C. § 362. See also, In re
BBT, 11 B.R. 224, 232 (Bankr.D.Nev.1981). To obtain relief from an
automatic stay, a creditor may bring a request pursuant to 11 U.S.C. §
362(d). Section 362(d) provides:
On request of a party in interest and after notice and a hearing, the

court shall grant relief from the stay provided under subsection (a)
of this section, such as by terminating, annulling, modifying, or
conditioning such stay-
(1) for cause, including the lack of adequate protection of an interest

in property of such party in interest; or
(2) with respect to a stay of an act against property, if-

(A) the debtor does not have an equity in such property; and
(B) such property is not necessary to an effective reorganization.
11 U.S.C. § 362(d).
[1][2][3] Stay litigation is limited to issues of the lack of adequate

protection, the debtor’s equity in the property, and the necessity of
the property to an effective reorganization. Hearings on relief from
the automatic stay are thus handled in a summary fashion. In re Cedar
Bayou, Ltd., 456 F.Supp. 278, 284 (W.D.Pa.1978). The validity of the
claim or contract underlying the claim is not litigated during the
hearing. The action seeking relief from the stay is not the assertion
of a claim which would give rise to the right or obligation to assert
a counterclaim.** In re Essex Properties, Ltd., 430 F.Supp. 1112
(N.D.Cal.1977). SeeS.Rep. No. 989, 95th Cong., 2d Sess. 55, reprinted
in1978 U.S.Code Cong. & Ad.News, 5787, 5841. Thus, the state law
governing contractual relationships is not considered in stay
litigation.FN2
FN2. Furthermore, when a party requests relief from the automatic stay
he is not necessarily seeking to foreclose under a contract. Such an
action could be brought by one seeking to proceed upon an alleged
personal injury claim against the debtor or a variety of other claims
not based on contract.
In re Poughkeepsie Hotel Associates Joint Venture, 132 B.R. 287, 22

Bankr.Ct.Dec. 267 (Bankr.S.D.N.Y.,Oct 15, 1991)
Calls In re Johnson into doubt
The less formal nature of stay litigation under the Code is

illustrated by the fact that relief may now be obtained by motion
under Fed.R.Bankr.P. 4001, rather than by the prior practice of an
adversary proceeding. See Former Bankr.R. 701(6); In re Lockwood, 14
B.R. 374 (Bankr.E.D.N.Y.1981). As the House Report to Code § 362(e)
explains:
At the expedited hearing under subsection (e), and at all hearings on
relief from the stay, the only issue will be the claim of the creditor
and the lack of adequate protection or existence of other cause for
relief from the stay. This hearing will not be the appropriate time
at which to bring in other issues, such as counterclaims against the
creditor on largely unrelated matters. Those counterclaims are not
to be handled in the summary fashion that the preliminary hearing
under this provision will be. **Rather, they will be the subject of
more complete proceedings by the trustees to recover property of the
estate or to object to the allowance of a claim.
H.Rep. No. 595, 95th Cong., 1st Sess. 344 (1977), U.S.Code Cong. &
Admin. News, pp. 5787, 6300-6301.
** Shortly after the Code was enacted, a view developed that

consideration of affirmative defenses and counterclaims was improper
in relief from stay litigation. See, e.g., In re Johnson, 756 F.2d
738, 740 (9th Cir.), cert. denied, 474 U.S. 828, 106 S.Ct. 88, 88
L.Ed.2d 72 (1985) ("validity of the claim or contract underlying the
claim is not litigated" on a motion for relief from the automatic
stay); In re Saxon Industries, Inc., 43 B.R. 64, 67
(Bankr.S.D.N.Y.1984) (equitable subordination is "inappropriate for
consideration in an automatic stay proceeding"); In re Born, 10 B.R.
43 (Bankr.S.D.Tex.1981). As the Court in Born explained:
[W]hen the defendant debtor through complex and bona fide affirmative
defenses or counterclaims seeks affirmative counter relief it is not
proper to attempt to determine that issue in the adequate protection
hearing and thereby determine finally the amount of the debt which in
turn will determine the extent of the creditor’s interest which he is
entitled to have protected. Rather, the counterclaims or affirmative
defenses may be severed out and the modification of stay tried on the
assumption that the creditor will prevail on the counterclaim. To do
otherwise would deprive the secured creditor of the right of adequate
protection while the proceedings are pending.
*291 In re Born, 10 B.R. at 48-49. [FN3]
FN3. Although widely cited for this proposition, the Born court
acknowledged, however, that it was "not holding that a counterclaim or
affirmative defenses should never be tried and determined during the
trial of a complaint to modify the stay." In re Born, 10 B.R. at 50.
**[3] Nevertheless, a more expansive approach to what may be asserted

in opposition to a relief from stay motion has evolved. The
"interests of judicial economy and the speedy and economical
determination of litigation" supports the consideration of affirmative
defenses in relief from stay litigation. In re Sonnax Industries,
Inc., 907 F.2d 1280, 1287 (2nd Cir.1990). A challenge to the
validity of the underlying lien may be asserted by affirmative
defense. See, e.g., In re Davenport, 34 B.R. 463, 466
(Bankr.M.D.Fla.1983) ("when the affirmative defense contests the
validity of the lien at issue, such affirmative defense should be
considered in determining whether or not the automatic stay should be
lifted or extended"); In re Lockwood, 14 B.R. 374
(Bankr.E.D.N.Y.1981). Likewise, failure to perfect a secured claim
has been allowed as a defense to a motion for relief from the
automatic stay. First National Bank of Denver v. Turley, 705 F.2d
1024 (8th Cir.1983); In re Appeal of U.I.P. Engineered Products Corp.,
43 B.R. 480 (N.D.Ill.1984).
Extrinsic defenses and counterclaims unrelated to stay litigation

should be disallowed. See, e.g., D-1 Enterprises, Inc. v. Commercial
State Bank, 864 F.2d 36, 38 (5th Cir.1989) ("unrelated matters" or
"indirect defenses" are severed from stay litigation); Matter of
Little Creek Development Co., 779 F.2d 1068, 1074 (5th Cir.1986)
("extrinsic state law defenses" are to be stricken). **Where,
however, the affirmative defenses or counterclaims "directly involve
the question of the debtor’s equity, they should be heard in the stay
proceeding." In re Bialac, 694 F.2d 625, 627 (9th Cir.1982).
In re Bialac, 694 F.2d 625, 7 Collier Bankr.Cas.2d 899, 9
Bankr.Ct.Dec. 1354, Bankr. L. Rep. P 69,010 (9th Cir.,Dec 13, 1982)
[2] Moreover, the bankruptcy court did not abuse its discretion by
determining the value of the note rather than leaving its
interpretation to be determined “more thoughtfully” elsewhere. Bialac
misunderstands the nature of a § 362(d) hearing. It is true that “the
desired expedition of stay litigation ... may not always be conducive
to any final determination of questions going to the merits which are
so serious, substantial, difficult and doubtful as to make them fair
ground for litigation and thus for more deliberative investigation.”
United Companies Financial Corp. v. Brantley, 6 B.R. 178, 187
(Bkrtcy.N.D.Fla.1980) (Citations omitted). **When a debtor’s
affirmative defenses and counterclaims, however, directly involve the
question of the debtor’s equity, they should be heard in the stay
proceeding. Id. at 187.
In re Bialac, 712 F.2d 426, 8 Collier Bankr.Cas.2d 1395, 11

Bankr.Ct.Dec. 230, Bankr. L. Rep. P 69,314, 36 UCC Rep.Serv. 1467 (9th
Cir.(Ariz.) Aug 04, 1983)
Binding authority on the requirement of satisfying the two prongs
On creditor’s consolidated appeal from United States Bankruptcy Court for the District of Arizona, Robert G.
Mooreman, J., 16 B.R. 982, the Bankruptcy Appellate Panel, Elliott, J., 24 B.R. 580, reversed and remanded, and
appeal was taken. The Court of Appeals, Skopil, Circuit Judge, held that: (1) preforeclosure right of debtor, who had
one-sixth interest in surplus cash note, to redeem the entire note was a property right entitled to protection of
automatic stay provision, and (2) creditor was not entitled to have stay lifted as to the one-sixth interest in note since
it failed to establish that the debtor lacked equity in the note.
Decision of Bankruptcy Appellate Panel reversed.
West Headnotes
51 Bankruptcy
51k2424 k. Debtor’s Want of Interest or Equity. Most Cited Cases
(Formerly 51k659(1), 51k659.5(1))
Creditor is entitled to have stay lifted providing debtor does not have equity in the property and the property is not
necessary to an effective reorganization. Bankr.Code, 11 U.S.C.A. § 362(d)(2).
51 Bankruptcy
51V The Estate
51V(C) Property of Estate in General
51V(C)2 Particular Items and Interests
51k2545 k. Property Pledged or Encumbered; Redemption Rights. Most Cited Cases
(Formerly 51k143(5))
Preforeclosure right to redeem is a property right and constitutes part of the bankruptcy estate whether it stems from
ownership of entire underlying property or only a fractional share. Bankr.Code, 11 U.S.C.A. § 541.
11 U.S.C.A. § 362.
51 Bankruptcy
51k2435 Proceedings
51k2439 Evidence
51k2439(3) Creditor’s Burden
51k2439(4) k. Lack of Equity. Most Cited Cases
(Formerly 51k217(6), 51k217.5(5))
Burden of proof on question of debtor’s lack of equity in property, for purposes of determining whether automatic
stay should be lifted, lies with the creditor. Bankr.Code, 11 U.S.C.A. § 362(g)(1).
51 Bankruptcy
51k2424 k. Debtor’s Want of Interest or Equity. Most Cited Cases
(Formerly 51k217.5(5), 51k217.5(4), 51k217(6))
Creditor’s foreclosure sale of five-sixths of a surplus cash note, in which debtor held the other one-sixth interest,
destroyed debtor’s preforeclosure right to redeem and since creditor failed to show that debtor had no equity in the
note creditor was not entitled to have automatic stay lifted. Bankr.Code, 11 U.S.C.A. § 362(a).
OVERVIEW
The Bialac family sold Arizona real estate to Harsh Building Co. (“HBC”), a subsidiary of appellee, Harsh
Investment Co. (“HIC”) in return for a “surplus cash” note (“note”) payable by HBC. From a default in a related
transaction, HIC obtained a state court judgment against five members of the Bialac family, jointly and severally.
The judgment also gave HIC a security interest in the note. Debtor-appellant James Bialac (“James”) is liable on
HIC’s judgment and owns a one-sixth interest in the note.
HIC gave notice that it intended to foreclose on the note. James filed his Chapter 11 bankruptcy petition. HIC
proceeded with the sale of the note. A five-sixth interest in the note was sold, with James’ one-sixth ownership
interest preserved.
James sought to have the sale set aside. HIC sought to have the automatic stay, 11 U.S.C. § 362, lifted as to James’
one-sixth interest in the note. The bankruptcy court, 16 B.R. 982, continued the automatic stay *428 and held that
the sale violated the stay. The Bankruptcy Appellate Panel (“BAP”), 24 B.R. 580, reversed both rulings. James
Bialac appeals.
James sought to have HIC’s foreclosure sale set aside by the bankruptcy court. Count One of his complaint alleged
that the foreclosure sale was not adequately noticed and was not conducted in a commercially reasonable manner.
Count Two alleged that the automatic stay of 11 U.S.C. § 362 was violated by the sale of the note, which terminated
James Bialac’s rights of redemption in the five-sixth portion of the note sold.
HIC counterclaimed, seeking to lift the stay as to James Bialac’s remaining one-sixth interest in the note to enable it
to foreclose on that as well.
The bankruptcy court held that the sale was conducted in a commercially reasonable manner and that notice of the
sale was satisfactory.FN4 The court then held the sale of the five-sixth interest in the note violated the automatic stay
of section 362. James Bialac’s undivided one-sixth interest *429 gave him a pre-foreclosure right to redeem the
entire note by paying the amount of the judgment. The court held this redemption right was a valuable property
right, entitled to the automatic stay provisions of section 362.
FN4. Neither of these issues have been raised on appeal.
[1] Finally, the bankruptcy court considered HIC’s counterclaim seeking to lift the stay with respect to James’ one-
sixth interest in the note. A creditor is entitled to have the stay lifted providing (1) the debtor does not have an equity
in the property; and (2) the property is not necessary to an effective reorganization. 11 U.S.C. § 362(d)(2). The court
found that the value of the note was not, at the time, quantifiable. It could not be determined whether James had any
equity in the note. A separate action was proceeding. Final judgment in that action was necessary to determine the
present value of the note, and whether James had any equity in it. The court felt it improper to lift the stay where the
“side” litigation could establish an equity in the note. In addition, the court found the note necessary to an effective
reorganization. The court refused to lift the stay.
**The bankruptcy court voided the sale and reinstated James’ pre-foreclosure right to redeem the entire note. The
right was qualified. James was only given sixty days within which to pay the $460,000 due under the judgment. If he
failed to exercise his right to redeem, his right would be terminated and the foreclosure sale of the surplus cash note
would be reinstated.
HIC immediately sought a stay of the bankruptcy court’s order. James Bialac stood ready to redeem the note from
the judgment, but HIC would not accept. HIC sought a stay from the order so that it would not be compelled to
accept. The stay was granted, and HIC appealed to the Bankruptcy Appellate Panel of the Ninth Circuit.
The BAP reversed and remanded. With respect to James’ redemption right in the five-sixth portion of the note sold,
the BAP held that such rights, though valuable property rights, do not qualify for protection under the automatic stay
provisions of section 362. As to HIC’s counterclaim, the BAP held that the trial court did not make findings
sufficient to sustain its judgment that the automatic stay should continue as to the one-sixth interest in the note. The
case was remanded for further findings on James Bialac’s equity in the note.
James Bialac appeals.
ISSUES
1. Was James Bialac’s pre-foreclosure right to redeem the entire note a property right entitled to the protection of 11
U.S.C. § 362?
2. Was HIC entitled to have the stay lifted as to James Bialac’s one-sixth interest in the note because he lacks equity
in it and it is unnecessary to his Chapter 11 reorganization?
We conclude that James had a pre-foreclosure redemption right which covered the entire note.
(b) Redemption rights as “property of the estate”.
Both the Bankruptcy Court and the BAP concluded that Bialac’s pre-foreclosure right to redeem the entire note was
an independent property right that became part of the bankruptcy estate under 11 U.S.C. § 541. Section 541 defines
property of the debtor which is to be considered part of the bankruptcy estate, and was intended to be broad and all-
inclusive:
[T]he estate is comprised of all legal or equitable interest [sic] of the debtor in property, wherever located, as of the
commencement of the case. The scope of this paragraph is broad. It includes all kinds of property, including tangible
or intangible property, ... causes of action....
The instant case is distinguishable, in that here two aspects of the bankrupt’s property are implicated. First, and
primarily, James Bialac had a one-sixth undivided interest in the note. While the sale attempted to preserve this
interest, it would be more consistent with the best interests of the debtor and all creditors if the division of property
in which the debtor has a fractional interest is under the auspices of the trustee in bankruptcy. Second, the
redemption right was entirely cut off. Where prior to the foreclosure James could have paid $450,000 for a lien
against the entire note, he now must pay $300,000 to protect just his one-sixth interest in it.
Neither of these interests are within protections afforded by a literal interpretation of section 362, yet they should be
protected by the stay if the purposes of the Act, the orderly disposition of all property in which the debtor has some
interest, are to be achieved. See Texaco, Inc. v. Liberty National Bank and Trust Co. of Oklahoma City, 464 F.2d
389, 392-93 (10th Cir.1972). Section 362 should be given a broad meaning to include the kind of property involved
in this case. The BAP’s stated reason for cutting off the protections of section 362 in this case was because the line
has to be drawn somewhere. While that of course is true, the line should not be drawn where it might frustrate the
purposes of the Act.
Ruling on a summary judgement motion is a proposed judgment
There are exceptions to the automatic stay but none of them are
applicable to this case.
**Notice of sale required to be recorded 14 days before the sale June

11, 2003 falls on May 28, 2008
Greenwald & Asimov, Cal. Practice Guide: Real Property Transactions

(The Rutter Group 2008) ¶ 6:531 (CAPROP CH. 6-i);
(iv) state the total amount of unpaid principal obligation and

reasonably estimated costs, expenses and advances.
Alliance Title and Financial Title, Trustee, not authorized to act.
Dimock v. Emerald Properties LLC, 81 Cal.App.4th 868, 97 Cal.Rptr.2d 255,

00 Cal. Daily Op. Serv. 5010, 2000 Daily Journal D.A.R. 6653 (Cal.App. 4
Dist. Jun 21, 2000)
Good case
California Real Property Transactions, Greenwald, Dennis, D.; Asimov,

Michael
Greenwald & Asimov, Cal. Practice Guide: Real Property Transactions

(The Rutter Group 2008) ¶ 6:521.1 (CAPROP CH. 6-i);
See Greenwald & Asimov, Cal. Practice Guide: Real Property Transactions (The
Rutter Group 2008) ¶ 11:193 (CAPROP Ch. 11-D);
Residential Capital v. Cal-Western Reconveyance Corp., 108 Cal.App.4th 807,
134 Cal.Rptr.2d 162, 03 Cal. Daily Op. Serv. 4081, 2003 Daily Journal D.A.R.
5175 (Cal.App. 4 Dist.,May 14, 2003)
In 6 Angels, supra, 85 Cal.App.4th 1279, 1284-1285, 102 Cal.Rptr.2d 711, the

successful bidder at a trust deed foreclosure sale filed a quiet title action
against the trustee after the trustee declined to deliver the trustee’s deed
to the real property encumbered by the trust deed because of a mistake in the
price at which the sale bidding was opened. **The court stated that “ ‘[a]
successful challenge to the sale requires evidence of a failure to comply
with the procedural requirements for the foreclosure sale that caused
prejudice to the person attacking the sale.’ [Citation.]” (Ibid.)**Unless
there is a significant procedural error, a “mere inadequacy of price, absent
some procedural irregularity that contributed to the inadequacy of price or
otherwise injured the trustor, is insufficient to set aside a nonjudicial
foreclosure sale.” (Ibid.) In 6 Angels, the trust deed beneficiary intended
to set the opening bid at the sale at $100,000, but through a clerical error,
the trustee was mistakenly instructed to open the bidding at $10,000, and the
plaintiff made a successful bid of $10,000.01. The court granted summary
judgment in favor of the bidder and entered a judgment of quiet title in the
bidder’s favor. The court found no significant procedural irregularity to
justify setting aside the sale to the successful bidder. The clerical error
in the amount of the opening bid was insufficient to invalidate the sale,
because “this error, which was wholly under [the beneficiary’s loan
servicer’s] control and arose solely from [the beneficiary’s loan servicer’s]
own negligence, falls outside the procedural requirements for foreclosure
sales described in the statutory scheme, and, like the secretary’s error in
Crofoot, is ‘dehors the sale proceedings’ [citing Crofoot v. Tarman, supra,
147 Cal.App.2d at p. 447, 305 P.2d 56, dealing with an erroneous postponement
sale date given to a corporation allied with the debtor by the prospective
new buyer in foreclosure, through that buyer’s attorney’s office]. Because
there is no procedural error here independent of the inadequacy of price, we
conclude that summary adjudication was properly granted.” (6 Angels, supra,
85 Cal.App.4th at p. 1285, 102 Cal.Rptr.2d 711.)
Melendrez v. D & I Investment, Inc., 127 Cal.App.4th 1238, 1256 26

Cal.Rptr.3d 413, 05 Cal. Daily Op. Serv. 2684, 2005 Daily Journal D.A.R. 3656
(Cal.App. 6 Dist., Mar 29, 2005)
“FN26. Section 2924‘s conclusive presumption language for BFP’s applies only
to challenges to statutory compliance with respect to default and sales
notices. In reaching this conclusion, we recognize that there is dictum that
suggests that the conclusive presumption under section 2924 applies across
the board to any claimed irregularities in the trustee’s sale. The court in
Moeller held that the presumption under section 2924 provides that the
trustee’s "sale has been conducted regularly and properly," and that, as
against a BFP, the presumption operates to prevent the trustor from
"attacking the validity of the sale." (Moeller, supra, 25 Cal.App.4th 822,
831, 30 Cal.Rptr.2d 777.) Cases following Moeller have similarly described
the conclusive presumption--applicable under section 2924 where the buyer is
a BFP who has received a trustee’s deed--as precluding any attack on the
trustee’s sale. (See Residential Capital v. Cal-Western Reconveyance Corp.
(2003) 108 Cal.App.4th 807, 817, 134 Cal.Rptr.2d 162 (Residential Capital )
[once trustee’s deed was delivered, "there was a conclusive presumption of
validity under section 2924"]; 6 Angels, Inc. v. Stuart-Wright Mortgage,
Inc. (2001) 85 Cal.App.4th 1279, 1286, 102 Cal.Rptr.2d 711 [same]; Angell v.
Superior Court (1999) 73 Cal.App.4th 691, 699-700, 86 Cal.Rptr.2d 657
[same].) To the extent that Buyer may construe these cases as describing
section 2924‘s presumption as precluding any attack on the foreclosure sale
as to a BFP--irrespective of whether the challenge relates to the Trustee’s
compliance with procedural requirements concerning the default and sale
notices--we decline to follow such interpretation. (See 4 Miller & Starr,
Cal. Real Estate, supra, Deeds of Trust § 10:211, p. 680 [section 2924
"presumption only applies to the propriety of the required notices, but it
does not apply to other requirements of the foreclosure process"].)”
Miller v. Cote, 127 Cal.App.3d 888, 179 Cal.Rptr. 753 (Cal.App. 4 Dist. Jan
14, 1982)
Contemplated transfer of a leasehold did not constitute a default and a

notice of default therefore was invalid.
Middlebrook-Anderson Co. v. Southwest Sav. & Loan Assn., 18 Cal.App.3d

1023, 96 Cal.Rptr. 338 (Cal.App. 4 Dist. Jul 29, 1971)
Notice does not have to state amount exactly
conflicting authorities
System Inv. Corp. v. Union Bank, 21 Cal.App.3d 137, 98 Cal.Rptr. 735

(Cal.App. 2 Dist.,Nov 15, 1971)
Applies to voidable deed.
**Need of case on subject of inadequacy of sales price which voids sale, look
to Bernhard , Mortgage Trust Deed Practice, Greenwald & Asimov, Cal.
Practice Guide: Real Property Transactions (The Rutter Group 2008) ¶
6:535.18 (CAPROP CH. 6-i);
However, a foreclosure sale may be avoided where an inadequate sale

price is coupled with a procedural irregularity (¶ 6:535.17) that
contributed to the inadequate price or otherwise injured the trustor.
[Angell v. Super.Ct. (Verdugo Trustee Service Corp.) (1999) 73 CA4th
691, 700, 86 CR2d 657, 663-- trustee justified in aborting sale for
slight irregularity when coupled with grossly inadequate sale price;
Whitman v. Transtate Title Co. (1985) 165 CA3d 312, 322-323, 211 CR
582, 589--inadequate price coupled with denial of request for one-day
postponement of sale proper ground for aborting sale]
(c) After delivery of trustee’s deed to successful bidder

1) [6:535.35] Circumstances supporting avoidance of sale: Under certain
circumstances, an otherwise completed nonjudicial foreclosure sale may
be set aside or voided after the trustee’s deed is delivered to the
high bidding purchaser, but subject to the rights of an intervening
BFP (¶ 6:536 ff.):
a) [6:535.36] Statutorily-deficient notice: A completed trustee’s sale
based on a statutorily-deficient notice of default and/or notice of
sale is invalid and may be set aside. [Miller v. Cote (1982) 127 CA3d
888, 894, 179 CR 753, 756- 757 (notice of default premature and thus
specified default was no default); System Invest. Corp. v. Union Bank
(1971) 21 CA3d 137, 152-153, 98 CR 735, 744-745 (failure to state in
notice of default nature of payment due--whether interest, principal
or otherwise); compare Knapp v. Doherty (2004) 123 CA4th 76, 97-99, 20
CR3d 1, 17-19--where no evidence presented that notice of default did
not properly state nature or amount of default, inaccuracy re default
date immaterial and not basis for set-aside]
but note conflicting authorities [ Middlebrook-Anderson Co. v. Southwest

Sav. & Loan Assn., 18 Cal.App.3d 1023, 96 Cal.Rptr. 338 (Cal.App. 4 Dist. Jul
29, 1971)Notice does not have to state amount exactly]
Mental capacity
From California Forms Of Pleading And Practice

Contracts, Section 140.21, p. 140.21[1][b]
[1] Unsound mind
[a] Contract Void
The term ‘understanding’ denotes not the act of understanding but the
capacity or faculty of doing so. The expression ‘without
understanding’ denotes persons without that capacity. However, the
expression should not be understood in its literal and extreme sense
because even the most disabled person may have some degree of
understanding. Instead the expression as it applies to both executed
and executory contracts, refers to a person entirely without the
capacity to understand or comprehend such transactions [Jacks v. Estee
(1903) 139 Cal. 507, 511 [73 P. 247].
California Affirmative Defenses, Chapter 52 Lack of Capacity to

Contract, Section 52:27, page 1512, Nor is the knowledge or good faith
of the other contracting parties relevant to the validity of the
contract; a contract void under Civil Code Section 38 is void even it
the other party had no knowledge of the incapacity of the incompetent
and acted completely in good faith or if the person affected is a bona
fide purchaser in good faith without notice. FN4
FN4 Jacks v. Estee, (1903) 139 Cal. 507, 512-513 [73 P.247, 249]
Good case;
Mattos v. Kirby, (1955) 133 Cal.App.2d 649, 653-654, [285 P.2d 56, 59]
Good case
capacity
Issue of lis pendens (unnecessary)

Actual notice
Soon Chey provided actual notice to Wells Fargo
Miller & Starr, California Real Estate 3D, Chapter 11. Recording and
Priorities, D. PRIORITY OF SPECIFIC INTERESTS, 8. Effect of a Lis
Pendens
§ 11:137. Effect of recorded lis pendens on subsequent interests
**A lis pendens is a "conveyance" within the provisions of the

recording laws.[FN4] When "duly recorded," a lis pendens imparts
constructive notice to all purchasers, encumbrancers, or other
transferees of the real property, but only against parties not named
fictitiously.[FN5] It provides notice of its contents and of all other
facts that would be discovered by reasonable inquiry and, thereafter,
the interests of all persons who subsequently acquire a title or lien
interest in the described real property are subject to any judgment
rendered by the court in the litigation.[FN6] The lis pendens operates
in accordance with the classic principles of priorities that a duly
recorded instrument constitutes constructive notice,[FN7] and a
subsequent purchaser or encumbrancer is subject to prior interests of
which he or she has actual or constructive notice.[FN8]
[FN8] Arrow Sand & Gravel, Inc. v. Superior Court (1985) 38 Cal.3d
884, 888 [215 Cal.Rptr. 288, 700 P.2d 1290]; Bishop Creek Lodge v.
Scira (1996) 46 Cal.App.4th 1721, 1733 [54 Cal.Rptr.2d 745].
CEB, California Real Property Remedies And Damages, August 2008,

Second Edition,
Berk, Michael, California Real Property Remedies and Damages, Chapter

13 Lis Pendens, Section 13.15, C. Actual or Inquiry Notice of Pending
Action, page 761
“A person who acquires an interest in real property with actual notice

of a pending action concerning the property takes it subject to any
judgment that might be entered in the action, whether or not a lis
pendens has been recorded (except set forth in Section 405.61,
discussed below). CCP 1908(a)(2) Albertson v. Raboff (1956) 46 C.2d
375, 379 [295 P.2d 405] Similarly bound by the judgment is one who
acquires an interest in real property with inquiry notice (ie. Notice
of facts sufficient to put a reasonable person on inquiry that would
have lead to knowledge of a pending action concerning property).
CEB, California Real Property Remedies And Damages, Second Edition,

August 2008, Chapter 13 Lis Pendens, Section 13.8, A. Constructive
Notice of Pending Action, 1 Notice Binds Subsequent Purchasers and
Encumbrancers, p. 859-860
“A purchaser or an encumbrancer of real property who has actual

knowledge of a pending action affecting title to or possession of the
property takes whatever interest he or she acquires subject to any
judgment that may be entered in the action regardless of whether a
lis pendens is recorded. CCP § 1908(a)(2); Albertson v. Raboff (1956)
46 C.2d 375, 379, 295 P.2d 405. But See CCP § 405.61 (discussed in
§13.15)
Once recorded, a lis pendens imparts constructive notice not only of

its contents but also all facts concerning the action that could be
discovered by reasonable inquiry. Albertson v. Raboff, supra; Milton
E. Giles & Co. v. Bank of America (1941) 47 CA2d 315, 324, 117 P.2d
943; In re Brickyard (9th Cir 1984) 735 F.2d 1154 (applying California
law). Moreover a lis pendens constitutes constructive notice of what
may be established by the judgment and is effective with respect to
what is established. Ahmanson Bank & Trust Co. v. Tepper (1969) 269
CA2d 333, 342, 74 CR 774.”

August 2008, Chapter 13 Lis Pendens, Section 13.14, B.
, Duration of Lis Pendens, p. 865,
“Unless expunged (see §§ 13.44-13.105), withdrawn or terminated (see

§§ 13.108-13.115) a recorded lis pendens is incidental to the action
and is effective to give constructive notice from the date on which it
is recorded until final decision on appeal, passage of time for
appeal, or satisfaction of judgment. See
§13.108. Thus, a lis pendens may be recorded late in the action, and
may be effective to give constructive notice to subsequently acquired
interests, after judgment has been entered but before it becomes
final. CCP §§405.24, 1049; Kartheiser v. Superior Court (1959) 174
CA2d 617, 619, 345 P2d 135. On effect when judgment becomes final, see
§13.110. A lis pendens (arising from a prior action to cancel a deed
of trust) that has not been expunged, withdrawn, or terminated extends
the time period under CC §882.020 for enforcing the power of sale in
the deed of trust. Slintak v. Buckeye Retirement Co. (2006) 139
CA4th 575, 43 CR3d 131.”

August 2008, Chapter 13 Lis Pendens, Section 13.15, C.
, Actual or Inquiry Notice of Pending Action , p. 866,
“A person who acquires an interest in real property with actual notice

of a pending action concerning the property takes it subject to any
judgment that might be entered in the action, whether or not a lis
pendens has been recorded (except set forth in Section 405.61,
discussed below). CCP 1908(a)(2) Albertson v. Raboff (1956) 46 C.2d
375, 379 [295 P.2d 405] Similarly bound by the judgment is one who
acquires an interest in real property with inquiry notice (ie. Notice
of facts sufficient to put a reasonable person on inquiry that would
have lead to knowledge of a pending action concerning property).
Sharp v. Lumley (1868) 34 C 611 (bankruptcy petition’s statement re
commencement of action to foreclose on bankrupt’s real property was
sufficient to impart notice of foreclosure action to assignee of
bankrupt’s interest in real property).”
…”In an action for fraudulent conveyance, however, withdrawal of a lis

pendens does not obliterate actual knowledge of the lis pendens or
underlying action. Bishop Creek Lodge v. Scira (1996) 46 CA4th 1721,
54 CR2d 745.”
(At pp.873-874)
“§13.22 E. Use in Federal Actions
A notice of pendency of action may be recorded and filed in any

federal district court action alleging a real property claim
concerning California real property to the same extent an in the same
manner as in an action in a California court. CCP §405.5 A litigant
in federal court may record a lis pendens in an action concerning real
property if authorized to do so under applicable state law. See eg.
U.S. v Real Prop. At 2659 Roundhill Dr. (9th Cir 1999) 194 F3d 1020;
Nintendo of Am., Inc. v. Dragon Pac. Int’l (9th Cir 1994) 40 F3d 1007.
For the special situation of forfeitures under the Civil Asset
Forfeiture Reform Act (18USC §§981-987), the person protected and
burdens of proof are different. U.S. v One Residential Prop. At 8110
E. Mojave Rd. (SD Cal 2002) 229 F Supp 2d 1046. The state statutes
for recording a notice must be complied with for notice of the federal
action to be effective. 28 USC §1964.”

7 Quiet Title, Section 7.27, 3. Parties, a. Plaintiffs, page 417
Any person or entity with sufficient interest or estate in real

property (see Sections 7.20-7.23) can bring a quiet title action.
The quiet title statute (CCP Sections 760.010 -765.060) are intended
to provide the “broadest possible forum for clearing title. The
inclusiveness of the statute and its intent are demonstrated by the
breadth of plaintiffs included such as:
A heir or a devisee (Prob C Section 9654);

7 Quiet Title, Section 7.33, c. Adverse Claims, page 421
“If a person required to be named as a defendant has died, the

plaintiff must join the personal representative as a defendant (CCP
Section 762.030(a); otherwise, if the personal representative is
unknown the complaint must name “the testate and intestate successors
of the deceased and all persons claiming by, through, or under such
decedent” (CCP Section 762.030(b)). On formal requisites of the
caption, see California Civil Procedure Before Trial Section 15.3 (4th
ed. Cal CEB 2004)
Plead the specific facts of the fraud by the notary,
§ 18. Notice; actual and constructive

Civil Code Section 18, NOTICE, ACTUAL AND CONSTRUCTIVE.
Notice is:
1. Actual--which consists in express information of a fact; or,
2. Constructive--which is imputed by law.
2. Actual notice
“Notice” is actual, constructive, implied and presumptive, while “actual

notice” is susceptible of subdivisions, such as information which, of itself,
gives actual notification and that which, if prosecuted with ordinary
diligence, would furnish information of fact. U.S. v. Certain Parcels of Land
Situate in San Bernardino County, S.D.Cal.1949, 85 F.Supp. 986. Notice
1.6; Notice 5; Notice 6
From Cal Jur.3D, Real Estate, Section 649, page 54

notice of the outstanding rights of third persons
California Jurisprudence 3D, Volume 54A, Real Estate, §642, page 41
“Notice or knowledge as defeating bona fide status
A bona fide purchaser of land must acquire the property without actual
knowledge, or means of acquiring it, which is the equivalent of
knowledge, 1 and without notice, actual or constructive, 2 of a prior
conveyance 3 or the outstanding rights of third persons. 4 Thus in the
absence of actual notice of the prior contract or circumstances
sufficient to put the purchaser on inquiry as to the state of the
title, a subsequent purchaser takes title free and clear of any
interest of the prior purchaser. A bona fide purchaser’s standing is
not affected by knowledge acquired after recordation of his or
conveyance.5
California Real Estate Law And Practice, Mathew Bender, 2009, Volume
3, Chapter 82 Deeds And Recording, p. 82-12.2,
“[6] Actual Notice

If a person has actual notice of an unrecorded instrument or of a fact
of any kind that affects the title to property he or she is about to
acquire an interest in, he or she is not a bona fide purchaser as far
as that instrument or fact is concerned. FN31
FN 31 Pellisier v. Title Guarantee & Trust Co. (1929) 208 Cal. 172
184-185 [280 P. 947]”
Pellissier v. Title Guarantee & Trust Co., 208 Cal. 172, 280 P. 947 (Cal.,
Sep 23, 1929)
Miller & Starr, California Real Estate 3D, Recording And Priorities, §
11:51, p. 138
“§11:51 Notice as defeating bona fide status
Type of notice. A purchaser or encumbrancer who pays value for an

interest in or lien on real property receives it subject to any prior
interests that are known. There are several types of notice that will
defeat the status of the subsequent party as a bona fide purchaser.
[FN2] Knowledge or notice of a prior interest or lien may be in the
form of actual notice of the prior interest [FN3] or in the form of
constructive notice received by the recordation of the prior interest.
[FN4]
In addition, the law implies notice when the purchaser or encumbrancer
has knowledge from possession of the property that is inconsistent
with the record title, [FN5] or of suspicious circumstances, or
knowledge of a condition of the property that would prompt a
reasonable person to inquire. [FN6] Further, notice is imputed to a
purchaser or encumbrancer from knowledge acquired by an agent within
the course and scope of his or her authority. [FN7]
[FN4] See § 11:3 (effect of recording statutes on priority), §

11:59 (recordation as constructive notice).
[FN5] See §§ 11:78 to 11:88 (notice implied from possession or

use).
[FN6] See §§ 11:75 to 11:77 (notice implied from circumstances).
[FN7] See §§ 11:70 to 11:74 (imputed notice).
[FN8] Gates Rubber Co. v. Ulman (1989) 214 Cal.App.3d 356, 365
[262 Cal.Rptr. 630].
See § 11:49 (bona fide purchase; definition).”
11:58, p. 147
“§ 11:58. What constitutes actual notice
Actual knowledge. A title or lien of a subsequent party is subject to

prior unrecorded interests in the property of which he has actual
knowledge or notice, even though he or she records the deed or
security instrument first. [FN1] "[A]ctual notice means that which a
person actually knows or could discover by making a reasonable
investigation." [FN2] Actual knowledge is that "which consists in
express information of fact." [FN3] Actual knowledge or notice may be
received when a subsequent party is told of the prior interest, [FN4]
hears it discussed by others, [FN5] sees some document referring to
the interest, [FN6] or views a document in the public records reciting
the interest even though the document did not otherwise impart
constructive notice. [FN7]
[FN1] Civ. Code, §§ 1107, 1214, 1217; Slaker v. McCormick-Saeltzer Co.

(1918) 179 Cal. 387, 388 [177 P. 155] (execution sale purchaser had
knowledge of prior unrecorded mortgage); Robinson v. Muir (1907) 151
Cal. 118, 123-124 [90 P. 521]; Bartley v. Karas (1983) 150 Cal.App.3d
336, 340 [197 Cal.Rptr. 749] (disapproved on other grounds in Petersen
v. Hartell (1985) 40 Cal.3d 102 [219 Cal.Rptr. 170, 707 P.2d 232]);
Lawton v. Gordon (1869) 37 Cal. 202, 207 (subsequent purchaser told by
recorder that a prior deed had been filed and withdrawn); Gribble v.
Mauerhan (1961) 188 Cal.App.2d 221, 227-228 [10 Cal.Rptr. 296];
Croswell v. Eckels (1950) 101 Cal.App.2d 271, 274 [225 P.2d 663];
Laughton v. McDonald (1923) 61 Cal.App. 678, 683 [215 P. 707]
(subsequent purchaser told by person in possession that he had
performed an oral agreement to purchase the property).
In reference to instruments known to both parties and created at
the same time, see § 11:1 (interests with equal priority), § 11:3
(effect of recording statutes on priority).
[FN2] Perry v. O’Donnell (9th Cir. 1984) 749 F.2d 1346, 1351.
[FN3] Civ. Code, § 18.

I. E. Associates v. Safeco Title Ins. Co. (1985) 39 Cal.3d 281,
285 [216 Cal.Rptr. 438, 702 P.2d 596]; Prouty v. Devin (1897) 118 Cal.
258, 260 [50 P. 380].
[FN4] In Laughton v. McDonald (1923) 61 Cal.App. 678, 683 [215 P.

707], the vendees in possession told a purchaser from the vendor of
their oral agreement to purchase. The agreement was enforced against
the vendor on the theory of estoppel (see § 1:39) and against the
purchaser because of his knowledge.
In Lawton v. Gordon (1869) 37 Cal. 202, 205-206, the purchasers
were subject to the prior unrecorded interest of other buyers because
the recorder told them that a prior deed was deposited with him but
withdrawn before it was recorded.
[FN5] Williams v. Miranda (1958) 159 Cal.App.2d 143, 153 [323 P.2d
794]; Smith v. J.R. Newberry Co. (1913) 21 Cal.App. 432, 434 [131 P.
1055].
In Hart v. Erickson (1944) 63 Cal.App.2d 719, 722 [147 P.2d 414],
the wife orally agreed to convey a two-fifths interest in her separate
property to her husband in consideration for his care for her and the
property and his payment of the mortgage payments. The wife then
deeded the entire property to her nephew who had heard the wife
discuss the agreement with her husband. The nephew’s title was held to
be subject to the interest of the husband.
Also see Hill v. Den (1898) 121 Cal. 42, 45-46 [53 P. 642].
[FN6] Beverly Hills Nat. Bank & Trust Co. v. Seres (1946) 76
Cal.App.2d 255, 261-264 [172 P.2d 894] (The buyer saw a letter written
by the seller to a tenant promising him a five-year lease. The tenant
improved the premises in reliance on the letter. It was held that the
buyer’s interest was subject to the five-year lease on the theory of
equitable estoppel.)
[FN7] Harmon Enterprises, Inc. v. Vroman (1959) 167 Cal.App.2d

517, 523-524 [334 P.2d 628] (purchaser knew that the property was
assessed to another).
In Warden v. Wyandotte Savings Bank (1941) 47 Cal.App.2d 352, 355
[117 P.2d 910], a buyer saw the tax assessor’s map showing title in a
stranger who had received unrecorded title from the trustee in
bankruptcy. Tax assessor’s records do not impart constructive notice.
However, the buyer was charged with actual notice.
See § 11:61 (recorded documents that do not give constructive
notice).
11:70, p. 177-178
“4. Imputed Notice
11:70 Notice to an agent-General rule
Knowledge of a general agent is imputed. In an action against the

principal, both principal and agent are deemed to have notice of
whatever either has notice of that should be communicated to the other
in good faith and in the exercise of ordinary care and diligence FN1
The basis for imputing knowledge to the principal is the agent’s duty
of disclosure to the principal such information obtained the course of
the agency that is material to the subject matter of the agency. FN2
Because the agent hasa duty to communicate to the principal all
information received during the course and scope of the agency, FN3 it
is presumed that the agent performed the duty even though the
information was not actually transmitted to the principal, FN4 and the
principal is deemed to know all facts known by the agent. FN5
The scope of the imputation of knowledge is directly related to the

scope of the agent’s duties that arises from the agency agreement and
is not based upon whether he or she actually has the knowledge in mind
at the time he or she performs the agency duties, or whether it is
practical to expect the agent to remember something that had occurred
month’s earlier. FN6”
At p.180
“Example; employer and employee. And employee of an institutional

lender whose duties include the negotiation of loans on behalf of the
lender is a general agent for the lender, and his or her knowledge of
an unrecorded lien prior to the trust deed of the lender is imputed to
the lender, causing its lien to be junior to the prior unrecorded
lien. 16
FN16 Christie v. Sherwood (1896) 113 Cal. 526, 530-532 [45 P. 820]
Also see Sanders v. Magill (1937) 9 Cal.2d 145, 153-154 [70 P.2d 159]
Example; bank and client. The knowledge of an employee of a bank

that was collecting note payments for the holder of the note that the
payee of the note was in default was imputed to the holder. 17
FN17
Fickbohm v. Knaust (1930) 103 Cal.App. 443, 446-447 [284 P.692].”
At p. 183,
§ 11:72 Notice to an attorney
Attorney’s knowledge is imputed to the client. An attorney is the

agent of his or her client, and any notice to or knowledge of the
attorney acquired during the course and scope of his or her employment
ordinarily is imputed to the client. 1
[FN1] Chapman College v. Wagener (1955) 45 Cal.2d 796, 802 [291 P.2d
445]; Rauer v. Hertweck (1917) 175 Cal. 278, 282-283 [165 P. 946];
Mabb v. Stewart (1905) 147 Cal. 413, 421-422 [81 P. 1073]; Edwards-
Town, Inc. v. Dimin (1970) 9 Cal.App.3d 87, 92-93 [87 Cal.Rptr. 726];
Beab, Inc. v. First Western Bank & Trust Co. (1962) 204 Cal.App.2d
680, 689 [22 Cal.Rptr. 583]; Laukkare v. Abramson (1935) 9 Cal.App.2d
447, 449 [50 P.2d 478]; Nelson v. Nelson (1933) 131 Cal.App. 126, 132-
134 [20 P.2d 995]; Byers v. Doheny (1930) 105 Cal.App. 484, 493 [287
P. 988]; Fletcher v. Allen (1921) 51 Cal.App. 774, 778-779 [197 P.
952].
Case Example: An institutional lender made an optional advance

without knowledge of an intervening lien. The court found, however,
that the attorney for the lender actually knew of the intervening lien
and, therefore, the lender’s advance was junior to it. [FN4]
[FN4] Atkinson v. Foote (1919) 44 Cal.App. 149, 163-165 [186 P. 831].
Mathew Anderson asked Young Chey if he was married.
Notice is determined at the time of purchase
Law of reconveyance
In re Elmore, 94 B.R. 670, (Bankr.C.D.Cal., Dec 14, 1988)
In re Elmore, 94 B.R. 670 (Bankr.C.D.Cal., Dec 14, 1988)
The court stated, a “debtor’s principal residence in a Chapter 13

case is virtually always necessary to an effective reorganization.”
1 Collier on Bankruptcy (L. King 15th ed. 1986) 3-15, 3-67 to 3-68
(hereinafter Collier )
Collier, Exceptions to the Stay Involving Certain Residential Property

Evictions, 2008 Emerging Issues 1531, December 14, 2007
Exceptions to the Stay Involving Certain Residential Property
Evictions
2008 Emerging Issues 1531
Collier on Exceptions to the Stay Involving Certain Residential

Property Evictions
By Collier
December 14, 2007
Collier, Exceptions to the Stay Involving Certain Residential Property Evictions,

2008 Emerging Issues 1531, December 14, 2007
SUMMARY: Bankruptcy Code section 362(b)(22) provides that the automatic stay under
section 362(a)(3), subject to the provisions of section 362(l), does not apply to
the continuation of an eviction, unlawful detainer action, or similar proceeding
involving residential property in which the debtor resides as a tenant under a
lease or rental agreement if the lessor has obtained a judgment for possession of
such property against the debtor before the commencement of the bankruptcy case.
This Expert Commentary covers the circumstances under which the automatic stay does
not apply, the filing of a certification with the petition by the debtor that
negates the effect of section 362(b)(22) for at least a period of 30 days, the
filing of an objection by the lessor to the certification, and the inapplicability
of the automatic stay if the residential property eviction involved the
endangerment of the property or illegal drug use on the property.
...
The stay exception under subsection (b)(22) applies only if the prepetition
judgment for possession relates to rental property in which the debtor resides
under a lease or rental agreement. It does not apply, for example, to an eviction
judgment obtained by a purchaser of property at foreclosure who does not have a
lease or rental agreement with a debtor occupying the property. 3
...
3
. See In re McCray, 342 B.R. 668 (Bankr. D.D.C. 2006).”
Dated: December 28, 2007 ____________________________
Soon Chey
In pro per
§ 2934a. Substitution of trustee; mailing; recording; contents of substitution;

substitution after notice of default; authorization of trustee to act; new notice
of sale, of the Civil Code of the State of California provides:
(a)(1) The trustee under a trust deed upon real property or an estate for years
therein given to secure an obligation to pay money and conferring no other duties
upon the trustee than those which are incidental to the exercise of the power of
sale therein conferred, may be substituted by the recording in the county in which
the property is located of a substitution executed and acknowledged by: (A) all of
the beneficiaries under the trust deed, or their successors in interest, and the
substitution shall be effective notwithstanding any contrary provision in any trust
deed executed on or after January 1, 1968; or (B) the holders of more than 50
percent of the record beneficial interest of a series of notes secured by the same
real property or of undivided interests in a note secured by real property
equivalent to a series transaction, exclusive of any notes or interests of a
licensed real estate broker that is the issuer or servicer of the notes or
interests or of any affiliate of that licensed real estate broker.
Pro Value Properties, Inc. v. Quality Loan Service Corp., 170 Cal.App.4th
579, 88 Cal.Rptr.3d 381, 09 Cal. Daily Op. Serv. 929, 2009
In Pro Value Prperties, Inc., v. Quality Loan Service Corp., (2009) 170 Cal.App.4th
579, 581 [88 Cal.Rptr.3d 381] the court stated, “
At the request of the beneficiary of a Deed of Trust on a residence (the Property),

QLS instituted non-judicial foreclosure proceedings, commencing with the
recordation of a Notice of Default. QLS was not the trustee named in the deed of
trust, and so was required to record a Substitution of Trustee pursuant to Civil
Code section 2934a. This it neglected to do. Pursuant to a recorded Notice of
Trustee Sale, QLS sold the Property to the highest bidder, Pro Value, on June 9,
2005 for $842,000. QLS issued a Trustee’s Deed of Sale to Pro Value, which was
subsequently recorded.
Some time thereafter, QLS and FV-1, the beneficiary under the Deed of Trust,
realized that there was no recorded Substitution of Trustee naming QLS as trustee.
Consequently, both QLS and FV-1 determined that the Trustee’s Deed of Sale was
void.”
And,
“In August 2005, FV-1 filed this lawsuit, alleging causes of action for
cancellation of an instrument and declaratory relief. FV-1 named both QLS and Pro
Value as defendants. Pro Value cross-complained against FV-1 for breach of
contract, negligence and negligent misrepresentation, and against QLS for
negligence. ...
QLS moved for summary judgment as to FV-1’s complaint and Pro Value’s cross-
complaint. After hearing arguments on the motion on January 25, 2007, the trial
court ruled that the Trustee’s sale was void and that the Trustee’s Deed of Sale
which QLS issued to Pro Value was of no force or effect” (Pro Value Properties,
Inc., v. Quality Loan Service Corp., supra, 170 Cal.App.4th at p.582)
And the appellate court upheld the trial court.
In re Worcester, 811 F.2d 1224, 16 Collier Bankr.Cas.2d 589, 7 Fed.R.Serv.3d

733, Bankr. L. Rep. P 71,637 (9th Cir.(Cal.),Feb 26, 1987)
In In re Worcester, (1987) 811 F.2d 1224 (9th Cir. (Call.), the Court stated, If
the appellant, “Worcester has the right under California law to set aside a
foreclosure sale after the sale has taken place, after deeds have been recorded,
and after the property has been sold to a third party, then she has the right in
bankruptcy to do the same and that right is property of the estate. See 11 U.S.C. §
541(a)(1)(property of the estate includes ‘all legal and equitable interests of the
debtor in property’). If Worcester does have such a right under California law, we
are not powerless to enforce it, and we may grant Worcester relief to the same
extent California courts would in similar circumstances.
purported to transfer all of her right, title, and interest in the
subject property to Young Chey. Again, on December 17, 2003, Young
Chey gave Plaintiff a document to sign. He again represented to
Plaintiff that the document was a declaration of homestead. Again,
the instrument was an “interspousal transfer deed.” Again on
September 1, 2005, Young Chey gave Plaintiff a document to sign. He
again represented to Plaintiff that the document was a declaration of

homestead. The instrument was Wells Fargo Trust Deed 2005000781940.
In each instrument, Plaintiff purported to transfer all of her right,
title, and interest in the subject property to Young Chey or to
to a person outside of herself.
When Young Chey presented the deeds described in paragraph 17
for her execution, she trusted him, and she did not carefully review
the documents. She simply believed that the documents were what
Young Chey represented them to be. If Plaintiff had known the true
nature of the documents, namely deeds she would not have signed them.
§ 362. Automatic stay
11 U.S.C. 362. Automatic stay, provides:
(a) Except as provided in subsection (b) of this section, a petition filed

under section 301, 302, or 303 of this title, or an application filed under
section 5(a)(3) of the Securities Investor Protection Act of 1970, operates
as a stay, applicable to all entities, of--
(d) On request of a party in interest and after notice and a hearing, the
court shall grant relief from the stay provided under subsection (a) of this
section, such as by terminating, annulling, modifying, or conditioning such
stay--
(4) with respect to a stay of an act against real property under subsection
(a), **by a creditor whose claim is secured by an interest in such real
property, if the court finds that the filing of the petition was part of a
scheme to delay, hinder, and defraud creditors that involved either--
**(A) transfer of all or part ownership of, or other interest in, such real
property without the consent of the secured creditor or court approval; or
**(B) multiple bankruptcy filings affecting such real property.
If recorded in compliance with applicable State laws governing notices of

interests or liens in real property, an order entered under paragraph (4)
shall be binding in any other case under this title purporting to affect such
real property filed not later than 2 years after the date of the entry of
such order by the court, except that a debtor in a subsequent case under this
title may move for relief from such order based upon changed circumstances or
for good cause shown, after notice and a hearing. Any Federal, State, or
local governmental unit that accepts notices of interests or liens in real
property shall accept any certified copy of an order described in this
subsection for indexing and recording.
(e)(1) Thirty days after a request under subsection (d) of this section for
relief from the stay of any act against property of the estate under
subsection (a) of this section, such stay is terminated with respect to the
party in interest making such request, unless the court, after notice and a
hearing, orders such stay continued in effect pending the conclusion of, or
as a result of, a final hearing and determination under subsection (d) of
this section. A hearing under this subsection may be a preliminary hearing,
or may be consolidated with the final hearing under subsection (d) of this
section. The court shall order such stay continued in effect pending the
conclusion of the final hearing under subsection (d) of this section if there
is a reasonable likelihood that the party opposing relief from such stay will
prevail at the conclusion of such final hearing. If the hearing under this
subsection is a preliminary hearing, then such final hearing shall be
concluded not later than thirty days after the conclusion of such preliminary
hearing, unless the 30-day period is extended with the consent of the parties
in interest or for a specific time which the court finds is required by
compelling circumstances.
(2) Notwithstanding paragraph (1), in a case under chapter 7, 11, or 13 in

which the debtor is an individual, the stay under subsection (a) shall
terminate on the date that is 60 days after a request is made by a party in
interest under subsection (d), unless--
(A) a final decision is rendered by the court during the 60-day period
beginning on the date of the request; or
(B) such 60-day period is extended--
(i) by agreement of all parties in interest; or
(ii) by the court for such specific period of time as the court finds is
required for good cause, as described in findings made by the court.
(f) Upon request of a party in interest, the court, with or without a

hearing, shall grant such relief from the stay provided under subsection (a)
of this section as is necessary to prevent irreparable damage to the interest
of an entity in property, if such interest will suffer such damage before
there is an opportunity for notice and a hearing under subsection (d) or (e)
of this section.
(g) In any hearing under subsection (d) or (e) of this section concerning
relief from the stay of any act under subsection (a) of this section--
(1) the party requesting such relief has the burden of proof on the issue of
the debtor’s equity in property; and
(2) the party opposing such relief has the burden of proof on all other
issues.
RUTTER CABANKR ANALYSIS
**4. Relief From Stay Against Real Property Where Debtor’s Petition Filed to Delay, Hinder and Defraud
Creditors (11 USC § 362(d)(4))
a. [8:1320] Authorizes future in rem relief from stay: Provided the appropriate findings are made (¶ 8:1323), when
granting stay relief to a secured creditor with respect to the debtor’s real property, the court can enter an order
precluding the stay from arising as to that real property in future bankruptcy cases (even those filed by a different
debtor) for two years following entry of the order. This is referred to as "in rem" relief because it applies in future
bankruptcy cases affecting the real property in issue. [11 USC § 362(d)(4) (applicable to cases commenced on or
after 10/17/05)]
**Comment: Section 362(d)(4) is directed at debtors who, owing money on a loan secured by real property, in the
past filed multiple bankruptcy cases simply to obtain the benefit of the automatic stay to stall inevitable foreclosure
proceedings. Section 362(d)(4) is designed to preclude this practice by authorizing a court order that effectively
prevents the stay from arising as to that property in future bankruptcy cases.
(1) [8:1321] Recordation of § 362(d)(4) in rem order: Any federal, state, or local governmental unit that accepts
notices of interests or liens in real property "shall" accept any certified copy of a § 362(d)(4) in rem order for
indexing and recording. [11 USC § 362(d)(4)]
(2) [8:1321.1] Central District Forms: The Central District has adopted two optional local forms, down-loadable from
the Central District Web site (¶ 8:686):
• CD CA BC Local Form F 4001-1M.ER, "Extraordinary Relief Attachment," to be attached to relief from stay motions
where the moving party seeks in rem relief; and
• CD CA BC Local Form F 4001-1O.ER, "Extraordinary Relief Attachment," to be attached to the order granting in rem
relief from stay.
[8:1322] Reserved.
b. [8:1323] Required findings: Before § 362(d)(4) in rem relief can be granted, the court must find that the filing of the
debtor’s petition was part of "a scheme to delay, hinder, and defraud creditors" that involved either:
--transfer of all or part ownership of (or other interest in) the real property without the secured creditor’s consent or court
approval; or
--multiple bankruptcy filings affecting such real property. [11 USC § 362(d)(4)(A) & (B)]
WELLS FARGO IS NOT A SECURED CREDITOR.
WELLS FARGO IS NOT A LANDLORD TO (TENANT) WITH A SIGNED LEASE, NEVER

SOUGHT POSSESSION OF THIS PROPERTY PREVIOUSLY
Good faith / Bad faith
In re Hakim, 212 B.R. 632, 97 Daily Journal D.A.R. 12,834 (Bankr.N.D.Cal.

Aug 11, 1997)
Government moved to dismiss Chapter 11 debtor’s case, to strike debtor’s

removal of litigation pending in federal district court and for relief from
automatic stay to pursue pending litigation in Swiss court or in federal
district court regarding ownership of funds in Swiss bank account. The
Bankruptcy Court, Marilyn Morgan, J., held that: (1) debtor’s bankruptcy case
was filed for legitimate purpose; (2) debtor’s attempt to remove litigation
pending in federal district court was ineffective; and (3) government was
entitled to relief from automatic stay to allow litigation to proceed before
Swiss courts or in federal district court.
West Headnotes
51 Bankruptcy
51XIV Reorganization
51XIV(A) In General
51k3502 Good Faith; Motive
To determine whether debtor’s case is filed in good faith, bankruptcy courts
consider amalgam of factors rather than specific fact.
51 Bankruptcy
51XIV(A) In General
51k3502.5 k. “Good Faith.”. Most Cited Cases
Test for determining if debtor’s case is filed in good faith is whether
debtor is attempting to unreasonably deter and harass creditors or is
attempting to effect speedy and efficient reorganization on feasible basis.
51 Bankruptcy
51XIV(A) In General
51k3502.25 k. Frustration or Delay of Creditors. Most
Cited Cases
**Chapter 11 debtor’s bankruptcy case was filed for legitimate purpose, even
if genesis of case was dispute between debtor and federal government
regarding ownership of certain funds in Swiss bank account, where debtor’s
financial straights hampered his efforts to protect his claim to funds and
creditors were affected by debtor’s limited ability to contest ownership of
funds; case was not filed to deter and harass creditors unreasonably, but to
maximize value of bankruptcy estate.
A. Hakim’s Bankruptcy Case Was Filed For A Legitimate Purpose
[1][2] To determine whether a debtor’s case is filed in good faith,

bankruptcy courts consider an “amalgam of factors rather than a specific
fact.” Marsch v. Marsch (In re Marsch), 36 F.3d 825, 828 (9th Cir.1994)
(citing *639In re Arnold, 806 F.2d 937, 939 (9th Cir.1986)) FN17 The test in
the Ninth Circuit is whether a debtor is attempting to unreasonably deter and
harass creditors or is attempting to effect a speedy and efficient
reorganization on a feasible basis. Marsch, 36 F.3d at 828.
FN17. Courts often cite a non-exclusive list of factors, including: **(1)

whether the debtor has only one asset; **(2) whether the secured creditors’
lien encumbers that asset; (3) whether there are employees other than the
principals; (4) whether there is cash flow and available sources of income to
sustain a plan of reorganization or to make adequate protection payments; (5)
whether there are unsecured creditors; **(6) whether there are allegations of
wrongdoing by the debtor or its principals; creditors; and, **(8) whether
bankruptcy offers the only possibility of forestalling loss of the property.
See generally Little Creek Dev. Co. v. Commonwealth Mortgage Corp., 779 F.2d
1068, 1072-73 (5th Cir.1986) and its progeny.
These factors are more pertinent in single asset real estate cases, which are
distinguishable from a case that is driven by litigation such as Hakim’s.
[3] That the genesis of Hakim’s case is a two-party dispute regarding

ownership of the $12 million does not, of itself, adversely predetermine
Hakim’s motives or prospects for reorganization. Many other factors come into
play. It is evident from a review of Hakim’s amended bankruptcy schedules
that his financial straights hamper his efforts to protect his claim to the
$12 million and that his creditors are affected by his limited ability to
contest ownership of the funds. Clearly, given the severe financial situation
confronting Hakim, and Hakim’s prospects as represented in his amended
disclosure statement, the case is not filed to deter and harass creditors
unreasonably, but to maximize the value of the bankruptcy estate. See Toibb
v. Radloff, 501 U.S. 157, 163, 111 S.Ct. 2197, 2201, 115 L.Ed.2d 145 (1991).
In re Duncan & Forbes Development, Inc., 368 B.R. 27 (Bankr.C.D.Cal. Apr

06, 2006)
b. Defraud
[12][13] Sunset cannot prevail under § 362(d)(4) unless, in addition to showing that D
& F engaged in a scheme to delay and hinder its creditors, it shows that D & F engaged
in a scheme to defraud its creditors. As with the “hinder and delay” element, the
filing of a bankruptcy case cannot alone constitute a scheme to defraud under § 362(d)
(4).
28 USC Section 1334. Bankruptcy cases and proceedings
(a) Except as provided in subsection (b) of this section, the district

courts shall have original and exclusive jurisdiction of all cases
under title 11.
(b) Except as provided in subsection (e)(2), and notwithstanding any

Act of Congress that confers exclusive jurisdiction on a court or
courts other than the district courts, the district courts shall have
original but not exclusive jurisdiction of all civil proceedings
arising under title 11, or arising in or related to cases under title
11.
(c)(1) Except with respect to a case under chapter 15 of title 11,

nothing in this section prevents a district court in the interest of
justice, or in the interest of comity with State courts or respect for
State law, from abstaining from hearing a particular proceeding
arising under title 11 or arising in or related to a case under title
11.
(2) Upon timely motion of a party in a proceeding based upon a State

law claim or State law cause of action, **related to a case under
title 11 but not arising under title 11 or arising in a case under
title 11, with respect to which an action could not have been
commenced in a court of the United States absent jurisdiction under
this section, the district court shall abstain from hearing such
proceeding if an action is commenced, and can be timely adjudicated,
in a State forum of appropriate jurisdiction.
(d) Any decision to abstain or not to abstain made under subsection

(c) (other than a decision not to abstain in a proceeding described in
subsection (c)(2)) is not reviewable by appeal or otherwise by the
court of appeals under section 158(d), 1291, or 1292 of this title or
by the Supreme Court of the United States under section 1254 of this
title. Subsection (c) and this subsection shall not be construed to
limit the applicability of the stay provided for by section 362 of
title 11, United States Code, as such section applies to an action
affecting the property of the estate in bankruptcy.
(e) The district court in which a case under title 11 is commenced or

is pending shall have exclusive jurisdiction--
(1) of all the property, wherever located, of the debtor as of the

commencement of such case, and of property of the estate; and
(2) over all claims or causes of action that involve construction of

section 327 of title 11, United States Code, or rules relating to
disclosure requirements under section 327.
28 USC Section 157. Procedures
(a) Each district court may provide that any or all cases under title 11 and any or all proceedings arising under title
11 or arising in or related to a case under title 11 shall be referred to the bankruptcy judges for the district.
(b)(1) Bankruptcy judges may hear and determine all cases under title 11 and all core proceedings arising under title
11, or arising in a case under title 11, referred under subsection (a) of this section, and may enter appropriate orders
and judgments, subject to review under section 158 of this title.
(2) Core proceedings include, but are not limited to--
(A) matters concerning the administration of the estate;
(B) allowance or disallowance of claims against the estate or exemptions from property of the estate, and estimation
of claims or interests for the purposes of confirming a plan under chapter 11, 12, or 13 of title 11 but not the
liquidation or estimation of contingent or unliquidated personal injury tort or wrongful death claims against the
estate for purposes of distribution in a case under title 11;
(C) counterclaims by the estate against persons filing claims against the estate;
(D) orders in respect to obtaining credit;
(E) orders to turn over property of the estate;

(F) proceedings to determine, avoid, or recover preferences;
(G) motions to terminate, annul, or modify the automatic stay;
(H) proceedings to determine, avoid, or recover fraudulent conveyances;
(I) determinations as to the dischargeability of particular debts;
(J) objections to discharges;
(K) determinations of the validity, extent, or priority of liens;
(L) confirmations of plans;
(M) orders approving the use or lease of property, including the use of cash collateral;
(N) orders approving the sale of property other than property resulting from claims brought by the estate against
persons who have not filed claims against the estate;
(O) other proceedings affecting the liquidation of the assets of the estate or the adjustment of the debtor-creditor or
the equity security holder relationship, except personal injury tort or wrongful death claims; and
(P) recognition of foreign proceedings and other matters under chapter 15 of title 11.
(3) The bankruptcy judge shall determine, on the judge’s own motion or on timely motion of a party, whether a
proceeding is a core proceeding under this subsection or is a proceeding that is otherwise related to a case under title
11. **A determination that a proceeding is not a core proceeding shall not be made solely on the basis that its
resolution may be affected by State law.
**(4) Non-core proceedings under section 157(b)(2)(B) of title 28, United States Code, shall not be subject to the
mandatory abstention provisions of section 1334(c)(2).
(5) The district court shall order that personal injury tort and wrongful death claims shall be tried in the district court
in which the bankruptcy case is pending, or in the district court in the district in which the claim arose, as
determined by the district court in which the bankruptcy case is pending.
(c)(1) A bankruptcy judge may hear a proceeding that is not a core proceeding but that is otherwise related to a case
under title 11. In such proceeding, the bankruptcy judge shall submit proposed findings of fact and conclusions of
law to the district court, and any final order or judgment shall be entered by the district judge after considering the
bankruptcy judge’s proposed findings and conclusions and after reviewing de novo those matters to which any party
has timely and specifically objected.
(2) Notwithstanding the provisions of paragraph (1) of this subsection, the district court, with the consent of all the
parties to the proceeding, may refer a proceeding related to a case under title 11 to a bankruptcy judge to hear and
determine and to enter appropriate orders and judgments, subject to review under section 158 of this title.
(d) The district court may withdraw, in whole or in part, any case or proceeding referred under this section, on its
own motion or on timely motion of any party, for cause shown. The district court shall, on timely motion of a party,
so withdraw a proceeding if the court determines that resolution of the proceeding requires consideration of both
title 11 and other laws of the United States regulating organizations or activities affecting interstate commerce.
(e) If the right to a jury trial applies in a proceeding that may be heard under this section by a bankruptcy judge, the
bankruptcy judge may conduct the jury trial if specially designated to exercise such jurisdiction by the district court
and with the express consent of all the parties.
28 U.S.C. Section 1367. Supplemental jurisdiction
(a) Except as provided in subsections (b) and (c) or as expressly provided

otherwise by Federal statute, in any civil action of which the district
courts have original jurisdiction, the district courts shall have
supplemental jurisdiction over all other claims that are so related to claims
in the action within such original jurisdiction that they form part of the
same case or controversy under Article III of the United States Constitution.
Such supplemental jurisdiction shall include claims that involve the joinder
or intervention of additional parties.
(b) In any civil action of which the district courts have original
jurisdiction founded solely on section 1332 of this title, the district
courts shall not have supplemental jurisdiction under subsection (a) over
claims by plaintiffs against persons made parties under Rule 14, 19, 20, or
24 of the Federal Rules of Civil Procedure, or over claims by persons
proposed to be joined as plaintiffs under Rule 19 of such rules, or seeking
to intervene as plaintiffs under Rule 24 of such rules, when exercising
supplemental jurisdiction over such claims would be inconsistent with the
jurisdictional requirements of section 1332.
(c) The district courts may decline to exercise supplemental jurisdiction

over a claim under subsection (a) if--
(1) the claim raises a novel or complex issue of State law,
(2) the claim substantially predominates over the claim or claims over which
the district court has original jurisdiction,
(3) the district court has dismissed all claims over which it has original
jurisdiction, or
(4) in exceptional circumstances, there are other compelling reasons for

declining jurisdiction.
(d) The period of limitations for any claim asserted under subsection (a),
and for any other claim in the same action that is voluntarily dismissed at
the same time as or after the dismissal of the claim under subsection (a),
shall be tolled while the claim is pending and for a period of 30 days after
it is dismissed unless State law provides for a longer tolling period.
(e) As used in this section, the term “State” includes the District of
Columbia, the Commonwealth of Puerto Rico, and any territory or possession of
the United States.
In re Eads, 135 B.R. 387, 930 26 Collier Bankr.Cas.2d 514, Bankr. L. Rep. P
74,403 (Bankr.E.D.Cal.,Dec 31, 1991)
Supplemental jurisdiction statute applicable to bankruptcy adversary

proceedings;
Matter of Little Creek Development Co., 779 F.2d 1068, 13 Collier
Bankr.Cas.2d 1231, 13 Bankr.Ct.Dec. 1407, Bankr. L. Rep. P 70,909 (5th Cir.
(Tex.) Jan 03, 1986)
Undecisive, foreign jurisidiction
JURISDICTION
Proceedings against the property of the estate is a core proceeding as

well as proof of claims filed against the property of the estate.
In re Casamont Investors, Ltd., 196 B.R. 517, 35 Collier Bankr.Cas.2d 1544,

96 Cal. Daily Op. Serv. 4398, 96 Daily Journal D.A.R. 11,153 (9th Cir.BAP
(Cal.) May 20, 1996) (NO. EC-95-1741-MERBA, 93-2036, EC-95-1766-MERBA, 92-
21132-A-11)
Factors in determining whether the Bankruptcy Court should retain

jurisdiction over an adversary proceeding when the underlying
bankruptcy case is dismissed.
In re Serrato 214 BR 219
Res judicata effect of bankruptcy order.
In re Lazar 237 F.3d 2001,
“abstention can exist only where there is a parallel proceeding in

state court”
28 usc 157 core, non core, or related proceedings
In re Harris Pine Mills, 44 F.3d 1431, 32 Collier Bankr.Cas.2d 1377, 26

Bankr.Ct.Dec. 735, Bankr. L. Rep. P 76,321 (9th Cir.(Or.),Jan 12, 1995)
Action by petitioner against trustee or trustee’s agents is a core

proceeding.
In re ACI-HDT Supply Co., 205 B.R. 231, 37 Collier Bankr.Cas.2d 908, 30

Bankr.Ct.Dec. 478, 97 Cal. Daily Op. Serv. 1906 (9th Cir.BAP (Cal.),Jan 24,
1997)
Possession is a component of the property of the estate ?
Substantive right is possession is a property of the estate ?
In re Conejo Enterprises, Inc., 96 F.3d 346, 65 USLW 2163, 36 Collier

Bankr.Cas.2d 822, 29 Bankr.Ct.Dec. 749, 96 Cal. Daily Op. Serv. 6285, 96
Daily Journal D.A.R. 10,333 (9th Cir.(Cal.) Aug 23, 1996)
From NCLC Section 13.5.2 Mandatory abstention

These requirements, forth in 28 U.S.C. 1334(c)(2), are:
1) a timely motion filed by a party

2) In a proceeding based upon a state law claim or cause of action;
3) that it is a related proceeding and not one arising under title 11
or in a case under title 11
4) where the claim or cause of action could not have been commenced
federal court absent section 1334’s jurisdiction; and
5) an action is commenced and can be timely adjudicated in a state
court of appropriate jurisdiction
The section further provides that it is not intended in any way to

limit the applicability of the section 362 automatic stay as it
applies to property of the bankruptcy estate. Thus, a decision that
a mandatory stay is warranted is not a cause for granting relief from
automatic stay. 390
390
In re Conejo 96 F.3d 346 (9th Cir. 1996)
Good case
at p. 352
In re Conejo Enterprises, Inc., 96 F.3d 346, 352 (9th Cir.(Cal.) Aug

23, 1996)
“[11] First, a finding that mandatory abstention applies to the

underlying state action does not preclude denial of relief from §
362’s automatic stay. See 28 U.S.C. § 1334(c)(2) (1986) and 28 U.S.C.
§ 1334(d) (1994) (“This subsection shall not be construed to limit
applicability of the stay provided for by [11 U.S.C. § 362], as such
section applies to an action affecting the property of the estate in
bankruptcy.”); see also Pursifull v. Eakin, 814 F.2d 1501, 1505 (10th
Cir.1987) (district court decision to abstain under 28 U.S.C. §
1334(c) does not moot review of the propriety of a bankruptcy court’s
decision to grant relief from the automatic stay); In re Micro Design,
Inc., 120 B.R. 363, 369 (E.D.Pa.1990) **(following decision to
abstain, court denied relief from automatic stay to continue
creditor’s action because granting relief from the stay would
undermine the bankruptcy process). Thus, the district court erred in
holding that the bankruptcy court abused its discretion based only on
the district court’s finding that mandatory abstention applied.
Second, if Congress had intended pending state actions that are

determined to be non-core proceedings to be exempt from the automatic
stay, it would have explicitly so provided.
[12] As pointed out previously, § 362(b) provides explicit exceptions

to § 362(a)’s automatic stay. Pending state actions that are
determined to be non-core proceedings are not listed among the
explicit exemptions. **Therefore, it is clear that Congress did not
intend to provide an exception to the automatic stay for non-core
pending state actions which are subject to mandatory abstention. In
fact, Congress has made it clear that it intended just the opposite by
providing that a decision to abstain under § 1334(c)(2)“shall not be
construed to limit the applicability of the stay provided for by [§
362]....” 28 U.S.C. § 1334(c)(2) (1986).
Third, the grounds articulated by the bankruptcy court for refusing to

lift the stay were reasonable and supported by the record. The
bankruptcy court’s refusal to lift the stay was therefore not an abuse
of discretion.
The bankruptcy court considered at least three different grounds on

which to deny Benedor relief from the stay: (1) staying the state
action gave the bankruptcy court and the other parties time to see
whether Benedor would file a proof of claim before the upcoming claims
bar date, or effectively waive its right to payment from the
bankruptcy estate; (2) staying the state action promoted judicial
economy by minimizing the duplication of litigation in two separate
forums and promoting the efficient administration of the estate; and
(3) staying the state action preserved a level playing field for
negotiation of a consensual reorganization plan. All of these grounds
for denying relief from the automatic stay are reasonable and
supported by the record.
[13] The inevitability of the decision to file or not file a proof of

claim was appropriately considered by the bankruptcy court in *353
denying relief from the stay. As the bankruptcy court noted, if
Benedor filed a proof of claim, the bankruptcy court would have core
jurisdiction over the claim under 28 U.S.C. § 157(b)(2)(B), allowance
or disallowance of claims.FN5 If Benedor did not file a proof of
claim, the state action claim would be discharged in bankruptcy. It
would be absurd to allow the state action to go ahead and require the
estate to spend money litigating a debt that might ultimately be
uncollectable. Thus, the bankruptcy court’s “wait and see” approach
was both reasonable and appropriate.
FN5. The fact that the state action has been remanded to the state
court does not affect the bankruptcy court’s jurisdiction over the
proof of claim filed by Benedor. Thus, the bankruptcy court’s
determination that if Benedor did file a proof of claim it would have
jurisdiction over that claim, was not an erroneous conclusion of law.
[14] Judicial economy and efficient administration of the estate were

also properly considered by the bankruptcy court in denying relief
from the stay. See In re Robbins, 964 F.2d 342, 345 (4th Cir.1992)
(one of the factors that courts consider in deciding whether to lift
the automatic stay is whether modifying the stay will promote judicial
economy). By staying the state action, the bankruptcy court promoted
judicial economy and efficiency by minimizing the duplication of
litigation in two separate forums and preventing litigation of a claim
that may have been discharged in bankruptcy proceedings.
[15] The bankruptcy court’s consideration of preserving a level

playing field for negotiation of a consensual reorganization plan in
denying relief from the stay was also proper. Benedor admitted to the
bankruptcy judge that it was seeking relief from the stay to
strengthen its position against Conejo and other creditors in
negotiating a reorganization plan. The judge determined that this was
highly inappropriate:
Mr. O’Brien made a plea. If I wanted a consensual [plan] and a

resolution of the case with everybody playing, that I should grant the
motion. That sounds like, please grant the motion so we have a cudgel
and we can [pound] them over the head and beat them into submission so
they’ll do what we want to do.
Now, I want everyone on a level playing field but I’m not going to
give one side or the other a strategic advantage just for the sake of
reaching a resolution of this matter for the Court’s convenience; that
strikes me as being the most inappropriate thing I could possibly do.
Given the policies favoring reorganization of debtors, the bankruptcy

court’s efforts to preserve a level playing field for all parties to
negotiate a plan was a rational basis for denying relief from the
automatic stay. See In re Bonner Mall Partnership, 2 F.3d 899, 915
(9th Cir.1993) (the two major objectives of Chapter 11 are to permit
the successful rehabilitation of debtors and maximize the value of the
estate), motion to vacate denied and dismissed as moot, 513 U.S. 18,
115 S.Ct. 386, 130 L.Ed.2d 233 (1994).
Because the bankruptcy court’s denial of relief from the automatic

stay was based on reasonable grounds supported by the record, the
bankruptcy court did not abuse its discretion. The district court’s
order that the automatic stay be lifted was therefore erroneous.
[16] Finally, the filing of a proof of claim by Benedor must also be

considered in determining whether cause exists for lifting the
automatic stay. In holding that the automatic stay must be lifted, the
district court ignored the filing of the proof of claim, instead
focusing on its finding that the state court action was not within the
bankruptcy court’s core jurisdiction. We hold that the district court
erred in doing so.
[17] The allowance and disallowance of claims against the estate is a

core proceeding. 28 U.S.C. § 157(b)(2)(B). Once Benedor filed its
proof of claim, it subjected its claim to the core jurisdiction of the
bankruptcy court. It was within the sound discretion of the bankruptcy
court to deny relief from the automatic stay. However, because the
proof of claim was filed after the bankruptcy court rendered its
decision not to lift the stay, the bankruptcy court has not had the
opportunity to exercise its discretion in light of the filing of the
claim. Therefore, this *354 case must be remanded to the bankruptcy
court for a determination of whether the stay should be lifted.
CONCLUSION
[18] In sum, we hold that we lack jurisdiction to review that portion

of the district court’s order remanding the state action to the state
court. We also hold that the bankruptcy court did not abuse its
discretion in denying Benedor relief from the automatic stay. However,
because the bankruptcy court’s decision was made prior to Benedor’s
filing its proof of claim, we remand this case to the district court
with instructions to remand the case to the bankruptcy court for
reconsideration of the motion for relief from the automatic stay in
light of this opinion.FN6
FN6. Because the state action has been remanded back to the state
court, there is no need to reach the issue of whether Benedor has the
right to a jury trial on its state law cause of action. As to the
claim before the bankruptcy court, the law is clear that once Benedor
filed its proof of claim, it subjected itself to the bankruptcy
court’s equitable power and waived any right to a jury trial for the
resolution of disputes vital to the bankruptcy process of allowance
and disallowance of the claims, including the power of the bankruptcy
court to inquire into the validity of the claim. See Langenkamp v.
Culp, 498 U.S. 42, 44, 111 S.Ct. 330, 331, 112 L.Ed.2d 343 (1990);
Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 58-59, 109 S.Ct. 2782,
2799, 106 L.Ed.2d 26 (1989); Katchen v. Landy, 382 U.S. 323, 329, 86
S.Ct. 467, 472, 15 L.Ed.2d 391 (1966); Germain v. Connecticut Nat’l
Bank, 988 F.2d 1323, 1329 (2d Cir.1993); In re Hooker Invs., Inc., 937
F.2d 833, 838 (2d Cir.1991).
DISMISSED in part, VACATED in part and REMANDED. No costs allowed.
In re General Carriers Corp., 258 B.R. 181, 45 Collier Bankr.Cas.2d 669, 37

Bankr.Ct.Dec. 103, 01 Cal. Daily Op. Serv. 1076, 2001 Daily Journal D.A.R.
1377, 5 Cal. Bankr. Ct. Rep. 56 (9th Cir.BAP (Cal.),Jan 22, 2001)
In In re General Carriers Corp., 258 B.R. 181, 189 (9th Cir.BAP

(Cal.),Jan 22, 2001) the court stated,
“The rules of abstention require an examination of these same

characteristics. In bankruptcy proceedings, there are two forms of
statutory abstention: mandatory and discretionary. 28 U.S.C. §
1334(c).
[23][24] ‘[A]bstention provisions implicate the question whether the

bankruptcy court should exercise jurisdiction, not whether the court
has jurisdiction in the first instance.... The act of abstaining
presumes that proper jurisdiction otherwise exists.’
In re S.G. Phillips Constructors, Inc., 45 F.3d 702, 708 (2nd Cir.
1995). The abstention rules, both mandatory and discretionary, clearly
require ‘a proceeding’ in order for the bankruptcy court to
abstain.” ...
”(2) The Abstention Motion Did Not Present a Live Controversy Over
Which the
Bankruptcy Court Could Assert Jurisdiction
[25][26] One of the threshold requirements for mandatory or
discretionary abstention, as set forth above, is that there must be a
‘proceeding’ from which the bankruptcy court can abstain. See In re
Hughes-Bechtol, Inc., 141 B.R. 946, 948-49 (Bankr.S.D.Ohio
1992)describing a noncore proceeding as ‘a proceeding filed in the
bankruptcy court alleging a cause of action....’).
A bankruptcy complaint must be filed with the clerk of court in the

district in which the case is pending. Fed.R.Bankr.P. 7003/Fed.R. 3;
Fed.R.Bankr.P. 5005. There is no pending proceeding unless an action
either has been filed in a court, or has been removed to it. Cf.
Security Farms v. Int’l Bhd. Of Teamsters, 124 F.3d 999, 1009 (9th
Cir.1997) (abstention in favor of a state court proceeding can only
exist where there is a parallel proceeding in state court, and cannot
exist where such proceeding has been removed to federal court); See
Fed.R.Bankr.P. 9027; 28 U.S.C. § 1452.
[27][28] A ‘bedrock requirement’ for federal jurisdiction is the

existence of a ‘case’ or ‘controversy.’
Valley Forge Christian College v. Americans United for Separation of
Church and State, Inc., 454 U.S. 464, 471, 102 S.Ct. 752, 70.Ed.2d 700
(1982). ‘[I]t is quite clear that ‘the oldest and most consistent
thread in the federal law of justiciability is that the federal courts
will not give advisory opinions.’ ‘ Flast v. Cohen, 392 U.S. at 96, 88
S.Ct. 1942 (citing C. WRIGHT, FEDERAL COURTS 34 (1963)). The
doctrine of justiciability is a blend of constitutional and policy or
prudential considerations. Id. at 97, 88 S.Ct. 1942.” (In Re General
Carriers, supra, 181 B.R. at p. 190)
And,
“In the context of this case, the ‘live controversy" must be a

‘proceeding" upon which § 1334(c) can operate. In re The Bible Speaks,
65 B.R. 415, 431 (Bankr.D.Mass.1986). The motion for abstention lacked
the essential elements of a justiciable controversy. See Di Giorgio,
134 F.3d at 974. Krasnoff did not file a parallel proceeding in
bankruptcy court. Neither Krasnoff nor Marshack removed the state
court action to bankruptcy court. The claims were never placed
before the court, in the form of an adversary proceeding, over which
the bankruptcy court could obtain jurisdiction. Therefore, the motion
for abstention filed by Krasnoff was premature.” (In Re General
Carriers, supra, 181 B.R. at p. 190)
And the court stated,
”Since there was no adversary proceeding in bankruptcy court, the

bankruptcy court lacked jurisdiction over the motion for abstention of
such action” (In Re General Carriers, supra, 181 B.R. at p. 191)
Admission into evidence of recording of conversation between defendant

and internal revenue agent, as against claim that it was not properly
authenticated and was inaudible, was not erroneous, where trial judge
listened to recordings and found portions of it sufficiently audible
and where internal revenue agent testified that he could identify
voices on recordings as his and defendant’s. U. S. v. Kaufer, C.A.2
(N.Y.) 1967, 387 F.2d 17. Criminal Law 444.15
In re Gruntz, 202 F.3d 1074, 43 Collier Bankr.Cas.2d 921, 35

Bankr.Ct.Dec. 160, Bankr. L. Rep. P 78,102, 00 Cal. Daily Op. Serv.
909, 2000 Daily Journal D.A.R. 1337, 4 Cal. Bankr. Ct. Rep. 33 (9th
Cir.(Cal.),Feb 03, 2000)
Judgment rendered in violation of automatic stay is void.
In re Tucson Estates, Inc., 912 F.2d 1162, Bankr. L. Rep. P 73,613 (9th Cir.(Ariz.) Aug 30, 1990)
Is not a Chapter 13 case where the personal residence is necessary for effective
reorganization. Relief from stay given on permissive abstention, Tucson
factors. A final judgment was not entered before the filing of
bankruptcy. Do have a claim because affecting property of the
estate, In re Worcester. Investigate diversity of citizenship amount
of property interest involved.
Court talks about an earlier case In re Ozai before it adopted the In

re Republic Reader’s Serv., Inc., 81 B.R. 422, 429, (Bankr S.D. Tex.
1987) factors but case is distinguished because of the implicit
extension of time to refile the dischargeabiliity complaint and
because the opinion was made before In re Conejo.
In re Micro Design, Inc., 120 B.R. 363 (E.D.Pa. Aug 03, 1990)
But result is to abstain.
Proceedings against the property of the estate is a core proceeding
51 Bankruptcy
51I In General
51I(C) Jurisdiction
51k2052 k. Claims or Proceedings Against Estate or Debtor;
Relief from Stay. Most Cited Cases
**Creditors action to recover sums allegedly owing under equipment lease with
debtor was “core” proceeding, which bankruptcy court could finally decide. 28
U.S.C.A. § 157(b)(2)(B).
**[4] Moreover, Computerware’s Action is rather plainly a core proceeding. It

states a claim against the Debtor. See28 U.S.C. § 157(b)(2)(B); and
Meyertech, 831 F.2d at 418. **However, as the Debtor points out, this
proceeding is stayed by the Debtor’s bankruptcy filing and, as we note below,
the cause of action set forth therein will be properly relegated to the
claims process. See In re Clark, 91 B.R. 324, 338, 342 (Bankr.E.D.Pa.1988).
which is properly filed on its own.
[8] Furthermore, the substance of the motion for relief is most doubtful.
Computerware is merely an unsecured creditor of the Debtor. As such, it bears
the heavy and possibly insurmountable burden of proving that the balance of
hardships tips significantly in favor of granting relief as against the
hardships to the Debtor in denying relief. See In re Ward, 837 F.2d 124, 128
(3d Cir.1988); In re FRG, Inc., 114 B.R. 75, 80 (E.D.Pa.1990); In re Metro
Transportation Co., 82 B.R. 351, 353 (Bankr.E.D.Pa.1988); and In re Ronald
Perlstein Enterprises, Inc., 70 B.R. 1005, 1009-10 (Bankr.E.D.Pa.1987).
Clearly, if unsecured creditors could easily obtain relief from the stay to
pursue their claims against debtors in other forums, rather than in the
bankruptcy claims process, much of the purpose for bankruptcy filings,
featuring a summary process for resolving claims, would be undermined.
Therefore, although we recommend that both actions are remanded to the CCP,
**Computerware is not entitled to have relief from the stay to pursue its
action against the Debtor. Computerware is obliged to file a proof of claim
in the Debtor’s bankruptcy case to pursue its claim against the Debtor,
allowing the amount of its claim to be decided by this court in the claims
process. See Clark, supra, 91 B.R. at 338, 342.
In re Mankin, 823 F.2d 1296, 17 Collier Bankr.Cas.2d 469, Bankr. L. Rep. P

71,918 (9th Cir.(Cal.),Jul 27, 1987)
Discusses distinction between core and noncore proceeding
51 Bankruptcy
51I In General
51I(C) Jurisdiction
51k2043 Core, Non-Core, or Related Proceedings in General;
Nexus
51k2043(2) k. Core or Non-Core Proceedings. Most Cited
Cases
Statutes 361 195
361 Statutes
361VI Construction and Operation
361VI(A) General Rules of Construction
361k187 Meaning of Language
361k195 k. Express Mention and Implied Exclusion. Most
Cited Cases
Statute enumerating core proceedings did not set categorical limits on
jurisdiction of bankruptcy courts over core proceedings, but rather, merely
enumerated examples of proceedings falling within bankruptcy court’s core
proceeding jurisdiction. 28 U.S.C.A. § 157(b)(2).
51 Bankruptcy
51I In General
51I(C) Jurisdiction
51k2043 Core, Non-Core, or Related Proceedings in General;
Nexus
51k2043(2) k. Core or Non-Core Proceedings. Most Cited
Cases
In construing bankruptcy court’s jurisdiction over particular action, crucial
consideration is not whether action falls within clause of statute listing
core proceedings, but rather, whether action was, in fact, core proceeding.
28 U.S.C.A. § 157(b)(1, 2)
[4][5] Section 157(b)(2) does not set categorical limits on the jurisdiction
of bankruptcy courts over core proceedings, but rather merely enumerates
examples of proceedings falling within a bankruptcy court’s core proceeding
jurisdiction. That Congress did not intend to limit the bankruptcy courts’
jurisdiction over core proceedings by enumerating examples of core
proceedings in § 157(b)(2) is apparent from the prefatory language of §
157(b)(2): “Core matters include, but are not limited to....” (emphasis
added). 28 U.S.C.A. § 157(b)(2) (West Supp.1987). Thus, in construing a
bankruptcy court’s jurisdiction over a particular action pursuant to § 157(b)
(1), the crucial consideration is not whether the action falls within one of
the clauses of § 157(b)(2), but rather whether the action is or is not in
fact a core proceeding. As explained later in this opinion, an action by a
trustee pursuant to § 544(b) to set aside a fraudulent conveyance is in fact
a core proceeding. See infra at p. 1307.
Even if the bankruptcy court’s § 157(b) jurisdiction over this case did turn
on construction of § 157(b)(2)(H), we have found no evidence that Congress
intended to restrict § 157(b)(2)(H) to federal fraudulent conveyance
proceedings. Not only does § 157(b)(2)(H) not distinguish between state and
federal fraudulent conveyance proceedings, the federal law of fraudulent
conveyance is essentially identical to the law of fraudulent conveyance
adopted by the states.FN2 Thus, for purposes of § 157(b)(2)(H), state
fraudulent conveyance proceedings are distinguishable from federal fraudulent
conveyance proceedings only by the fact that they are of state origin.
Congress has explicitly found that this is a distinction which, standing
alone, cannot serve as the basis for distinguishing core from non-core
proceedings: “A determination that a proceeding is not a core proceeding*1301
shall not be made solely on the basis that its resolution may be affected by
State law.” 28 U.S.C.A. § 157(b)(3) (West Supp.1987). In essence then the
explicit provisions of the bankruptcy statutes are contrary to the judicial
gloss Munn asks us to place on § 157(b)(2)(H).
FN2. Conveyances made for the purpose of defrauding creditors have long been
void at common law. The first major statutory codification of the common law
of fraudulent conveyances is that of 13 Elizabeth I Ch. 5 (1570). That
statute provided, in substance, that every conveyance made to the end,
purpose and intent to hinder, delay or defraud creditors is void. The Uniform
Fraudulent Conveyance Act, approved by the National Conference of
Commissioners on State Laws in 1918, is essentially a restatement of the
statute of 13 Elizabeth. States which have not adopted the Uniform Fraudulent
Conveyance Act or a similar version of the statute of 13 Elizabeth have
recognized the statute of 13 Elizabeth as part of the common law. 11 U.S.C. §
548 is aimed only at such conveyances as would be fraudulent and voidable
under common law or under the statute of 13 Elizabeth. Coder v. Arts, 213
U.S. 223, 242-43, 29 S.Ct. 436, 443-44, 53 L.Ed. 772 (1909) (applying
statutory predecessor of 11 U.S.C. § 548).
In re General Carriers Corp., 258 B.R. 181, 45 Collier Bankr.Cas.2d 669, 37

Bankr.Ct.Dec. 103, 01 Cal. Daily Op. Serv. 1076, 2001 Daily Journal D.A.R.
1377, 5 Cal. Bankr. Ct. Rep. 56 (9th Cir.BAP (Cal.),Jan 22, 2001)
Chapter 7 trustee, after commencing state court action against former trustee
for his alleged negligence and breach of fiduciary duty, filed motion in
bankruptcy court for mandatory or discretionary abstention. The United States
Bankruptcy Court for the Central District of California, Lynne Riddle, J.,
denied motion, and appeal was taken. The Bankruptcy Appellate Panel, Marlar,
J., held that bankruptcy court did not have subject matter jurisdiction to
decide motion to abstain from hearing controversy that was currently pending
only in state court, and that had not yet been removed to bankruptcy forum.
Vacated.
[3] Federal Courts 12.1

170Bk12.1 Most Cited Cases
To qualify for adjudication in federal court, actual controversy must be
extant at all stages of review. U.S.C.A. Const. Art. 3, § 2, cl. 1.
[17] Bankruptcy 2041.1

51k2041.1 Most Cited Cases
Proceedings "arise under" title 11 if they involve cause of action created or
determined by statutory provision of title 11. 28 U.S.C.A. § 1334(b).

Proceedings that "arise in" title 11 are those administrative matters which
arise only in bankruptcy cases, and which would have no existence outside
bankruptcy. 28 U.S.C.A. § 1334(b).
[19] Bankruptcy 2043(3)

51k2043(3) Most Cited Cases
"Related to" proceeding may be related to bankruptcy because of its potential
effect, but it does not invoke substantive right created by Bankruptcy Code
and could exist outside of bankruptcy. 28 U.S.C.A. § 1334(b).

Claims that "arise under" or "arise in" title 11 are "core" claims, of kind
which bankruptcy court may finally decide, while claims that are "related to"
title 11 are "noncore" proceedings.
U.S.C.A. § 1334(c)(2).

(Formerly 170Bk47.1)
Seven elements must be satisfied for mandatory abstention in bankruptcy
proceeding: (1) timely motion; (2) purely state law question; (3) noncore
proceeding; (4) lack of independent federal jurisdiction, absent debtor’s
bankruptcy filing; (5) that action is commenced in state court; (6) that
state court action may be timely adjudicated; (7) state forum of appropriate
jurisdiction. 28 U.S.C.A. § 1334(c)(2).

Abstention provisions implicate question of whether bankruptcy court should
exercise jurisdiction, not of whether court has jurisdiction in first
instance; act of abstaining presumes that proper jurisdiction otherwise
exists. 28 U.S.C.A. § 1334(c)(1, 2).

**Abstention rules, both mandatory and discretionary, clearly require "a
proceeding" in order for bankruptcy court to abstain. 28 U.S.C.A. § 1334(c)
(1, 2).

Threshold requirement for mandatory or discretionary abstention is that there
must be a proceeding from which bankruptcy court can abstain. 28 U.S.C.A. §
1334(c)(1, 2).
[26] Bankruptcy 2045

51k2045 Most Cited Cases

Bankruptcy court did not have subject matter jurisdiction to decide motion to
abstain from hearing controversy that was currently pending only in state
court, and that had not yet been removed to bankruptcy forum, as there was no
pending proceeding from which court could abstain. 28 U.S.C.A. § 1334(c)(1,
2).
Look up abstention under 28 usc 1334 in Rutter Bankruptcy
And research practice guide annotations in 28 usc 1334 annotated
Must remove or file counterclaim upon filing a claim

**There is no federal proceeding to abstain from
In re Lazar, 237 F.3d 967, 01 Cal. Daily Op. Serv. 383, 2001 Daily Journal
D.A.R. 491 (9th Cir.(Cal.),Jan 12, 2001)

Bankruptcy court could not abstain from hearing removed adversary proceeding,
in which Chapter 7 trustee challenged State Water Resources Control Board’s
(SWRCB’s) denial of debtors’ claims for reimbursement from California
Underground Storage Tank Cleanup Fund, where as result of trustee’s
successful removal of proceeding, there was no pending state court action. 28
U.S.C.A. § 1334(c)(1, 2).
B. Abstention
[16][17] The State Board also argues that the bankruptcy court erred by not
abstaining in the Mandamus Adversary, pursuant to 28 U.S.C. §§ 1334(c)(1) and
1334(c)(2). [FN16] In Security Farms v. International Brotherhood of
Teamsters, 124 F.3d 999 (9th Cir.1997), however, we noted that "[a]bstention
can exist only where there is a parallel proceeding in state court." Id. at
1009. Thus, we held that:
FN16. Because the Lazars filed their bankruptcy petition prior to October 22,
1994, the amendments made to § 1334 by the Bankruptcy Reform Act of 1994 do
not apply in this case. See Wynns v. Wilson (In re Wilson), 90 F.3d 347,
350 (9th Cir.1996) (noting that "the Bankruptcy Reform Act of 1994 applies
only in bankruptcy cases filed on or after October 22, 1994").
Section 1334(c) abstention should be read in pari materia with section 1452(b)
remand, so that [§ 1334(c) ] applies only in those cases in which there is a
related proceeding that either permits abstention in the interest of comity,
section 1334(c)(1), or that, by legislative mandate, requires it, section
1334(c)(2).
Id. at 1010. On March 22, 1996, the Trustee successfully removed the
Mandamus Adversary from state court, and, as a result, "[n]o other related
[state] proceeding thereafter exists." Id. Accordingly, because*982 there
is no pending state proceeding, §§ 1334(c)(1) and 1334(c)(2) are simply
inapplicable to this case. See id. at 1009-10. [FN17]
FN17. In Eastport Associates v. City of Los Angeles (In re Eastport

Associates), 935 F.2d 1071 (9th Cir.1991), we reviewed the district court’s
order refraining from abstention under § 1334(c)(1), even though "no state
court proceeding ha[d] been commenced in [the] case." Id. at 1079. The
Mandamus Adversary is distinguishable from Eastport Associates, however,
because the action in Eastport Associates was not removed to federal court.
See id. at 1078-79. Thus, the remand provisions of 28 U.S.C. § 1452(b) were
inapplicable in Eastport Associates. See 28 U.S.C. § 1452(b). In this
case, on the other hand, as in Security Farms, we are confronted with the
interrelationship between § 1334(c) and § 1452(b). See Security Farms, 124
F.3d at 1010 ("To require a pendant state action as a condition of abstention
eliminates any confusion with 28 U.S.C. § 1452(b)....").
[18] Furthermore, to the extent that the State Board appeals the bankruptcy
court’s decision against remanding the Mandamus Adversary, and "to the extent
that we are required to construe [the State Board’s] motion to abstain as a
motion to remand," id. at 1009, we lack jurisdiction over the appeal. 28
U.S.C. § 1452(b) (1994) (stating that "a decision to not remand ... is not
reviewable by appeal or otherwise by the court of appeals"); Security Farms,
124 F.3d at 1009-10 & n. 7 ("Section 1452(b) prevents this court from
reviewing a district court’s decision not to remand.").
Security Farms v. International Broth. of Teamsters, Chauffers,

Warehousemen & Helpers, 124 F.3d 999, 156 L.R.R.M. (BNA) 2148, 134
Lab.Cas. P 10,046, 38 Fed.R.Serv.3d 856, 47 Fed. R. Evid. Serv. 597,
97 Cal. Daily Op. Serv. 6727, 97 Daily Journal D.A.R. 10,940 (9th Cir.
(Cal.) Aug 22, 1997)
Not clear on the requirement of two parallel proceedings being

adversary proceeding and state court action.
28 USC 1452 removal

In re Marshland Development, Inc., 129 B.R. 626
Bankr.N.D.Cal.,1991
Removed state court action by owner of property against Chapter 11
debtors seeking to recover for environmental damages was transmuted
into core proceeding by virtue of fact that essence of action was now
resolution of claim against debtors. 28 U.S.C.A. § 157(b), (b)(3); ?
U.S.Dist.Ct.Rules N.D.Cal., Rule 700-5.
Res Judicata
Limited is not a court of competent jurisdiction to determine issues

of title.
Order on summary judgment void because of notice of automatic stay

filed and automatic stay in force and effect.
Does claim preclusion apply only to the plaintiff or to all the

parties? According to ca forms plead practice applies to all parties
From witkin ca proced
Claims or causes of action, and counterclaims.
terminology used.
(1) In General. The Second Restatement uses the term "claim

preclusion" for the primary aspect of res judicata and "issue
preclusion" for collateral estoppel. **"Preclusive effects" refers to
limitations on the opportunity in a second action to litigate claims
or issues that were litigated, or could have been litigated, in a
prior action. The rule of claim preclusion is that a party ordinarily
may not assert a civil claim arising from a transaction with respect
to which the party has already prosecuted a claim, whether or not the
two claims wholly correspond to each other. **The rule of issue
preclusion is that a party ordinarily may not relitigate an issue that
the party fully and fairly litigated previously.
See word doc res_judicata_matters_which_might_have_been_litigated

digest.doc
res judicata scope and_extent of estoppel digest.doc
Old Republic Ins. Co. v. Superior Court, 66 Cal.App.4th 128, 77 Cal.Rptr.2d
642, 98 Cal. Daily Op. Serv. 6529, 98 Daily Journal D.A.R. 9015 (Cal.App. 2
Dist.,Aug 20, 1998)
[22] Constitutional Law 92 4012
92 Constitutional Law
92XXVII Due Process
92XXVII(E) Civil Actions and Proceedings
92k4007 Judgment or Other Determination
92k4012 k. Conclusiveness. Most Cited Cases
(Formerly 92k315)
Judgment 228 713(1)
228 Judgment
228XIV(C) Matters Concluded
228k713 Scope and Extent of Estoppel in General
Collateral estoppel may only be applied where due process requirements are
met.
tions of privity,” it is clear that collateral estoppel may only be applied

where due process requirements are met. (Clemmer v. Hartford Insurance Co.
(1978) 22 Cal.3d 865, 875, 151 Cal.Rptr. 285, 587 P.2d 1098.) “ ‘In the
context of collateral estoppel, due process requires that the party to be
estopped must have had an identity or community of interest with, and
adequate representation by, the losing party in the first action as well as
that the circumstances must have been such that the party to be estopped
should reasonably have expected to be bound by the prior adjudication.’
[Citation.] The ‘reasonable expectation’ requirement is satisfied if the
party to be estopped had a proprietary interest in and control of the prior
action, or if the unsuccessful party in the first action might fairly be
treated as acting in a representative capacity for the party to be estopped.
[Citations.] Furthermore, due process requires that the party to be estopped
must have had a fair opportunity to pursue his claim the first time.
[Citation.]” (Lewis v. County of Sacramento (1990) 218 Cal.App.3d 214, 218,
266 Cal.Rptr. 678.) These tests were met in both Drinkhouse and Ceresino;
they are not satisfied here.
Folsom v. Butte County Assn. of Governments, 32 Cal.3d 668, 652 P.2d 437,
186 Cal.Rptr. 589 (Cal.,Oct 28, 1982)
[1] Compromise and Settlement 89 15(1)
89 Compromise and Settlement

89I In General
89k14 Operation and Effect
89k15 In General
In absence of showing of fraud or undue influence, valid compromise agreement
is decisive of rights of parties to and operates as bar to reopening of
original controversy.
*677 [1] As we explain below we adopt neither party’s view. Compromise has
long been favored. ( Rohrbacher v. Aitken (1904) 145 Cal. 485, 488, 78 P.
1054; Armstrong v. Sacramento Valley R. Co., supra, 179 Cal. 648, 650, 178 P.
546.) “[A] valid compromise agreement has many attributes of a judgment, and
in the absence of a showing of fraud or undue influence is decisive of the
rights of the parties thereto and operates as a bar to the reopening of the
original controversy.” ( Shriver v. Kuchel (1952) 113 Cal.App.2d 421, 425,
248 P.2d 35.)
Research ccp 1916 and also limited jurisdiction, fraud, as ground for
not being able to raise issue. As applied to fully and fairly.
Smith v. Exxon Mobil Oil Corp., 153 Cal.App.4th 1407, 64 Cal.Rptr.3d 69, 07
Cal. Daily Op. Serv. 9314, 2007 Daily Journal D.A.R. 11,903 (Cal.App. 1
Dist.,Aug 03, 2007)
Grounds to find collateral estoppel not applicable
[6] “Collateral estoppel applies when (1) the party against whom the plea is
raised was a party or was in privity with a party to the prior adjudication,
(2) there was a final judgment on the merits in the prior action and (3) the
issue necessarily decided in the prior adjudication is identical to the one
that is sought to be relitigated.” (Roos v. Red (2005) 130 Cal.App.4th 870,
879, 30 Cal.Rptr.3d 446, citing Coscia v. McKenna & Cuneo (2001) 25 Cal.4th
1194, 1201, 108 Cal.Rptr.2d 471, 25 P.3d 670.) Conceding that all three
factors are present in this case, Mobil emphasizes the equitable nature of
collateral estoppel and that even where the technical requirements are all
met, the doctrine is to be applied “only where such application comports with
fairness and sound public policy.” (Vandenberg v. Superior Court, supra, 21
Cal.4th at p. 835, 88 Cal.Rptr.2d 366, 982 P.2d 229; White Motor Corp. v.
Teresinski (1989) 214 Cal.App.3d 754, 763, 263 Cal.Rptr. 26; Sandoval v.
Superior Court (1983) 140 Cal.App.3d 932, 941, 190 Cal.Rptr. 29.)
[7] Mobil also stresses that the offensive use of collateral estoppel “is
more closely scrutinized than the defensive use of the doctrine.” (White
Motor Corp. v. Teresinski, supra, 214 Cal.App.3d at p. 763, 263 Cal.Rptr. 26;
see Parklane, supra, 439 U.S. at pp. 329-331, 99 S.Ct. 645.) Collateral
estoppel is used offensively when, as here, “the plaintiff seeks to foreclose
the defendant from litigating an issue the defendant has previously litigated
unsuccessfully in an action with another **74 party. Defensive use occurs
when a defendant seeks to prevent a plaintiff from asserting a claim the
plaintiff has previously litigated and lost against another defendant.”
(Parklane, at p. 326, fn. 4, 99 S.Ct. 645; see also Vestal, Preclusion/Res
Judicata Variables: Parties (1964-1965) 50 Iowa L.Rev. 27, 43-76) Although
some cases suggest that a trial court’s decision to allow the *1415 offensive
use of collateral estoppel is an exercise of discretion to which an appellate
court should give deference (see, e.g., Sandoval v. Superior Court, supra,
140 Cal.App.3d at p. 942, 190 Cal.Rptr. 29), the “ predominate view” in this
state is that “the trial court’s application of collateral estoppel is
reviewed de novo.” (Roos v. Red, supra, 130 Cal.App.4th at p. 878, 30
Cal.Rptr.3d 446, citing Groves v. Peterson (2002) 100 Cal.App.4th 659, 667,
123 Cal.Rptr.2d 164 and Campbell v. Scripps Bank (2000) 78 Cal.App.4th 1328,
1333, fn. 2, 93 Cal.Rptr.2d 635.)
[8] Respondents take the position that de novo review is appropriate with
respect to the presence of the three elements essential to collateral
estoppel (i.e., whether the necessary parties are the same or in privity,
there was previously a final judgment on the merits, and the issues are
identical) and to whether the prior proceeding was of a type that should be
given preclusive effect (see, e.g., Vandenberg v. Superior Court, supra, 21
Cal.4th at pp. 831-834, 88 Cal.Rptr.2d 366, 982 P.2d 229 [private arbitration
not given preclusive effect] ). They claim de novo review does not, however,
apply to a trial court’s determination of the “fairness” of applying
collateral estoppel, as to which respondents say the more deferential abuse
of discretion standard should apply. Respondents cite no authority for this
proposition, and in the circumstances of this case we decline to accept it.
While reasonable minds may differ as to the appropriateness of de novo review
of a trial court determination of the applicability of an equitable doctrine
that is made upon the basis of a factual inquiry and credibility assessment,
the facts bearing upon the propriety of applying estoppel in this case, none
of which involve questions of credibility, did not arise out of an
independent evidentiary inquiry and are entirely uncontested. The trial court
had no more information than is now before us and was in no better position
than we are to evaluate that information.
For example, with respect to the issue this case presents, we know that
collateral estoppel does not apply “when the party against whom the earlier
decision is asserted did not have a ‘full and fair opportunity’ to litigate
the claim or issue.” (Kremer v. Chemical Construction (1982) 456 U.S. 461,
480-481, 102 S.Ct. 1883, 72 L.Ed.2d 262.) The problem is that parties against
whom a verdict is returned commonly feel they were denied a “full and fair
opportunity” to litigate their claims and, because no trial is perfect, it is
usually not difficult for them to find a defect upon which to try to hang
their hats. It is easy to say that the “full and fair opportunity” necessary
to collateral estoppel is not that which is perfect, but not so easy to
distinguish imperfect proceedings which are nonetheless acceptable from those
which are not.
FN5. For example, it has been stated that “[i]n the final analysis ... an
equitable estoppel rests upon the facts and circumstances of the particular
case in which it is urged, considered in the framework of the elements,
requisites, and grounds of equitable estoppel, and consequently, any
attempted definition usually amounts to no more than a declaration of an
estoppel under those facts and circumstances. The cases themselves must be
looked to and applied by way of analogy rather than rule.” (28 Am.Jur.2d,
Estoppel & Waiver, § 27, p. 628.)
No case brought to our attention by the parties or that we can find has
addressed the question whether the inability of a defendant at a prior trial
to obtain the testimony of an assertedly crucial witness so unfairly denied
him a full opportunity to litigate his claim that he should not be
collaterally estopped from relitigating the matter.FN6 **The case law is not,
however, altogether unhelpful. The United States Supreme Court discussed the
factors that may have prevented a defendant from enjoying a full and fair
opportunity to litigate a claim at a prior trial in Parklane, supra, 439 U.S.
322, 99 S.Ct. 645, 58 L.Ed.2d 552 and Blonder-Tongue v. University of
Illinois Foundation (1971) 402 U.S. 313, 91 S.Ct. 1434, 28 L.Ed.2d 788
(Blonder-Tongue ). In Parklane, the court posited the *1417 situation in
which the second action afforded the defendant procedural opportunities
unavailable in the first action that could readily cause a different result,
as where “the defendant in the first action was forced to defend in an
inconvenient forum and therefore was unable to engage in full scale discovery
or call witnesses.” (Parklane, at p. 331, fn. 15, 99 S.Ct. 645, italics
added.) Blonder-Tongue was a patent infringement case and the court
acknowledged that the unusual factual complexity of such litigation rendered
it inordinately difficult to determine whether a patentee had had a full and
fair chance to litigate the validity of **76 his patent in the earlier case.
Included among the important factors that needed to be considered, the court
said, is “ whether without fault of his own the patentee was deprived of
crucial evidence or witnesses in the first litigation.” (Blonder-Tongue, at
p. 333, 91 S.Ct. 1434.) Parklane and Blonder-Tongue, thus, both acknowledge
that the unavailability of a crucial witness or evidence at the prior
proceeding is a circumstance that may render it inappropriate to permit the
offensive use of collateral estoppel.
FN6. But see Continental Can Co. v. Hudson Foam Latex Prod., Inc. (1973) 123
N.J.Super. 364, 303 A.2d 97,reversed (1974) 129 N.J.Super. 426, 324 A.2d 60
(Continental Can ) discussed, post, at page 78, footnote 8.
The deprivation of crucial evidence or witnesses at the earlier trial is also

among the considerations mentioned in the Restatement Second of Judgments as
militating against preclusion. Section 29 of the Restatement states the
familiar principle that a party is not precluded from relitigating an issue
“unless the fact that he lacked a full and fair opportunity to litigate the
issue in the first action or other circumstances justify affording him an
opportunity to relitigate the issue.” (Rest.2d Judgments (1982) § 29, p. 291,
italics added.) Comment j to section 29 states that “[i]mportant among such
other circumstances is the disclosure that the prior determination was
plainly wrong or that new evidence has become available that could likely
lead to a different result. It is unnecessary that the party seeking to avoid
preclusion show, as he must in seeking to set aside a judgment, that the
evidence could not have been discovered with due diligence; the question is
not whether a prior determination should be set aside but whether it should
be treated as conclusive for further purposes.” (Rest.2d Judgments, § 29,
com. j, p. 297.) The illustration the Restatement provides of “other
circumstances” that justify an opportunity to relitigate an issue is this: “C
engages in conduct resulting in damage to the property of A and B that is
stored in the same location. In A’s action against C for damages, a key
witness for C on the issue of C’s negligence is unavailable. Judgment is for
A. In B’s subsequent action for his damage, C may be permitted to relitigate
the issue of negligence upon a showing that the witness can be available at
trial of that action.” (Rest.2d Judgments, § 29, com. j, illus. 9, p. 298.)
Respondents are unimpressed with the foregoing authority. They point out that
collateral estoppel was deemed appropriate in Parklane, Blonder-Tongue*1418
and the other cases Mobil relies upon, and the issue in the other cases was
not the inability of the defendant to present crucial evidence or witnesses
at the earlier trial, but the fact that the prior proceeding was of a
different nature than the subsequent trial. (Kremer v. Chemical Construction
Corp., supra, 456 U.S. 461, 102 S.Ct. 1883 [ruling in prior administrative
proceeding entitled to preclusive effect in subsequent civil rights
proceeding]; Roos v. Red, supra, 130 Cal.App.4th 870, 30 Cal.Rptr.3d 446
[adjudication in prior bankruptcy proceeding given preclusive effect in
subsequent wrongful death suit]; Imen v. Glassford (1988) 201 Cal.App.3d 898,
247 Cal.Rptr. 514 [ruling in prior administrative proceeding given preclusive
effect in subsequent fraud action].) Finally, respondents claim, the
provision of the Restatement Mobil relies upon is inconsistent with
California law.
The fact that collateral estoppel was found applicable in Parklane, Blonder-
Tongueand the three other cases just cited is beside the point. Mobil does
not rely on those cases for anything more than the language contained in the
opinions emphasizing the equitable nature of collateral estoppel, the bar on
the offensive use of the doctrine when the defendant did not have a full and
fair opportunity to litigate his claim or issue at the earlier proceeding
and, in the case of Parklane and **77Blonder- Tongue, the indication that the
inability without fault of a defendant to produce important evidence or
witnesses at the prior trial is among the circumstances rendering issue
preclusion inappropriate.
Respondents assert that the illustration employed in the Restatement Second

of Judgments quoted above conflicts with Evans v. Celotex Corp. (1987) 194
Cal.App.3d 741, 238 Cal.Rptr. 259 (Evans ), and therefore does not represent
California law. Evans was a wrongful death action by the widow and children
of a worker who died as a result of occupational exposure to asbestos
products allegedly produced by the defendant. The trial court ruled that the
plaintiffs were barred from proceeding with their action due to the adverse
judgment in the worker’s personal injury suit. Relying on Melendres v. City
of Los Angeles (1974) 40 Cal.App.3d 718, 115 Cal.Rptr. 409, which held that
collateral estoppel does not bar a later suit if new material facts emerged
since the prior decision, the Evans plaintiffs contended on appeal that facts
unobtainable at the time of the earlier trial were now available, rendering
estoppel inapplicable. According to the plaintiffs, a lung biopsy performed
after the death of the deceased that could not be performed while he was
alive could now be used to show that asbestosis was the proximate cause of
death, contrary to the jury finding at the prior trial. The Court of Appeal
agreed with the plaintiffs that collateral estoppel “ ‘was never intended to
operate so as to prevent a re-examination of the same question between the
same parties where, in the interval between the first and *1419 second
actions, the facts have materially changed or new facts have occurred which
may have altered the legal rights or relations of the litigants.’
[Citation.]” (Evans, supra, 194 Cal.App.3d at p. 748, 238 Cal.Rptr. 259,
quoting Hurd v. Albert (1931) 214 Cal. 15, 26, 3 P.2d 545), but disagreed
that that was the case in Evans. “Here, the additional test performed
during the autopsy simply goes to the weight of the evidence against Celotex;
i.e., this evidence did not establish a previously undiscovered theory of
liability nor did it denote a change in the parties’ legal rights. An
exception to collateral estoppel cannot be grounded on the alleged discovery
of more persuasive evidence. Otherwise, there would be no end to litigation.
Accordingly, we hold that the results from the lung biopsy do not operate to
prevent the application of collateral estoppel.” (Ibid.)
Respondents say that “[j]ust as the heirs in Evans were collaterally estopped
from relitigating the issues even though they had new evidence which would
have been impossible to obtain in the prior litigation, [Mobil] is
collaterally estopped from relitigating the issues even though its previously
unavailable expert may now be available. Respondents mischaracterize Evans.
Preclusion was equitable in that case because the posttrial biopsy appeared
to be merely cumulative. As the appellate court stated, “[p]laintiffs have
not indicated what this biopsy showed and how it differed, if at all, from
the evidence adduced at the personal injury trial.” (Evans, supra, 194
Cal.App.3d at p. 747, 238 Cal.Rptr. 259.) Thus, to use the parlance of the
Restatement, the Evans plaintiffs failed to show that the new evidence “could
likely lead to a different result.” FN7
FN7. Our analysis assumes Evans, supra, 194 Cal.App.3d 741, 238 Cal.Rptr. 259
was correctly decided; but that assumption is questionable. It is true that,
as the Evans court said, “[a]n exception to estoppel cannot be grounded on
the alleged discovery of more persuasive evidence” (id. at p. 748, 238
Cal.Rptr. 259); however, a postmortem biopsy impossible to have obtained at
the prior trial is ordinarily powerful evidence of whether death was caused
by exposure to asbestos. The Evans opinion does not indicate what the biopsy
revealed nor describe the quality of the evidence of causation available and
presented by the plaintiffs at the earlier trial. The court’s conclusion that
estoppel was fairly applied can only be justified if the plaintiffs were
previously able to obtain and presented evidence that death was caused by
asbestos, and the biopsy did not provide substantially stronger evidence.
**78 The situation in the present case is very different. The relevant facts
consist entirely of representations set forth in a declaration submitted by
Mobil in opposition to respondents’ in limine motion to apply collateral
estoppel. The declarant, William H. Armstrong, a member of the law firm that
represented Mobil in the prior and subsequent trials, states as follows: “We
retained and disclosed Francis Weir, Ph.D., an industrial hygienist and
toxicologist, to render opinion testimony about the relative significance of
decedent’s various exposures to asbestos. Dr. Weir was prepared to opine that
decedent’s exposures at the Torrance refinery ... ranged from zero to
insignificantly *1420 small, and that Mr. Smith’s main asbestos exposures
occurred from his work with asbestos-containing transite pipe early in his
career (unrelated to any refinery work). He was also prepared to opine that
none of the reported refinery exposures would have created any reason for
concern about a health hazard based on knowledge available at the time, and
that Mobil’s conduct was well within a reasonable industrial hygiene
approach. As reflected in the transcript of [the pretrial hearing on] May 14,
2001, Dr. Weir was unable to testify due to the unexpected sudden death of
his only daughter on May 11, 2001 [while trial was in progress].... [¶] We
expected to use only one expert, i.e., Dr. Weir, to cover the points he was
prepared to address. When Dr. Weir became unavailable, no other disclosed or
retained expert was available to present that testimony. Although the trial
court (Judge Wick) was prepared to allow a substitute, the evidence was
ending, and Mr. Smith was dying, and no one was available on such short
notice.”
Respondents acknowledge that neither Mobil nor its counsel were in any way
responsible for Dr. Weir’s unavailability (compare Continental Can., supra,
123 N.J.Super. 364, 303 A.2d 97,reversed 129 N.J.Super. 426, 324 A.2d 60) FN8
and that no other witness for Mobil at the prior trial **79 addressed the
issues about which Dr. Weir was expected to testify. It is additionally clear
that those issues-causation, the applicable standard of care at the time, and
apportionment of fault-were all crucial issues. Mobil’s fortuitous inability,
through no fault of its own, to produce evidence on these crucial issues
makes it impossible to say that the prior trial provided it a full and fair
opportunity to present a defense. In the unusual and compelling circumstances
of this case, the trial court’s application of collateral estoppel was unfair
and must be set aside.
Limited jurisdiction does not have jurisdiction to determine title to

property over 25,000
§ 1917. Judgment; jurisdiction necessary
THE JURISDICTION NECESSARY IN A JUDGMENT. The jurisdiction sufficient to

sustain a record is jurisdiction over the cause, over the parties, and over
the thing, when a specific thing is the subject of the judgment.
Section 85, of the Code of Civil Procedure of the State of California.
§ 85. Actions treated as limited civil case; conditions
An action or special proceeding shall be treated as a limited civil case if

all of the following conditions are satisfied, and, notwithstanding any
statute that classifies an action or special proceeding as a limited civil
case, an action or special proceeding shall not be treated as a limited civil
case unless all of the following conditions are satisfied:
(a) The amount in controversy does not exceed twenty-five thousand dollars
($25,000). As used in this section, “amount in controversy” means the amount
of the demand, or the recovery sought, or the value of the property, or the
amount of the lien, that is in controversy in the action, exclusive of
attorneys’ fees, interest, and costs.
(b) The relief sought is a type that may be granted in a limited civil case.
(c) The relief sought, whether in the complaint, a cross-complaint, or

otherwise, is exclusively of a type described in one or more statutes that
classify an action or special proceeding as a limited civil case or that
provide that an action or special proceeding is within the original
jurisdiction of the municipal court, including, but not limited to, the
following provisions:
Section 580 of the Code of Civil Procedure of the State of California
§ 580. Relief granted; no answer; limited civil case
(a) The relief granted to the plaintiff, if there is no answer, cannot exceed
that demanded in the complaint, in the statement required by Section 425.11,
or in the statement provided for by Section 425.115; but in any other case,
the court may grant the plaintiff any relief consistent with the case made by
the complaint and embraced within the issue. The court may impose liability,
regardless of whether the theory upon which liability is sought to be imposed
involves legal or equitable principles.
(b) Notwithstanding subdivision (a), the following types of relief may not be
granted in a limited civil case:
(1) Relief exceeding the maximum amount in controversy for a limited civil
case as provided in Section 85, exclusive of attorney’s fees, interest, and
costs.
(2) A permanent injunction, except as otherwise authorized by statute.
**(3) A determination of title to real property.
(4) Declaratory relief, except as authorized by Section 86.
The order granting summary judgment on May 12, 2009 is void, while
Title 11 U.S.C 362 was in force and effect.
and is void
distinguish Wood v. Herson involved a quiet title action in superior

court not municipal court, on lack of jurisdiction to determine title
to real property. Void judgment and res judicata inapplicable.
Effective:[See Text Amendments]
West’s Annotated California Codes Currentness

Code of Civil Procedure(Refs & Annos)
Part 4. Miscellaneous Provisions (Refs & Annos)
Title 2. Of the Kinds and Degrees of Evidence
Chapter 3. Writings
Article 2. Public Writings
§ 1916. Judicial record; impeachment
MANNER OF IMPEACHING A RECORD. Any judicial record may be impeached by

evidence of a want of jurisdiction in the Court or judicial officer, of
collusion between the parties, or of fraud in the party offering the record,
in respect to the proceedings.
Shows that they have shown evidence in support of their contentions,

conclusions without evidence to support.
Amended pleadings
Original pleading superseded by – 8:1550
Declarations in statement of facts and the declaration of Miguel

Duarte is objected on the grounds of lack of personal knowledge fre
602, and conclusion,
Fre 702 testimony by experts, fre 803(4) hearsay exception state for
purposes of medical diagnosis or treatment
He has not objected to and therefore has consented to.
Rutter fed evid 8:291 attorneys are generally prohibited from taking
the witness stand to testify in a case they are litigating. U.S. v.
Edwards (9th Cir. 1998) 154 F.3d 915, 921
Rule 901. Requirement of Authentication or Identification
(a) General provision. The requirement of authentication or identification as

a condition precedent to admissibility is satisfied by evidence sufficient to
support a finding that the matter in question is what its proponent claims.
(b) Illustrations. By way of illustration only, and not by way of limitation,

the following are examples of authentication or identification conforming
with the requirements of this rule:
(1) Testimony of witness with knowledge. Testimony that a matter is what it

is claimed to be.
(2) Nonexpert opinion on handwriting. Nonexpert opinion as to the genuineness

of handwriting, based upon familiarity not acquired for purposes of the
litigation.
(3) Comparison by trier or expert witness. Comparison by the trier of fact or

by expert witnesses with specimens which have been authenticated.
(4) Distinctive characteristics and the like. Appearance, contents,

substance, internal patterns, or other distinctive characteristics, taken in
conjunction with circumstances.
(5) Voice identification. Identification of a voice, whether heard firsthand
or through mechanical or electronic transmission or recording, by opinion
based upon hearing the voice at any time under circumstances connecting it
with the alleged speaker.
(6) Telephone conversations. Telephone conversations, by evidence that a call

was made to the number assigned at the time by the telephone company to a
particular person or business, if (A) in the case of a person, circumstances,
including self-identification, show the person answering to be the one
called, or (B) in the case of a business, the call was made to a place of
business and the conversation related to business reasonably transacted over
the telephone.
(7) Public records or reports. Evidence that a writing authorized by law to

be recorded or filed and in fact recorded or filed in a public office, or a
purported public record, report, statement, or data compilation, in any form,
is from the public office where items of this nature are kept.
(8) Ancient documents or data compilation. Evidence that a document or data

compilation, in any form, (A) is in such condition as to create no suspicion
concerning its authenticity, (B) was in a place where it, if authentic, would
likely be, and (C) has been in existence 20 years or more at the time it is
offered.
(9) Process or system. Evidence describing a process or system used to

produce a result and showing that the process or system produces an accurate
result.
(10) Methods provided by statute or rule. Any method of authentication or

identification provided by Act of Congress or by other rules prescribed by
the Supreme Court pursuant to statutory authority.
Judge Karen L. Robinson stated that she seeks additional points and
evidence on the issue of the purchaser at the trustee sale notice of
Soon Chey’s interest as precluding a bona fide purchaser
She was limiting the issues to notice of defendant’s interest
Refused to receive evidence on the issues of capacity, forgery fraud

in the inception
See res judicata and collateral estoppel cases determining res

judicata where evidence on the issue is refused to be received.
Due process is the right to present evidence to prove a case
Bank of America, N.A. v. La Jolla Group II, 129 Cal.App.4th 706, 28

(Cal.App. 5 Dist. May 19, 2005)
*715 Of course, the advantages of being a bona fide purchaser are not limited
to the presumptions set forth in section 2924. **Primarily, the doctrine of
bona fide purchase gives a bona fide purchaser priority over earlier-arising
unrecorded interests of which the bona fide purchaser had no notice. (See
generally 5 Miller & Starr, supra, §§ 11:49-11:57.)
La Jolla also argues that its title is valid and cannot be disturbed even if
it were not a bona fide purchaser because a deed was delivered to it and was
recorded. “Once the trustee’s deed upon sale has been delivered with all the
recitals of statutory compliance and the recital of authority under the power
of sale,” La Jolla contends, “the deed cannot be ‘void’ as a matter of law.”
It also argues
**Like the statutory provisions regarding reinstatement, the provisions La

Jolla relies on regarding the rights of a recipient of a trustee’s deed have
no effect on this **830 case. The provisions in question establish
presumptions about the adequacy of notices related to a foreclosure sale:
**“A recital in the deed executed pursuant to the power of sale of compliance
with all requirements of law regarding the mailing of copies of notices or
the publication of a copy of the notice of default or the personal delivery
of the copy of the notice of *714 default or the posting of copies of the
notice of sale or the publication of a copy thereof shall constitute prima
facie evidence of compliance with these requirements and conclusive evidence
thereof in favor of bona fide purchasers and encumbrancers for value and
without notice.”(§ 2924.)
**There is no contention in this case that the foreclosure sale was not
properly noticed. The sale was improper because the loan was current and
therefore the beneficiary had no right to exercise the power of sale. No
statute creates a presumption-conclusive or otherwise-for any purchaser-bona
fide or otherwise-that any recitals in a trustee’s deed render effective a
sale that had no contractual basis.
Instead of under due process of law, or whether the property was duly
sold, whether a default had occurred or the trustee had the right to
sale.
Mistakenly applies the notice of defaults to whether a default

occurred or the trustee had the right to sale
Lisa’s Bon Appetit v. Guy E. Maggio, Inc., 2002 WL 1359752 (Cal.App. 2

Dist.,Jun 21, 2002)
If WF/Duarte claim that title was litigated then it is void because

the limited jurisdiction court lacked jurisdiction to determine title
to real property over 25,000.00
Witkin Procedure
[§ 364] Judgments Subject to Appeal or Modification.

(1) Judgments Subject to Appeal. A judgment or order may be final
in nature, but it does not become res judicata until it is final in
the other sense of being free from direct attack. Hence, while an
appeal is pending or, though no appeal has yet been taken, the time
for appeal has not expired, the judgment is not conclusive. The
appropriate defense during the interim period is a plea in abatement
(other action pending). (See Pellissier v. Title Guarantee & Trust Co.
(1929) 208 C. 172, 184,
California Forms Of Pleading And Practice

[c] Invalid Judgment Distinguished
Res judicata may apply only when the prior judgment is valid; void
judgments cannot be res judicata [see **Balaam v. Perazzo (1931) 211
Cal. 375, 380-381, 295 P. 330 (holding that judgment in favor of
defendant quieting title against plaintiff and co-defendant was void
as against co-defendant who defaulted and was never served with
defendant’s answer); **California Nat. Supply Co. v. Flack (1920) 183
Cal. 124, 126, 190 P. 634 (holding that judgment rendered against
defunct corporation was void in action brought after forfeiture of
corporation’s charter)]. If a judgment is void only in part, the
judgment is res judicata to the extent that it is not void [see Lang
v. Lang (1920) 182 Cal. 765, 769, 190 P. 181 (holding that in default
judgment, any relief exceeding prayer is not entitled to res judicata
effect); **Ludwig v. Murphy (1904) 143 Cal. 473, 476, 77 P. 150 (prior
judgment was void to the extent it decreed a foreclosure,
notwithstanding its other possible conclusive effect)].
Thus, even when a judgment is final in the sense that it is free from
direct attack, it may be void and subject to collateral attack, and
thus not conclusive for purposes of res judicata [see Code Civ. Proc.
§ 1916 (judicial record may be impeached by evidence of want of
jurisdiction in court or judicial officer, of collusion between
parties, or of fraud in party offering record); see also Ch. 489,
Relief From Judgments and Orders ].
[d] Cases on Appeal
A judgment is not final for purposes of res judicata during the

pendency of and until the resolution of the appeal [ Agarwal v.
Johnson (1979) 25 Cal. 3d 932, 954 n.11, 160 Cal. Rptr. 141, 603 P.2d
58] ; Franklin & Franklin v. 7- Eleven Owners for Fair Franchising
(2000) 85 Cal. App. 4th 1168, 1171, 102 Cal. Rptr. 2d 770 (finality
required to invoke preclusive bar of res judicata is not achieved
until appeal from trial court judgment has been exhausted or time to
appeal has expired)]. A technically pending appeal does not preclude
the application of res judicata when the appeal is abandoned and is
subject to dismissal on the motion of the appellate court [see Wood v.
Herson (1974) 39 Cal. App. 3d 737, 748, 114 Cal. Rptr. 365] .
Moreover, the dismissal of an appeal is with prejudice to the right to

file another appeal within the time permitted, unless the dismissal is
expressly made without prejudice to another appeal [Code Civ. Proc. §
913; Lyons v. Security Pacific Nat. Bank (1995) 40 Cal. App. 4th 1001,
1017, 48 Cal. Rptr. 2d 174] . Thus, when an appeal was dismissed for
mootness, the dismissal was not made without prejudice, and
approximately one year elapsed from the date of filing the judgment to
a remittitur being issued, it was held that the underlying judgment
become final, absent the appeal, when the period for filing the appeal
had expired and principles of res judicata applied [ Lyons v. Security
Pacific Nat. Bank (1995) 40 Cal. App. 4th 1001, 1017, 48 Cal. Rptr. 2d
174 ; but see Chamberlin v. City of Palo Alto (1986) 186 Cal. App. 3d
181, 187, 230 Cal. Rptr. 454 (decided in context of collateral
estoppel; when party to judgment cannot obtain decision of appellate
court because matter determined against party is moot, judgment is not
conclusive against party in subsequent action on different cause of
action)].
Pellissier v. Title Guarantee & Trust Co., 208 Cal. 172, 280 P. 947 (Cal.,
Sep 23, 1929)
Pellisier v. Title Guanrantee & Trust Co. (1929) 208 Cal. 172, 184
[280 P. 947] the court stated,
“(3) Until a judgment has become final, it cannot be pleaded as a bar

to a subsequent action”
VOID JUDGEMENT
Notice of the bankruptcy was filed on date
In re Gruntz, 202 F.3d 1074, 43 Collier Bankr.Cas.2d 921, 35 Bankr.Ct.Dec. 160, Bankr. L. Rep. P 78,102,
00 Cal. Daily Op. Serv. 909, 2000 Daily Journal D.A.R. 1337, 4 Cal. Bankr. Ct. Rep. 33 (9th Cir.(Cal.)
In In re Gruntz 202 F.3d 1074 (9th Cir. (Cal.) the court stated,
actions taken in violation of the automatic stay are void. See

Schwartz v. United States (In re Schwartz), 954 F.2d 569, 571 (9th
Cir. 1992). Further, "[j]udicial proceedings in violation of th[e]
automatic stay are void." Phoenix Bond & Indemnity Co. v. Shamblin (In
re Shamblin) 890 F.2d 123, 125 (9th Cir.1989)(emphasis added). [FN6]
I refer to and incorporate the docket of Case Number 30-2008-00219380,

a true and correct copy is attached hereto as Exhibit “18” and
incorporated herein by this reference. And I request the court to
take judicial notice under the authorization of rule 201 of the
Federal Rules of Evidence. The Notices Of Bankruptcy was filed by on
April 30, 2009. The Order Granting Motion For Summary Judgement was
filed on May 12, 2009. In applying the rule of law to the facts of
the case The Order Granting Motion For Summary Judgement filed on May
12, 2009 is void.
In Balaam v. Perazzo (1931) 211 Cal. 375, 380-381, 295 P. 330
no service of the aforesaid answer of Victoria Perazzo was made or

attempted to be made upon Brambilio Juarez; that during the trial of
said cause no evidence whatever was presented with relation to the
right or claim of said Juarez in or to said property or any portion
thereof; nor was any finding thereon made by the trial court
And,
“it would seem clear that the defendant in this action was not
entitled to urge upon the trial thereof or upon this appeal either the
validity of the judgment in the former action of Medley v. Perazzo as
against Brambilio Juarez” (Balaam v. Perazzo, supra, 211 Cal. at p.
381)
Final for the purposes of appeal
Witkin
(1) Judgments Subject to Appeal. A judgment or order may be final in

nature, but it does not become res judicata until it is final in the
other sense of being free from direct attack. Hence, while an appeal
is pending or, though no appeal has yet been taken, the time for
appeal has not expired, the judgment is not conclusive.
[c] Invalid Judgment Distinguished
Res judicata may apply only when the prior judgment is valid; void
judgments cannot be res judicata [see Balaam v. Perazzo (1931) 211
Cal. 375, 380-381, 295 P. 330 (holding that judgment in favor of
defendant quieting title against plaintiff and co-defendant was void
as against co-defendant who defaulted and was never served with
defendant’s answer); California Nat. Supply Co. v. Flack (1920) 183
Cal. 124, 126, 190 P. 634 (holding that judgment rendered against
defunct corporation was void in action brought after forfeiture of
corporation’s charter)]. If a judgment is void only in part, the
judgment is res judicata to the extent that it is not void [see Lang
v. Lang (1920) 182 Cal. 765, 769, 190 P. 181 (holding that in default
judgment, any relief exceeding prayer is not entitled to res judicata
effect); **Ludwig v. Murphy (1904) 143 Cal. 473, 476, 77 P. 150 (prior
judgment was void to the extent it decreed a foreclosure,
notwithstanding its other possible conclusive effect)].
Thus, even when a judgment is final in the sense that it is free from
direct attack, it may be void and subject to collateral attack, and
thus not conclusive for purposes of res judicata [see Code Civ. Proc.
§ 1916 (judicial record may be impeached by evidence of want of
jurisdiction in court or judicial officer, of collusion between
parties, or of fraud in party offering record); see also Ch. 489,
Relief From Judgments and Orders ].
[d] Cases on Appeal
A judgment is not final for purposes of res judicata during the

pendency of and until the resolution of the appeal [ Agarwal v.
Johnson (1979) 25 Cal. 3d 932, 954 n.11, 160 Cal. Rptr. 141, 603 P.2d
58] ; Franklin & Franklin v. 7- Eleven Owners for Fair Franchising
(2000) 85 Cal. App. 4th 1168, 1171, 102 Cal. Rptr. 2d 770 (finality
required to invoke preclusive bar of res judicata is not achieved
until appeal from trial court judgment has been exhausted or time to
appeal has expired)]. A technically pending appeal does not preclude
the application of res judicata when the appeal is abandoned and is
subject to dismissal on the motion of the appellate court [see Wood v.
Herson (1974) 39 Cal. App. 3d 737, 748, 114 Cal. Rptr. 365] .
proposed order Summary judgment is
confirmation hearing
seek modification by amending schedules with additional debts.
See rutter bankruptcy section 13:576, page 13-61, the plan or

confirmation order preclude the revesting of the estate property until
a discharge is granted or the case is dismissed.
[CD CA BC Local Form F 3015-1.1 (“Chapter 13 Plan”) Paragraph VIII

(“Revestment of Property”) (mandatory)]
Property income from rental is used to for payments to the plan
Continue plan confirmation to file modified plan

request for plan modification
original pleading superseded see Rutter Fed Civ Proc 8:1550
Rutter Fed Civ Proc 8:995 compare pleadings containing inconsistent

factual allegations: Pleading rules permit litigants to allege
factually (or legally) inconsistent theories (subject to FRCP 11 ban
on presenting frivolous papers to the court). See FRCP 8(d)(3) and
Molsbergen v. United States (9th Cir. 1985) 757 F.2d 1016, 1018 fn. 3]
Molsbergen v. U.S., 757 F.2d 1016, 53 USLW 2521, 1 Fed.R.Serv.3d 1051 (9th
Cir.(Cal.),Apr 09, 1985)
A. Appellant’s Inconsistent Averments
As a threshold matter, we note that the district court erred in construing

count two of appellant’s complaint as an admission against count one and in
concluding that count one was therefore barred by Feres. Indeed, to permit
such a construction would undermine the clear intent of the Federal Rules of
Civil Procedure, which explicitly authorize litigants to present alternative
and inconsistent pleadings. Pursuant to Rule 8(e)(2), “[a] party may set
forth two or more statements of a claim or defense alternatively or
hypothetically.” The Rule further provides that “[a] party may also state as
many separate claims or defenses as he has regardless of consistency.”*1019
Id. Clearly, a policy which permits one claim to be invoked as an admission
against an alternative or inconsistent claim would significantly restrict, if
not eliminate, the freedom to plead inconsistent claims provided by Rule 8(e)
(2). Thus, courts have been reluctant to permit one pleading to be read as a
judicial or evidentiary admission against an alternative or inconsistent
pleading. See Douglas Equipment, Inc. v. Mack Trucks, Inc., 471 F.2d 222 (7th
Cir.1972); Continental Insurance Co. v. Sherman, 439 F.2d 1294 (5th
Cir.1971); Giannone v. United States Steel Corp., 238 F.2d 544 (3d Cir.1956);
McCormick, Evidence § 265 (2nd ed. 1972). Cf. Ryan v. Foster and Marshall,
556 F.2d 460, 463 (9th Cir.1977) (plaintiffs’ assertion of inconsistent and
alternative claims may not be construed as a waiver by plaintiffs of their
rights to recovery under either claim).
[1] In light of the liberal pleading policy embodied in Rule 8(e)(2), we hold
that a pleading should not be construed as an admission against another
alternative or inconsistent pleading in the same case under the circumstances
present here. Shipek v. United States, 752 F.2d 1352, 1356 (9th Cir. 1985).FN4
Thus, in this case, the district court should have examined counts one and
two of appellant’s complaint independently. Properly analyzed, count one of
appellant’s complaint alleges that subsequent to Mr. Molsbergen’s discharge,
the government learned of a risk to which it had exposed Mr. Molsbergen and
negligently failed to warn him of prospective harm.
FN4. As presented here, we deal with inconsistency only at the initial

pleading stage. Whether, and under what circumstances, inconsistent
allegations may be used as admissions, or for other proper evidentiary
purposes later in the same action, or in related or subsequent actions, are
issues not presented to us for decision.
Look at ninth circuit appellate practice for statement of facts filled

with legal conclusions.
Argue Bank Of America v. La jolla
Cite argument as to the quotation of interspousal as to what was

stated to me as to what was written on the document.
Hearsay
I object to the declaration of Miguel Duarte as inadmissible on the

basis that Miguel Duarte lacks personal knowledge, asserts statements
from which he lacks personal knowledge. States testimony from which
there is a lack of personal knowledge. States testimony which are
conclusions from which there is lack of personal knowledge. Duarte
fails to establish that he was in position to see Soon Chey sign a
document.
Employee’s summary judgment affidavit included inadmissible evidence, and

statements in employee’s response that were not supported by other portions
of record or could not represent information based on employee’s personal
knowledge would be disregarded on employer’s motion for summary judgment;
affidavit included immaterial information, recitation of facts that employee
could not have actually perceived or observed, conclusory allegations, and
hearsay. Ney v. City of Hoisington, Kan., D.Kan.2007, 508 F.Supp.2d 877,
affirmed 264 Fed.Appx. 678, 2008 WL 324203. Federal Civil Procedure 2539
Duarte’s declaration is hearsay statement an out of court statement
offered to prove the truth of the matter at issue
Heard what the judge said.
The line between argument and evidence is blurred. Rutter Fed Evid
page 8C-13
Conclusory.
Federal Deposit Ins. Corp. v. New Hampshire Ins. Co., 953 F.2d 478 (9th
Cir.(Cal.),Dec 30, 1991)
[7] Federal Civil Procedure 170A 2545
170A Federal Civil Procedure

170AXVII Judgment
170AXVII(C) Summary Judgment
170AXVII(C)3 Proceedings
170Ak2542 Evidence
170Ak2545 k. Admissibility. Most Cited Cases
(Formerly 170Ak2542.1, 170Ak2542)
Defects in evidence submitted in opposition to motion for summary judgment
are waived absent motion to strike or other objection. Fed.Rules
Civ.Proc.Rule 56(e), 28 U.S.C.A.
[10] Federal Courts 170B 634
170B Federal Courts

170BVIII Courts of Appeals
170BVIII(D) Presentation and Reservation in Lower Court of
Grounds of Review
170BVIII(D)2 Objections and Exceptions
170Bk634 k. Amount or Extent of Relief; Costs;
Judgment. Most Cited Cases
Court of Appeals could consider exhibits introduced in opposition to motion
for summary judgment, even though the exhibits would not have been admissible
at trial; party moving for summary judgment failed to object to the admission
of the exhibits. Fed.Rules Civ.Proc.Rule 56(e), 28 U.S.C.A
[7] Rule 56(e) provides in pertinent part:
Supporting and opposing affidavits shall be made on personal knowledge, shall

set forth facts as would be admissible in evidence, and shall show
affirmatively that the affiant is competent to testify to the matters stated
therein.
Defects in evidence submitted in opposition to a motion for a summary

judgment are waived “absent a motion to strike or other objection.”
*485Scharf v. United States Attorney General, 597 F.2d 1240, 1243 (9th
Cir.1979) . See Allen v. Scribner, 812 F.2d 426, 435 n. 18 (9th Cir.) (“If a
party fails to move to strike an affidavit that is allegedly defective under
Rule 56(e), he waives any objection to it.”), amended, 828 F.2d 1445 (9th
Cir.1987). In Scharf, we reversed an order granting summary judgment because
the trial court failed to consider the affidavit of a lay person which
contained references to medical literature and set forth incompetent evidence
of the affiant’s opinion concerning the effect of disease on the accuracy of
blood tests. 597 F.2d at 1242-43.
In Eguia v. Tompkins, 756 F.2d 1130 (5th Cir.1985), as in this matter,

“unauthenticated excerpts” from court proceedings and an attorney’s affidavit
alleging that “the facts and allegations contained in the defendants’ motion
for summary judgment were true and correct” were submitted by the moving
party. Id. at 1135. The Fifth Circuit held that “[d]ocuments presented in
support of a motion for summary judgment may be considered even though they
do not comply with the requirements of Rule 56 if there is no objection to
their use.” Id. at 1136.
[8][9] We review an order granting summary judgment independently, or de

novo, without deference to the ruling of the district court. FSLIC v.
Molinaro, 889 F.2d 899, 901 (9th Cir.1989). In fulfilling this duty, we must
determine whether there is a genuine issue of material fact in dispute, after
viewing the evidence in the light most favorable to the party opposing the
motion. Id.
[10] The Supreme Court instructed, in Celotex Corp. v. Catrett, 477 U.S. 317,
106 S.Ct. 2548, 91 L.Ed.2d 265 (1986), that the nonmoving party need not
produce evidence “in a form that would be admissible at trial in order to
avoid summary judgment.” Id. at 324, 106 S.Ct. at 2553. The nonmoving party
is required, however, to go beyond the pleadings and “set forth specific
facts showing that there is a genuine issue for trial.” Fed.R.Civ.P. 56(e).
Because New Hampshire failed to object to the admission of Exhibits F and H,
we may consider them in determining whether there is a genuine issue of
material fact in dispute, notwithstanding the fact that this evidence was
presented in a form that would not be admissible at trial.
[11] The grand jury indictment recites specific facts showing that Ramona’s
employees discovered that Molinaro committed the dishonest acts, alleged in
the amended complaint, during the term of the bond. **The portions of the
testimony presented in support of the summary judgment motion, and the
recitation of facts in the grand jury indictment, demonstrate that Ramona
employees, including Norm Marks, the loan officer, and Geraldine Balogh, a
director and employee, were aware of facts during the term of the bond that
would cause a reasonable person to assume that Molinaro was committing
dishonest acts.
Duarte argues that unlawful detainer cannot not look at validity of

title
And then later argues that it determined the total title

**Did Karen L. Robinson consider the declaration of David Chey
regarding actual or constructive notice of DEFENDANTS and the imputed
knowledge of Matthew Anderson.
Did not consider actual or constructive notice

Holder v. Holder, 305 F.3d 854, 02 Cal. Daily Op. Serv. 8169, 2002 Daily
Journal D.A.R. 10,304 (9th Cir.(Wash.),Sep 06, 2002)
Judicial notice of appellate court opinion to determine waiver issue

was not actually litigated or necessarily determined.
September 9, 2:30 p.m. hearing briefs whether case should be due

opening brief August 26, 2009, may file reply before Septebmer 2, 2009
reply brief for hearing Sept. 9, 2009 ,
11 U.S.C. § 1329. Modification of plan after confirmation
Smended plan plan payments September 9, 2009 2:30 p.m. August 6, 2009,
11:00 A.M.
October 14, 2:30 September 3, 2009 11:00 341 A meeting amended plan
in file 25 days prior by August
(a) At any time after confirmation of the plan but before the
completion of payments under such plan, the plan may be modified, upon
request of the debtor, the trustee, or the holder of an allowed
unsecured claim, to--
(1) increase or reduce the amount of payments on claims of a

particular class provided for by the plan;
(2) extend or reduce the time for such payments;
(3) alter the amount of the distribution to a creditor whose claim is

provided for by the plan to the extent necessary to take account of
any payment of such claim other than under the plan; or
(4) reduce amounts to be paid under the plan by the actual amount
expended by the debtor to purchase health insurance for the debtor
(and for any dependent of the debtor if such dependent does not
otherwise have health insurance coverage) if the debtor documents the
cost of such insurance and demonstrates that--
(A) such expenses are reasonable and necessary;
(B)(i) if the debtor previously paid for health insurance, the amount
is not materially larger than the cost the debtor previously paid or
the cost necessary to maintain the lapsed policy; or
(ii) if the debtor did not have health insurance, the amount is not
materially larger than the reasonable cost that would be incurred by a
debtor who purchases health insurance, who has similar income,
expenses, age, and health status, and who lives in the same
geographical location with the same number of dependents who do not
otherwise have health insurance coverage; and
(C) the amount is not otherwise allowed for purposes of determining

disposable income under section 1325(b) of this title;
and upon request of any party in interest, files proof that a health
insurance policy was purchased.
(b)(1) Sections 1322(a), 1322(b), and 1323(c) of this title and the
requirements of section 1325(a) of this title apply to any
modification under subsection (a) of this section.
(2) The plan as modified becomes the plan unless, after notice and a
hearing, such modification is disapproved.
(c) A plan modified under this section may not provide for payments
over a period that expires after the applicable commitment period
under section 1325(b)(1)(B) after the time that the first payment
under the original confirmed plan was due, unless the court, for
cause, approves a longer period, but the court may not approve a
period that expires after five years after such time.
Wells Fargo Bank, through its attorney of record, John M. Sorich

states in the Supplemental Brief To Motion For Relief From The
Automatic Stay, Statement Of Facts, page 2, line 19, “Debtor Soon
Chey’s continuing litigation tactics are no more than a form of forum
shopping and that is a basis for the bankruptcy court to abstain from
rehearing Debtor’s unsuccessful claim to the subject property. As
further evidence that Debtors are forum shopping they have claimed
that Soon Chey was defrauded by her husband in signing an interspousal
transfer deed by no less than three contradicting theories. Debtors
first claimed that Soon Chey was forced to sign by way of threat of
divorce. Then they claimed Soon Chey signed the transfer because
And at p. 6, Movant also made it a point in their Motion for Summary

Judgment hearing to address the issue of fraud the Debtor’s were
alleging in their opposition as Debtor has unsuccessfully litigated
title in two other forums. Movant also pointed out the inconsistent
testimony by both Debtors in the Unlawful Detainer Motion for Summary
Judgment and again now. In support of their original opposition to
Movant’s Relief from stay, Debtors submitted a declaration under the
penalty of perjury in which they testified that Soon W. Chey signed
the interspousal deed believing it was a “Homestead.” See Opposition.
However, now Debtors are claiming that the interspousal deed was
forged a claim that was made by David Chey in open court and a claim
that was mumbled by Soon Chey in open court when she said, “I didn’t
sign”. Incredibly this marks the third time Debtors have materially
altered their testimony. Specifically, in a previous bankruptcy case,
Defendant Soon Chey declaration signed, under penalty of perjury, read
as follows: “My husband Young Chey in or about the time of January 16,
1998 expressed his intention to divorce me if I didn’t sign the
‘interspousal transfer deed’ and in about the time of December 17,
2003 expresses his intention to divorce me if I didn’t sign the
‘interspousal transfer deed.’” (Request for Judicial Notice filed
concurrently herewith, Ex. 11). David Chey also submitted a
declaration under the penalty of perjury in the bankruptcy case that
stated, ‘Young Chey in about the time of January 16, 1998 expressed
his intention to divorce Soon Chey if she didn’t sign the
‘interspousal transfer deed” and in about the time of December 17,
2003 expressed his intention to divorce Soon Chey if she didn’t sign
the ‘interspousal transfer deed”. (Request for Judicial Notice filed
concurrently herewith, Ex. 12).”
John M. Sorich attempts to restate my words into, what was stated to

me, when to identify the document, I am stating what is in the
quotations what is stated on the document.
In New Hampshire v. Maine (2001) 532 U.S. 742, 749 the Supreme Court
has stated that judicial estoppel is where, ”a party assumes a certain
position in a legal proceeding, and succeeds in maintaining that
position, he may not thereafter, simply because his interests have
changed, assume a contrary position, especially if it be to the
prejudice of the party who has acquiesced in the position formerly
taken by him.”
[7][8][9][10] Courts have observed that “[t]he circumstances under

which judicial estoppel may appropriately be invoked are probably not
reducible to any general formulation of principle,”Allen, 667 F.2d, at
1166; accord, Lowery v. Stovall, 92 F.3d 219, 223 (C.A.4 1996);
Patriot Cinemas, Inc. v. General Cinema Corp., 834 F.2d 208, 212
(C.A.1 1987). Nevertheless, several factors typically inform the
decision whether to apply the doctrine in a particular case: First, a
party’s later position must be “clearly inconsistent” with its earlier
position. United States v. Hook, 195 F.3d 299, 306 (C.A.7 1999); In re
Coastal Plains, Inc., 179 F.3d 197, 206 (C.A.5 1999); Hossaini v.
Western Mo. Medical Center, 140 F.3d 1140, 1143 (C.A.8 1998); Maharaj
v. Bankamerica Corp., 128 F.3d 94, 98 (C.A.2 1997). Second, courts
regularly inquire whether the party has succeeded in persuading a
court to accept that party’s earlier position, so that judicial
acceptance of an inconsistent position in a later proceeding would
create “the perception that either the first or the second court was
misled,” Edwards, 690 F.2d 599.
And,”
Absent success*751 in a prior proceeding, a party’s later inconsistent
position introduces no “risk of inconsistent court determinations,”
United States v. C.I.T. Constr. Inc., 944 F.2d 253, 259 (C.A. 1991),
and thus poses little threat to judicial integrity.” (New Hampshire
v. Maine, supra, 532 U.S at p.750)
In In re Corey 892 F.2d 829 (9th Cir.(Hawai’i),Dec 27, 1989)

The court stated,
“In, Stevens Tech. Services, Inc. v. SS Brooklyn, 885 F.2d 584 (9th
Cir.1989) we recently described the two competing views of judicial
estoppel. Under the majority view, judicial estoppel does not apply
unless the assertion inconsistent with the claim made in the
subsequent litigation ‘was adopted in some manner by the court in the
prior litigation.” Id. at 588. Under the minority view, judicial
estoppel can apply even when a party was unsuccessful in asserting its
position in the prior judicial proceeding, ‘if the court determines
that the alleged offending party engaged in ‘fast and loose’ behavior
which undermined the integrity of the court.” Id. at 589. Appellants’
claim of judicial estoppel fails under either test. Neither the Hawaii
courts nor the federal courts adopted Corey’s position. Nor is there
any indication that Corey is playing ‘fast and loose’ with the
judicial system. The district court found that Corey’s change of
position was occasioned by her realization that Ellis was not her
friend and had duped her. This finding is not clearly erroneous. See
Konstantinidis v. Chen, 626 F.2d 933, 939 (D.C.Cir.1980) (doctrine of
judicial estoppel ‘ ‘has never been applied where [the party’s]
assertions were based on fraud, inadvertence, or mistake’ ‘) (quoting
Johnson Serv. Co. v. Transamerica Ins. Co., 485 F.2d 164, 175 (5th
Cir.1973)).
Rule 8. General Rules of Pleading, of the Federal Rules of Civil

Procedure.
(d) Pleading to Be Concise and Direct; Alternative Statements;

Inconsistency.
(2) Alternative Statements of a Claim or Defense.A party may set out 2

or more statements of a claim or defense alternatively or
hypothetically, either in a single count or defense or in separate
ones. If a party makes alternative statements, the pleading is
sufficient if any one of them is sufficient.
(3) Inconsistent Claims or Defenses.A party may state as many separate

claims or defenses as it has, regardless of consistency.
In Henry v. Daytop Village, Inc., 42 F.3d 89, (2nd Cir.(N.Y.),Dec 01,

1994) the court stated,” Common law and code practice condemned
inconsistency in pleadings because it was believed that a pleading
containing inconsistent allegations indicated falsehood on its face
and was a sign of a chicanerous litigant seeking to subvert the
judicial process. All too frequently, however, valid claims were
sacrificed on the altar of technical consistency. In order to avoid
the constrictions of the early practice, the draftsmen of the federal
rules sought to liberate pleaders from the inhibiting requirement of
technical consistency. 5 CHARLES A. WRIGHT & ARTHUR R. MILLER, FEDERAL
PRACTICE AND PROCEDURE § 1283, at 533 (2d ed. 1990). The flexibility
afforded by Rule 8(e)(2) is especially appropriate in civil rights
cases, in which complex inquiries into the parties’ intent may
sometimes justify raising multiple, inconsistent claims. See, e.g.,
MacFarlane v. Grasso, 696 F.2d 217, 224-25 (2d Cir.1982) (holding that
§ 1983 plaintiff conceded existence of disputed agency policy only to
the extent that he challenged the constitutionality of that policy,
but not for purposes of other claims); Wright v. Olin Corp., 697 F.2d
1172, 1184 (4th Cir.1982) (“[I]t is often appropriate to assess
particular Title VII claims and defenses alternatively under different
theories.”).
[13][14] Pursuant to Rule 8(e)(2), therefore, we may not construe
Henry’s first claim as an admission against another alternative or
inconsistent claim. See MacFarlane, 696 F.2d at 224-25; McCalden v.
California Library Ass’n, 955 F.2d 1214, 1219 (9th Cir.1990), cert.
denied, --- U.S. ----, 112 S.Ct. 2306, 119 L.Ed.2d 227 (1992);
Molsbergen v. United States, 757 F.2d 1016, 1018-19 (9th Cir.) (“In
light of the liberal pleading policy embodied in Rule 8(e)(2), ... a
pleading should not be construed as an admission against another
alternative or inconsistent pleading in the same case....”), cert.
dismissed, 473 U.S. 934, 106 S.Ct. 30, 87 L.Ed.2d 706 (1985).
Accordingly, even if Henry’s claims were somehow inconsistent-*96
which they are not, in our view-we could and would entertain them
both.”
In Messick v. Horizon Industries Inc., 62 F.3d 1227, 1231 (9th Cir.

(Or.),Aug 10, 1995) the court stated,
“[9][10] Mohawk contends that the affidavit submitted by Messick in

opposition to the motion for summary judgment should not be considered
because it ‘contradicted his deposition testimony.’ As the foregoing
discussion of the evidence shows, the deposition testimony given by
Messick and Fields, plus the relevant exhibits and affidavits of other
witnesses, suffice to establish the existence of triable issues with
respect to age discrimination. In any event, Mohawk’s argument amounts
to no more than a series of quibbles about peripheral details in the
deposition and the affidavit. While this court has held that a party
may not ‘create his own issue of fact by an affidavit contradicting
his prior deposition testimony’, Foster v. Arcata Associates, Inc.,
772 F.2d 1453, 1462 (9th Cir.1985), cert. denied, 475 U.S. 1048, 106
S.Ct. 1267, 89 L.Ed.2d 576 (1986), the non-moving party is not
precluded from elaborating upon, explaining or clarifying prior
testimony elicited by opposing counsel on deposition; minor
inconsistencies that result from an honest discrepancy, a mistake, or
newly discovered evidence afford no basis for excluding an opposition
affidavit. See, e.g., Kennedy v. Allied Mut. Ins. Co., 952 F.2d 262,
266-67 (9th Cir.1991).”
I refer to an incorporate the statement of qualifications of Ms. Eva

R. Salzer, expert witness and board certified document examiner, with
board certifications in:
1. The Court Qualified Expert Witness in Handwriting

Identification in California
2. The National Board of Document Examiners, New York, NY, 1988
3. The National Association of Document Examiners, Princeton, NJ,

1994
4. The National Association of Document Examiners, recertified,

2005
I visited Ms. Eva R. Salzer on July 6, 2009 to have her analyze

Document Number 19980051462 and the Document Number 2003001508349.
And supplied her with information that she had requested
I refer to and incorporate
To conduct an analysis of whether these documents were signed by me.
I refer to and incorporate the certified copy of the United States

Bankruptcy Court Central District of California, Santa Ana
on Case No. 8:07-12360 RK 8:07-ap-01397, Plaintiff’s Amended Notice Of
Motion And Motion For Summary Judgment, filed on July 3, 2008 and the
Declaration on page 28, line 15, “I signed
the document on the statement, on that it was a homestead.” And I
request the court to take judicial notice under the authorization of
Section 453 of the Evidence Code of the State of California.
I refer to and incorporate the Reporter’s Transcript, page 38, line
25,
“MR. DUARTE: Your Honor, it’s here and this Court cannot really
litigate title, in that this – this case filed in Santa Ana, it’s a
property title claim and just – that’s just to build the foundation,
there’s nothing, your Honor, with the trust deed, deed of trust on
that.
THE COURT: All right.
And I refer to and incorporate the Reporter’s Transcript, page 75,
line 6,
“MR. DUARTE: The Court, and proper Court, in terms of dealing

with title issues and – and issues that the Defendants raise of – of a
loan and what conversations occurred, those are not proper for this
Court, your Honor. This is Summary proceeding. This deals
specifically with possession and I – and that’s why Exhibit 7, 8, and
9 were submitted, your Honor, because any notice of – of interest was
shot down by the Court, your Honor, that’s dealing with the property
title claim.
line 19,
“But, the Plaintiff here – I mean, the only remedy – the only
adequate remedy of law for us is possession, hour Honor.
line 16,
“THE COURT: in an Unlawful Detainer proceeding, the issue of

title is not litigated, that would defeat the purpose, the summary
purpose of the Unlawful Detainer Action. The limited basis of title
that is litigated in an Unlawful Detainer Action is merely the
Plaintiff’s proof that they’re entitled to the property, so enabling
them to seek possession.
Henry v. Daytop Village, Inc., 42 F.3d 89, 66 Fair Empl.Prac.Cas. (BNA)

882, 66 Empl. Prac. Dec. P 43,672, 30 Fed.R.Serv.3d 1502 (2nd Cir.(N.Y.),Dec
01, 1994)
Messick v. Horizon Industries Inc., 62 F.3d 1227, 68 Fair Empl.Prac.Cas.

(BNA) 986, 66 Empl. Prac. Dec. P 43,665, 95 Cal. Daily Op. Serv. 6314, 95
Daily Journal D.A.R. 10,772 (9th Cir.(Or.),Aug 10, 1995)
Rule 17. Plaintiff and Defendant; Capacity; Public Officers, of the

Federal Rules of Civil Procedure provides,
(a) Real Party in Interest.
(1) Designation in General.An action must be prosecuted in the name of

the real party in interest. The following may sue in their own names
without joining the person for whose benefit the action is brought:
(A) an executor;
(B) an administrator;
(C) a guardian;
(D) a bailee;
(E) a trustee of an express trust;
(F) a party with whom or in whose name a contract has been made for
another’s benefit; and
(G) a party authorized by statute.
(2) Action in the Name of the United States for Another’s Use or
Benefit.When a federal statute so provides, an action for another’s
use or benefit must be brought in the name of the United States.
(3) Joinder of the Real Party in Interest.The court may not dismiss an
action for failure to prosecute in the name of the real party in
interest until, after an objection, a reasonable time has been allowed
for the real party in interest to ratify, join, or be substituted into
the action. After ratification, joinder, or substitution, the action
proceeds as if it had been originally commenced by the real party in
interest.
(b) Capacity to Sue or Be Sued.Capacity to sue or be sued is

determined as follows:
(1) for an individual who is not acting in a representative capacity,

by the law of the individual’s domicile;
(2) for a corporation, by the law under which it was organized; and
(3) for all other parties, by the law of the state where the court is
located, except that:
(A) a partnership or other unincorporated association with no such

capacity under that state’s law may sue or be sued in its common name
to enforce a substantive right existing under the United States
Constitution or laws; and
(B) 28 U.S.C. §§ 754 and 959(a) govern the capacity of a receiver

appointed by a United States court to sue or be sued in a United
States court.
(c) Minor or Incompetent Person.
(1) With a Representative.The following representatives may sue or

defend on behalf of a minor or an incompetent person:
(A) a general guardian;
(B) a committee;
(C) a conservator; or
(D) a like fiduciary.
(2) Without a Representative.A minor or an incompetent person who does

not have a duly appointed representative may sue by a next friend or
by a guardian ad litem. The court must appoint a guardian ad litem--or
issue another appropriate order--to protect a minor or incompetent
person who is unrepresented in an action.
U.S. v. 30.64 Acres of Land, More or Less, Situated in Klickitat County,

State of Wash., 795 F.2d 796, 55 USLW 2150, 5 Fed.R.Serv.3d 415 (9th Cir.
(Wash.),Jul 28, 1986)
U.S. v. 30.64 Acres of Land, More or less, Situated in Klickitat

County, State of Wash., 795 f.2d 796 (9th Cir.(Wash.), Jul 28, 1986)
Second, the district court is directed to exercise its discretion under

Fed.R.Civ.P. 17(c) to determine whether it should appoint a guardian ad litem
for Starr to protect his interests in further proceedings. A finding as to
his competency should be made. If the district court concludes that a
guardian ad litem need not be appointed, it should support that determination
with factual findings adequate for appellate review. The district court is
not limited to the appointment of a guardian ad litem but may “make such
other order as it deems proper for the protection of the ... incompetent
person.” Fed.R.Civ.P. 17(c).
Representation of Starr by an attorney will not be sufficient to satisfy the

requirements of Rule 17(c). See Roberts, 256 F.2d at 39.
Till v. Hartford Acc. & Indem. Co., 124 F.2d 405 (C.C.A.10 (Okla.),Dec 17,
1941)
211 Infants
211VII Actions
211k76 Guardian Ad Litem or Next Friend
A “guardian ad litem” is a special guardian, appointed by the court to defend
in behalf of an infant party, whereas a “next friend” is one who, without
being regularly appointed guardian, represents an infant plaintiff.
**[4] Infants 211 87
211 Infants
211VII Actions
211k87 k. Failure to Procure Appointment. Most Cited Cases
Where automobile liability insurer instituted declaratory judgment action
against parties who had instituted state court actions against insured and
some of the state court actions had been brought by minors through their next
friends, who were made defendants in the declaratory judgment action and
appeared and filed answers in behalf of the minors, one of whom through his
next frien”d filed a cross-complaint, federal rule regarding appointment of
guardian ad litem was substantially complied with, and failure to appoint
guardians ad litem did not render declaratory judgment void. Fed.Rules
Civ.Proc. rule 17(c), 28 U.S.C.A.
At pp. 408-409
“[3] There is little distinction between a next friend and a guardian ad

litem. A guardian ad litem is a special guardian, appointed by the court to
defend in behalf of an infant party. A next friend is one who, without being
regularly appointed guardian, represents an infant plaintiff.FN2
FN2. 31 C.J.,p. 1118, Sec. 262; Bouv. Law Dict., Rawle’s 3rd Rev., Vol. 1, p.
1390; Bunting v. Bunting, 87 N.J.Eq. 20, 99 A. 840, 841, 842; Schade v.
Connor, 84 Neb. 51, 120 N.W. 1012, 1015; Watts v. Hicks, 119 Ark. 621, 178
S.W. 924, 925; Crawford v. Amusement Syndicate Co., Mo. Sup., 37 S.W.2d 581,
584; Benson v. Birch, 139 Or. 459, 10 P.2d 1050, 1051.
[4] Here, the next friends were made parties defendant and appeared and filed
answers in behalf of the minors, and Shull, through his next friend, filed a
cross complaint. The next friends appeared and represented the minors at the
trial and the court found that the interests of the minors had been fully and
adequately represented and protected by their friends. Therefore, while not
technically appointed as guardians ad litem, the next friends did everything
for the minors they could have done had they been formally appointed. We
conclude that the requirements of Rule 17(c) were substantially*409 complied
with and that the failure to appoint guardians ad litem did not render the
judgment void.”
Roberts v. Ohio Cas. Ins. Co., 256 F.2d 35, 68 A.L.R.2d 747 (5th Cir.
(Tex.),Jun 03, 1958)
170B Federal Courts

170BVI State Laws as Rules of Decision
170BVI(C) Application to Particular Matters
170Bk433 k. Other Particular Matters. Most Cited Cases
(Formerly 170Ak113)
The appointment of a guardian ad litem for infants is a procedural question
controlled by federal rules. Fed.Rules Civ.Proc. rule 17(c), 28 U.S.C.A.
[6] Infants 211 78(1)
211 Infants
211VII Actions
211k78 Necessity and Grounds for Appointment
(Formerly 170Ak113)
The federal rule does not make the appointment of a guardian ad litem
mandatory, but if court feels that infant’s interests are otherwise
adequately represented and protected, a guardian ad litem need not be
appointed, but the rule does not mean that a trial judge may ignore or
overlook such fundamental requirement for protection of infants. Fed.Rules
Civ.Proc. rule 17(c), 28 U.S.C.A.
[7] Infants 211 78(1)
211 Infants
211VII Actions
(Formerly 170Ak113)
Federal rule relating to appointment of guardian ad litem for infant means
(1) as a matter of proper procedure, court should usually appoint a guardian
ad litem; (2) but the court may, after weighing all the circumstances, issue
such order as will protect the minor in lieu of appointment of a guardian ad
litem; (3) and may even decide that such appointment is unnecessary, though
only after court has considered the matter and made a judicial determination
that infant is protected without a guardian. Fed.Rules Civ.Proc. rule 17(c),
28 U.S.C.A.
[8] Infants 211 78(1)
211 Infants
211VII Actions
(Formerly 170Ak113)
Where record disclosed that no one gave a thought to appointment of guardian
ad litem for minors in suit to set aside an award of Texas Industrial
Accident Board in their favor, until after judgment was rendered, and it was
apparently an oversight, the discretion lodged in trial judge under federal
rule for appointment of guardian ad litem was not intended to apply to such a
situation, so that judgment would be reversed and remanded, since orderly
administration of justice and procedural protection of minors require trial
judge to give due consideration to propriety of an infant’s representation by
guardian ad litem before he may dispense with necessity of appointing the
guardian. Fed.Rules Civ.Proc. rule 17(c), 28 U.S.C.A.; Vernon’s
Ann.Civ.St.Tex. art. 8307, § 5.
At pp. 38-39
“[5][6][7] The appointment of a guardian ad litem is a procedural question

controlled by Rule 17(c) of the Federal Rules of Civil Procedure. 3 Moore’s
Federal Practice, Section 17.26, p. 1417; *39 Travelers Indemnity Co. v.
Bengston, 5 Cir., 1956, 231 F.2d 263; Fallot v. Gouran, 3 Cir., 1955, 220
F.2d 325.
Rule 17(c) provides in part:
‘The court shall appoint a guardian ad litem for an infant or incompetent

person not otherwise represented in an action or shall make such other order
as it deems proper for the protection of the infant or incompetent person.’
Rule 17(c) does not make the appointment of a guardian ad litem mandatory. If
the court feels that the infant’s interests are otherwise adequately
represented and protected, a guardian ad litem need not be appointed. Wescott
v. United States Fidelity & Guaranty Co., 4 Cir., 1946, 158 F.2d 20. But the
rule does not mean that a trial judge may ignore or overlook such a
fundamental requirement for the protection of infants. We spell out the rule
to mean: (1) as a matter of proper procedure, the court should usually
appoint a guardian ad litem; (2) but the Court may, after weighing all the
circumstances, issue such order as will protect the minor in lieu of
appointment of a guardian ad litem; (3) and may even decide that such
appointment is unnecessary, though only after the Court has considered the
matter and made a judicial determination that the infant is protected without
a guardian. In Till v. Hartford Accident & Indemnity Co., 10 Cir., 1941, 124
F.2d 405, the Court found that a guardian ad litem was not necessary only
because the infant was represented through a next friend, the alter ego of a
guardian ad litem. In Zaro v. Strauss, 5 Cir., 1948, 167 F.2d 218, this Court
held that an attorney’s representation of an incompetent was insufficient to
satisfy the requirements of Rule 17(c).
[8] The record in this case shows that no one gave a thought to the
appointment of a guardian ad litem until after judgment was rendered below.
Apparently it was an oversight. We believe that the discretion lodged in the
trial judge in Rule 17(c) was not intended to apply to such a situation. The
orderly administration of justice and the procedural protection of minors
requires the trial judge to give due consideration to the propriety of an
infant’s representation by a guardian ad litem before he may dispense with
the necessity of appointing the guardian.
The judgment is reversed and remanded for further proceedings not

inconsistent with this opinion.”
Zaro v. Strauss, 167 F.2d 218 (C.C.A.5 (Fla.),Apr 16, 1948) (NO. 12166)
**We, therefore, hold that while the judgment rendered was not null as one
rendered entirely without jurisdiction, it was voidable upon a showing such
as has been made here that defendant had a meritorious defense and was not
properly represented in the action. Quigley v. Cremin, Fla., 109 So. 312;
Olivera v. Grace, 19 Cal.2d 570, 122 P.2d 564, 140 A.L.R. 1328, and
Annotation 1336, et seq.; 44 C.J.S., Insane Persons, Sec. 151.
Noncoherent for property matters
Coherent for other matters.
LBR 9013-3. PROOF OF SERVICE

(a) Form.
(1) Declaration. Proof of service may be made by declaration of the
person
accomplishing the service. The declaration must include the following
information:
(A) The day and manner of service;
(B) The person and/or entity served;
(C) The method of service employed (e.g., electronic, personal, mail,
substituted,
etc.);
(D) Identification of the papers served;
(E) The exact address (including zip code) at which service was made,
or the
email address or facsimile number if service is by electronic means;
and
(F) The capacity in which the person or entity was served.
(c) Service by Mail. Proof of service by mail may be made by the

declaration of the person mailing or causing the papers to be mailed.
(g) Filing. Except for matters being heard on notice shortened under
LBR 9075-1, proof of service must be filed in the clerk’s office no
later than 5 days after service and the serving
party must bring a conformed copy to the hearing. If the proof or
acknowledgment of service is attached to the original document, it
must be attached as the last page of the document.
(h) Failure to File. The failure to prepare or file the proof of
service required by this rule does
not affect the validity of the service. The court may at any time
allow the proof of service
to be amended or supplied unless to do so would be prejudicial to the
rights of any party.
In re Mac Donald, 755 F.2d 715, Bankr. L. Rep. P 70,312 (9th Cir.(Cal.) Mar
12, 1985)
Child support modification
In re Universal Life Church, Inc., 127 B.R. 453, 71A A.F.T.R.2d 93-3576, 91-1 USTC P 50,172, Bankr. L.
Rep. P 74,002 (E.D.Cal.,Mar 25, 1991)
Internal Revenue Service (IRS) moved for relief from stay in order to allow prosecution of complex tax claim
against Chapter 11 debtor to proceed in state tax court. The United States Bankruptcy Court for the Eastern District
of California granted IRS’s motion for relief from stay, and debtor appealed. The District Court, Shubb, J., held that
IRS was properly granted relief from stay to allow state tax court action to proceed, given tax court’s special
expertise in resolving complex tax questions and its ability to effectively assess debtor’s tax liability in shortest
amount of time.
Affirmed.
[3] Bankruptcy 51 2422.5(4.1)
51 Bankruptcy
51k2422.5 In General
51k2422.5(4) Particular Cases
51k2422.5(4.1) k. In General. Most Cited Cases
(Formerly 51k2422.5(4))
Internal Revenue Service (IRS) was properly granted relief from stay to allow prosecution of complex tax claim to
continue in state tax court, where tax court was within three weeks of trying case when debtor filed for bankruptcy,
tax court had special expertise in deciding contested tax issues, and there was no question but that tax court could
most effectively assess debtor’s liability in shortest amount of time. Bankr.Code, 11 U.S.C.A. § 362.
In 1985, appellant, Universal Life Church (“ULC”), filed a petition in the tax court seeking redetermination of
income tax deficiencies for the 1978, 1979, and 1980 tax years. Over a three year period, the trial date was
continued four times, finally resulting in a December 4, 1989, trial date. On November 24, 1989, less than two
weeks before the start of trial, ULC filed a motion seeking to amend its petition to permit the use of the installment
method of accounting.FN1 On November 29, 1989, the tax court denied the motion. The next day, ULC filed a
Chapter 11 petition in bankruptcy. The filing of the petition automatically stayed any further proceedings in tax
court.
On January 12, 1990, ULC filed a complaint in bankruptcy requesting a determination of federal tax liability for the
years 1978-1990.FN2 The Internal Revenue Service (“I.R.S.”) immediately filed a motion to lift the debtor’s
automatic stay to allow the prosecution of the tax claim to continue in tax court. On February 13, 1990, the
bankruptcy court ordered a modification of the automatic stay to permit the tax court to determine the liability for
the years 1978-1980. ULC noticed an appeal to this court on March 15, 1990.
FN2. Appellant acknowledges that it filed the complaint in bankruptcy with the hope that it could capture the
installment method of accounting it was denied on the eve of trial in tax court.
[3] Appellant essentially argues that by lifting the stay and sending the parties back to tax court to litigate the tax
liability for 1978-1980, ULC will lose $800,000 because the tax court’s ruling prevents it from using a more
favorable method of accounting. The I.R.S. will thus be favored over other creditors in contravention of bankruptcy
policy favoring equal treatment of creditors. Moreover, appellant argues, the bifurcation of the proceedings will
result in a disorderly determination of *455 creditor rights and potentially expose ULC to conflicting results.
U.S. Department of Education 34,519.90
In re Neal, 176 B.R. 30 (Bankr.D.Idaho Nov 02, 1994)
Chapter 7 debtor’s former spouse moved for relief from stay in order to pursue state court divorce and battery
actions against debtor. The Bankruptcy Court, Alfred C. Hagan, J., held that automatic stay would be lifted, but only
to allow former wife to pursue battery action for determination of debtor’s liability and amount thereof.
Motion granted in part and denied in part.
51 Bankruptcy
51k2428 k. Claims of Nondischargeability. Most Cited Cases
Alleged nondischargeability of Chapter 7 debtor’s obligation to his former spouse in connection with claims asserted
by former spouse in pending state court actions was not “cause” for lifting stay to allow state court actions to
proceed; dischargeability question was one which could not be decided on motion for relief from stay, but only in
context of adversary proceeding. Bankr.Code, 11 U.S.C.A. §§ 362(d)(1), 523(a).
51 Bankruptcy
Dischargeability of debt must be determined in adversary proceeding, and may not be determined by motion.
Bankr.Code, 11 U.S.C.A. §§ 362(d)(1), 523(a); Fed.Rules Bankr.Proc.Rule 7001, 11 U.S.C.A.
[3] Bankruptcy 51 2422.5(1)
51 Bankruptcy
51k2422.5(1) k. In General. Most Cited Cases
**Existence of more convenient forum may be “cause” for lifting automatic stay. Bankr.Code, 11 U.S.C.A. § 362(d)
(1).
[4] Bankruptcy 51 2422.5(7)

51 Bankruptcy
51k2422.5(7) k. Domestic Relations. Most Cited Cases
Stay would not be lifted to allow Chapter 7 debtor’s former wife to pursue state court divorce action, **where
judgment had already been entered in former wife’s favor, debtors had admitted liability on judgment debt, and only
appeal which former wife sought to pursue was appeal by debtors; no useful purpose would be served by allowing
former wife to pursue appeal, given debtors’ admission of liability. Bankr.Code, 11 U.S.C.A. § 362(d)(1).
[6] Bankruptcy 51 2422.5(4.1)
51 Bankruptcy
51k2422.5(4.1) k. In General. Most Cited Cases
Automatic stay would be lifted as matter of judicial economy, to allow creditor to pursue battery claim against
Chapter 7 debtor in state court, where parties had already expended considerable effort and resources in state court,
state court was already familiar with facts of case, and no hardship to debtors would result from litigating matter in
state rather than in federal bankruptcy court; creditor would be granted relief from stay only to obtain determination
of debtor’s liability and extent of liability, and would not be granted relief to collect any judgment rendered in state
court proceeding. Bankr.Code, 11 U.S.C.A. § 523(d)(1).
A. The Divorce Proceeding
In the divorce proceeding, the magistrate court denied Hainline’s request for alimony but awarded her $600.00 per
month plus medical expenses for the support of the parties’ minor child. In addition, the magistrate awarded
Hainline $25,763.02 as compensation for Hainline’s support of Neal during medical school. The magistrate court
identified this award as one of “equitable restitution”.
Neal appealed the award of equitable restitution to the Idaho District Court. The district court affirmed the award
and Neal appealed to the Idaho Supreme Court.
The debtors, Thomas Neal and Jill Neal (the “debtors”), filed their petition for voluntary relief pursuant to Chapter 7
of Title 11 of the United States Code on June 2, 1994, before either party had submitted briefs to the Idaho Supreme
Court. In their schedules, the debtors list Hainline’s claim for equitable restitution as liquidated and uncontested.
The debtors filed a motion to dismiss. The district court considered the evidence submitted by the parties and
otherwise treated the motion as one for summary judgment.
The district court granted the motion to dismiss. Hainline filed a motion for reconsideration which the district court
denied. Hainline appealed to the Idaho Court of Appeals which affirmed the district court. Hainline appealed to the
Idaho Supreme Court which held the district court correctly *32 dismissed Hainline’s claims for criminal
conversation and tortious interference with her marriage contract as well as her claims for intentional and or
negligent infliction of emotional distress. However, the Idaho Supreme Court reversed and remained the district
court’s holding on the battery claim.
Since the Idaho Supreme Court remanded the battery claim there have been no further proceedings on the claim in
state court due to the automatic stay.
In their schedules the debtors note the existence of the battery claim, but state that it is unliquidated and disputed.
The debtors do not estimate the amount of this claim.
C. The Adversary Proceeding
Hainline has filed an adversary proceeding in this bankruptcy proceeding to determine the dischargeability of both
her battery claim and her claim for equitable restitution. In the adversary proceeding Hainline seeks:
that the Court determine that the battery debt owed by the Defendant to Plaintiff is nondischargeable, that the alimony
or equitable restitution debt owed by the Defendant to Plaintiff is nondischargeable, that the Court lift the stay so
that Plaintiff, her counsel and the District Court of the Fourth Judicial District of the State of Idaho, in and for the
County of Ada, can proceed with proceedings to determine the amount of the battery debt owed by Defendant to
Plaintiff and that the Court lift the stay so that Plaintiff, her counsel and the Idaho Supreme Court can continue with
proceedings before the Idaho Supreme Court to determine the nature of the debt owed by Defendant to Plaintiff
which is alluded to in Exhibit B, and the amount thereof, and so that the time for Plaintiff to file any additional
adversary proceedings and complaints in this bankruptcy proceeding because of the Idaho Supreme Court’s decision
may be extended until after entry of decision by the Idaho Supreme Court.
Hainline does not seek a determination by the bankruptcy court of Neal’s liability under state law, or the amount of
his liability on either her battery or her equitable restitution claim. Nor does she allege a total dollar amount of the
liability in either claim.
DISCUSSION
Hainline seeks relief from the automatic stay for “cause.” Section 362(d) provides in relevant part:
On request of a party in interest and after notice and a hearing, the court shall grant *33 relief from the stay provided
under subsection (a) of this section, such as by terminating, annulling, modifying, or conditioning such stay-
(1) for cause, including lack of adequate protection of an interest in property of such party in interest.
11 U.S.C. § 362(d)(1).
There is rigid rule test for determining whether sufficient cause exists to modify an automatic stay. Rather, in resolving
motions for relief for “cause” from the automatic stay courts generally consider the policies underlying the
automatic stay in addition to the competing interests of the debtor and the movant.
American Airlines, Inc. v. Continental Airlines (In re Continental Airlines), 152 B.R. 420, 424 (Bankr.D.Del.1993).
[1][2] Hainline contends she should be granted relief from stay to pursue her battery and her equitable restitution
claims on the grounds both claims are nondischargeable. Determination of the dischargeability of a debt is an
adversary proceeding and may not be determined by a motion.FN3 The dischargeability of the claims has yet to be
determined. Accordingly, relief from stay can not be granted on the grounds of nondischargeability.
FN3. Federal Rule of Bankruptcy Procedure 7001 provides in relevant part:
**An adversary proceeding is governed by the rules of this Part VII. It is a proceeding (1) to recover money or
property ... (6) to determine the dischargeability of a debt, ... or (10) to determine a claim or cause of action removed
under pursuant to 28 U.S.C. § 1452.
Federal Rule of Bankruptcy Procedure 7001.
[3] Although a more convenient forum is not one of the enumerated grounds for relief from stay in Section 362(d),
the legislative history of the section suggests that such a forum is cause under section 362(d)(1):
[I]t will often be more appropriate to permit proceedings to continue in their place of origin, when no great prejudice
to the bankruptcy estate would result, in order to leave the parties to their chosen forum and to relieve the
bankruptcy court from any duties that may be handled elsewhere.
In re Johnson, 153 B.R. 49, 51 (Bankr.D.Idaho 1993), quoting S.Rep. No. 989, 95th Cong., 2d Sess. 50, reprinted
in 1978 U.S.C.C.A.N. 5787, 5836.
[4] Hainline contends she should be granted relief from stay to pursue the divorce proceeding. No useful purpose,
however, would be served by a continuation of the state court proceeding. The appeal before the Idaho Supreme
Court which Hainline wishes to pursue was brought by Neal for the purpose of disputing liability. The debtors have
admitted to liability for the claim. Hainline has neither filed nor proposed filing a cross appeal. Therefore, the most
favorable result Hainline could obtain on appeal is an affirmation of the magistrate’s award, a matter the debtors
have already conceded.
[5] Hainline’s stated purpose for pursuing the appeal is to “determine the nature of the award.” It is unclear whether
Hainline believes the Idaho Supreme Court should determine whether the award is in the nature of support or
whether she believes the Idaho Supreme Court will merely more fully explain the award. Whether an award is in the
nature of support for purposes of dischargeability under 11 U.S.C. § 523(a)(5) of alimony or support is a question of
federal law. Shaver v. Shaver, 736 F.2d 1314, 1315-16 (9th Cir.1984). **No purpose would therefore be served by
allowing further proceedings in state court. **Furthermore, such a proceeding would require the estate to expend
money for legal fees without substantially advancing the interests of either the debtors or Hainline. Accordingly,
Hainline’s motion for relief from stay is denied as to the divorce proceeding.
[6] Unlike the equitable restitution claim, however, in the tort proceeding both liability and the amount thereof are in
dispute. Accordingly, liability will have to be determined in either state or federal court.
The parties have already expended considerable effort and resources in the state district court. The state court is
already familiar with the facts in the matter. If the matter were brought in this bankruptcy proceeding, the parties
would have to expend *34 considerable time and effort duplicating their previous efforts in the state court
proceeding. No hardship to the debtors would result from litigating the matter in the state rather than the federal
courts.
Further, whether Neal is liable to Hainline on the battery claim is purely a matter of state law. No federal law is
involved.
Accordingly, in the interests of judicial economy, Hainline is granted relief from stay to pursue final resolution of
the battery claim in state court. The final decree or judgment rendered by the state court shall be determinative of the
amount Hainline’s claim for battery.
**Hainline is not granted relief from stay to collect any judgment rendered in the tort proceeding.
Matter of Rabin, 53 B.R. 529 (Bankr.D.N.J. Mar 04, 1985)
Instruction on the the legislative purpose of the automatic stay
Creditors filed motion to lift automatic stay to permit continuation of two state court actions pending against Chapter
11 debtor for fraud and misrepresentation. The Bankruptcy Court, D. Joseph De Vito, J., held that creditors were
entitled to relief from automatic stay for cause.
Motion granted.
West Headnotes
Bankruptcy 51 2426
51 Bankruptcy
51k2426 k. Fraud, Bad Faith, or Misconduct. Most Cited Cases
Creditors were entitled to relief from automatic stay for cause to permit continuation of two state court actions
pending against Chapter 11 debtor for fraud and misrepresentation, as continuance of stay would cause great
prejudice to creditors in that debtor’s partner was codefendant in state actions, and no great prejudice to debtor’s
estate would result. Bankr.Code, 11 U.S.C.A. § 362(d)(1).
Lenz W. Gmelin (Gmelin), et al., seek relief from the automatic stay grounded in § 362[d] of the Bankruptcy Code
to permit continuation of two state court actions presently pending against the above debtor. On January 26, 1982,
the first action was filed by Gmelin, et al., against the debtor and Samuel Rosengarten, debtor’s business partner, in
the Superior Court of *530 New Jersey. On May 23, 1984, the second action was filed by Peter D. Nelson, et al.
(Nelson), against the same defendants, also in the Superior Court of New Jersey. Both actions are grounded in fraud
and misrepresentation relating to defendants’ solicitation of Gmelin and Nelson, et al., to invest in Master
Associates, a partnership formed to acquire and promote a motion picture film. Defendants were general partners in
that partnership.
The movants argue that the automatic stay should be lifted to prevent prejudice in repetitive litigation of identical
claims; that, absent consolidation, if the stay is not lifted, plaintiffs may be forced to litigate two state court actions
against Rosengarten and initiate an adversary proceeding against the debtor in the bankruptcy court.
Opposing the motion, the debtor argues that movants have failed to set forth grounds sufficient to permit relief from
the stay; that possible joint and several liability of state court defendants is an insufficient ground and, finally, that,
though the state court actions grounded in fraud may not be dischargeable in the debtor’s bankruptcy proceeding,
that fact is, similarly, insufficient to sustain the relief requested.
Section 362[d] provides, in pertinent part:
On request of a party in interest and after notice and a hearing, the court shall grant relief from the stay... (1) for cause,
including the lack of adequate protection of an interest in property of such party in interest....”
An example of “cause” requiring the court to grant relief from the automatic stay is the lack of good faith in filing a
case under Chapter 11. See In re Victory Construction Co., 9 B.R. 549, 560 (Bankr.C.D.Ca.1981) order stayed, 9
B.R. 570, order vacated and remanded on other grounds, Hadley v. Victory Construction Co., 37 B.R. 222, 229
(Bankr. 9th Cir.1984); Accord Glassmanor Apartments Ltd. v. Corporation Deja Vu (In re Corporation Deja Vu), 34
B.R. 845, 850 (Bankr.D.Md.1983). In Victory the court defined “cause” as: “any reason cognizable to the equity
power and conscience of the court as constituting an abuse of the reorganization or rehabilitation process.” 9 B.R. at
560.
The discretionary right of the bankruptcy court to decide whether a state court proceeding against the debtor should
be permitted to continue is well settled. Transamerica Insurance Co. v. Olmstead (In re Olmstead), 608 F.2d 1365,
1367-68 (10th Cir.1979); Harris v. Fidelity and Deposit Co. (In re Harris), 7 B.R. 284, 286 (S.D.Fla.1980) . In
delineating the limits and nature of the “cause” standard, the Court looks to the legislative history of § 362, which, in
pertinent part, provides:
Subsection [d] requires the court, on request of a party in interest, to grant relief from the stay, such as by terminating,
annulling, modifying, or conditioning the stay, for cause. The lack of adequate protection of an interest in property
of the party requesting relief from the stay is one cause for relief, but is not the only cause. As noted above, a desire
to permit an action to proceed to completion in another tribunal may provide another cause. Other causes might
include the lack of any connection with or interference with the pending bankruptcy case. For example, a divorce or
child custody proceeding involving the debtor may bear no relation to the bankruptcy case. In that case, it should not
be stayed. A probate proceeding in which the debtor is the executor or administrator of another’s estate usually will
not be related to the bankruptcy case, and should not be stayed. Generally, proceedings*531 in which the debtor is a
fiduciary, or involving postpetition activities of the debtor, need not be stayed because they bear no relationship to
the purpose of the automatic stay, **which is debtor protection from his creditors. The facts of each request will
determine whether relief is appropriate under the circumstances.
H.R.Rep. No. 595, 95th Cong., 1st Sess. (1977) p. 343-44 (emphasis added); see also S.Rep. No. 989, 95th Cong.,
2d Sess. (1978) p. 52, U.S.Code Cong. & Admin.News 1978, p. 5787, 5838, 6300.
Legislative history supporting § 362 further provides:
Undoubtedly the court will lift the stay for proceedings before specialized or nongovernmental tribunals to allow those
proceedings to come to a conclusion. Any party desiring to enforce an order in such a proceeding would thereafter
have to come before the bankruptcy court to collect assets. Nevertheless, it will often be more appropriate to permit
proceedings to continue in their place of origin, when no great prejudice to the bankruptcy estate would result, in
order to leave the parties to their chosen forum and to relieve the bankruptcy court from many duties that may be
handled elsewhere.
H.R.Rep. No. 595, 95th Cong., 1st Sess. 91977) p. 341; S.Rep. No. 989, 95th Cong., 2d Sess. (1978) p. 50,
U.S.Code Cong. & Admin.News 1978, pp. 5836, 6297.
Decisional law has interpreted the above legislative history in several ways. In Olmstead, supra, the Circuit Court
held that the bankruptcy court was correct in deferring its determination of whether a debt was dischargeable until
another court liquidated the creditor’s claim, provided, however, that no prejudice to the debtor existed. 608 F.2d at
1367-68. In Holtkamp v. Littlefield (In re Holtkamp), 669 F.2d 505 (7th Cir.1982), in affirming the bankruptcy
court’s lifting of the automatic stay to permit a civil action to continue, the Circuit Court emphasized that
“[a]llowing the pending action to proceed merely determined Holtkamp’s [debtor’s] liability but did not change
Littlefield’s [creditor’s] status in relation to other creditors.” 669 F.2d at 508. In addition, the Circuit Court made the
following observations: **where the civil action is not connected, nor interfering with the bankruptcy proceeding, to
lift the stay would not thwart the underlying purpose of the automatic stay, namely to preserve the debtor’s estate
and to provide a systematic and equitable plan for repayment and reorganization; further, that the expertise of the
bankruptcy court was not necessary to a determination of the pending civil action; and, finally, that the interests of
judicial economy warranted lifting of the stay because of the imminence of the trial. 669 F.2d at 508-09.
The Court finds that “cause” exists for lifting the automatic stay allowing movants to continue the state court action.
The sole connection or interference the state court proceeding may have on the debtor’s bankruptcy proceeding will
occur when payments are made pursuant to the Chapter 11 plan, provided movants herein file proofs of claim.
Indeed, there would be greater interference with the debtor’s bankruptcy proceeding if the stay were not lifted, with
the matters pending in state court to be litigated in the bankruptcy court. The time required to resolve the state court
matters would delay the debtor’s opportunity to move other matters presently pending in this Court.
Because it appears that no great prejudice to the debtor’s bankruptcy estate would result, the Court finds that it is
more appropriate to permit continuance of the state court proceedings in their place of origin. It is clear that
movants’ claim will have to be liquidated either in state court or the bankruptcy court. In either instance, the debtor
will have to defend that action. It is unreasonable to presume that the continuance in the state court would subject
the debtor’s estate to a greater *532 expense. The cost of defending the state court action in the state court has not
been considered so prejudicial as to require continuance of the stay. In re McGraw, 18 B.R. 140, 142
(Bankr.W.D.Wis.1982); Hoenig v. Hoffman (In re Hoffman), 33 B.R. 937, 941 (Bankr.W.D.Okla.1983). It is
certainly possible that continuance of the stay would cause great prejudice to the movants. Because the debtor’s
partner is a codefendant in the state action, movants would be required to proceed against the debtor in the
bankruptcy court and against the debtor’s partner in the state court. See Hoffman, supra, 33 B.R. at 941.
Further, the Court finds that the expertise of the bankruptcy court is unnecessary in the state court action, essentially
one grounded in securities fraud. For all of the foregoing reasons, the doctrine of judicial economy is better served
by permitting the continuance of the action in the court of origin.
We turn, finally, to the burden of proof on the issue of “cause”, which lies with the debtor. 11 U.S.C. § 362[g][2].
See also, Hoffman, supra, 33 B.R. at 941. The Court finds that the debtor has not adequately met his burden. The
debtor only claims that continuance of the state court action would frustrate his attempt to effectuate a successful
reorganization. This argument is unpersuasive and insufficient to carry debtor’s burden of proof.
Movants have sufficiently set forth facts evidencing their allegation of cause. Thus, the Court grants their motion to
lift the stay permitting continuance of the state court proceedings, limited, however, to the entry of judgment.**Only
a liquidation of their claim is ordered, and any enforcement of the judgment, if rendered in their favor, is
impermissible at this time. Movants are directed to return to the bankruptcy court either to litigate the
nondischargeability issue or participate as creditors under debtor’s reorganization plan.
In re Humphreys Pest Control Co., Inc., 35 B.R. 712 (Bankr.E.D.Pa. Jan 06, 1984)
In re Stranahan Gear Co., Inc., 67 B.R. 834 (Bankr.E.D.Pa.,Dec 08, 1986)
Policy of the automatic stay
Unsecured creditor filed motion for relief from stay, seeking leave to pursue breach of warranty claims against
debtor in Louisiana state court forum. The Bankruptcy Court, David A. Scholl, J., held that: (1) creditor had initial
burden of showing good cause for relief from stay, and (2) creditor failed to satisfy initial burden of proof.
Motion denied.

Creditor has initial burden of showing good cause for relief from stay; receding from In re Humphreys Pest
Control Co., 35 B.R. 712 (Bkrtcy.E.D.Pa.). Bankr.Code, 11 U.S.C.A. § 362(g).
The significant issue before the Court in this matter is the allocation of the burden of proof between the Moving
Party and the Debtor in a Motion seeking relief from the automatic stay pursuant to 11 U.S.C. § 362(d). Because
we believe that the Moving Party has an initial burden to establish cause for relief under § 362(d), irrespective of the
presence of 11 U.S.C. § 362(g)(2), and that the Moving Party has failed to meet that initial burden here, we shall
deny the Motion.
** We note that, in most of the cases in which unsecured creditors have been granted relief, two (2) factors have
coalesced: (1) the Debtor has engaged in some morally culpable conduct which the moving party seeks to undo in a
court action; and (2) the creditor does not seek to pursue assets of the estate or is prohibited from doing so, *838
although given relief to pursue certain remedies against the debtor. See In re Turner, 55 B.R. 498 (Bankr.N.D.Ohio
1985) (RICO action against Debtor in which creditors agreed to look only to bonding company for payment);
Humphreys, supra (insiders of Debtor accused of fraud and stay of execution on any judgment continued); In re
Larkham, 31 B.R. 273 (Bankr.D.Vt.1983) (Plaintiff entitled to proceed to obtain exclusively injunctive relief against
Debtor in discrimination suit).
[3] Several factors militate strongly against the allowance of any relief in this case--or in any but the most
extraordinary set of circumstances--where the moving party is an unsecured creditor. First is the need to maintain
all proceedings relevant to the debtor and his estate in a single forum convenient to the Debtor, particularly in a large
corporate Chapter 11 case, since subjection of the Debtor to cases in distant or diverse forums may prove disruptive
of the reorganization effort. We have noted that same principal in our previous decisions in other contexts. Cf. In
re T.D.M.A., Inc., 66 B.R. 992 (E.D.Pa., 1986) (ERISA claims must be resolved in bankruptcy claim procedure
rather than in arbitration otherwise mandated by statute); and In re American International Airways, Inc., Begier v.
Cleveland Pneumatic, 66 B.R. 642 (Bankr.E.D.Pa., 1986) (venue remains in bankruptcy court unless balance of
convenience weighs strongly in favor of party seeking transfer.) See also In re Leonard, 51 B.R. 53
(Bankr.D.D.C.1985) (relief from stay to pursue case in district court not allowed because court finds Debtor must
devote full-time energies to bankruptcy case); and In re General Oil Distributors, Inc., 33 B.R. 717
(Bankr.E.D.N.Y.1983) (creditor not permitted relief from stay to pursue Texas litigation against debtor filing
bankruptcy in New York).
[4] In the instant case, the Moving Party proposes to drag the Debtor into a distant forum, from Pennsylvania to
Louisiana, to pursue an action which, in light of the automatic stay, never should have been filed against the Debtor
in the first place and is, accordingly, void, see, e.g., Kalb v. Feuerstein, 308 U.S. 433, 60 S.Ct. 343, 84 L.Ed. 370
(1940); Borg-Warner Acceptance Corp. v. Hall, 685 F.2d 1306, 1308 (11th Cir.1982), even if the stay had never
been invoked by the Debtor. See Association of St. Croix Condominium Owners v. St. Croix Hotel Corp., 682 F.2d
446 (3d Cir.1982). The Moving Party is not a secured party, it has made no allegation of morally culpable conduct
by the Debtor, and it has made no concessions to forego execution upon its judgment against the Debtor.
In sum, there is absolutely no merit to the Motion in issue, and it will be denied in an accompanying Order.
In re Plumberex Specialty Products, Inc., 311 B.R. 551 (Bankr.C.D.Cal.,Jun 07, 2004)
Description of the shifting burden of proof in a motion for relief

from stay under 11 U.S.C 362(d)(1) for cause. However is not binding
authority but utilize for internal citations to Ninth Circuit case
authority.
[3][4][5] Section 362(d)(1) directs the court to grant relief from the automatic stay upon a showing of “cause.” FN9
Although the term “cause” is not defined in the Code, courts in the Ninth Circuit have granted relief from the stay
under § 362(d)(1) when necessary to permit pending litigation to be concluded in another forum if the non-
bankruptcy suit involves multiple parties or is ready for trial. See, e.g., Christensen v. Tucson Estates, Inc. (In re
Tucson Estates, Inc.), 912 F.2d 1162, 1166 (9th Cir.1990) (stating that “[w]here a bankruptcy court may abstain
from deciding issues in favor of an imminent state court trial involving the same issues, cause may exist for lifting
the stay *557 as to the state court trial”); Packerland Packing Co. v. Griffith Brokerage Co. ( In re Kemble), 776
F.2d 802, 807 (9th Cir.1985) (affirming an order lifting the stay to permit a creditor to pursue a conversion and
fraudulent conveyance action pending in the federal district court following a remand of the case by the appellate
court for a retrial on the damages issue); Santa Clara, 180 B.R. at 567 (affirming an order lifting the stay to allow
prosecution of a pending Title VII claim against the debtor in the federal district court). Section 362(a)‘s legislative
history supports this conclusion:
FN9. Section 362(d) provides, in pertinent part:
(d) On request of a party in interest and after notice and a hearing, the court shall grant relief from the
stay provided under subsection (a) of this section, such as by terminating, annulling, modifying, or
conditioning such stay-
(1) for cause, including the lack of adequate protection of an interest in property of such party in
interest,...
11 U.S.C. § 362(d)(1) (emphasis added).

[I]t will often be more appropriate to permit proceedings to continue in their place of origin, when no great
prejudice to the bankruptcy estate would result, in order to leave the parties to their chosen forum and to relieve
the bankruptcy court from many duties that may be handled elsewhere.
H.R.Rep. No. 95-595, at 341 (1977); S.Rep. No. 95-989, at 50 (1978), reprinted in 1978 U.S.C.C.A.N. 5787, 5836
(emphasis added). Judicial economy is a factor to be considered by bankruptcy courts when deciding lift stay
issues. See Piombo Corp. v. Castlerock Prop. (In re Castlerock Prop.), 781 F.2d 159, 163 (9th Cir.1986); Kemble,
776 F.2d at 807; Santa Clara, 180 B.R. at 566. However, a bankruptcy court must be cognizant “of the entire
bankruptcy case and its progress,” and adjudicate “stay relief issues from this perspective.” Santa Clara, 180 B.R.
at 567.
[6][7] The burden of proof on a motion to modify the automatic stay is a shifting one. FN10 Sonnax Indus., Inc. v. Tri
Component Prods. Corp. (In re Sonnax Indus., Inc.), 907 F.2d 1280, 1285 (2nd Cir.1990). To obtain relief from the
automatic stay, the party seeking relief must first establish a prima facie case FN11 that “cause” exists for relief under
§ 362(d)(1). Mazzeo v. Lenhart (In re Mazzeo), 167 F.3d 139, 142 (2nd Cir.1999); Duvar Apt., Inc. v. Fed. Deposit
Ins. Corp. (In re Duvar Apt., Inc.), 205 B.R. 196, 200 (9th Cir. BAP 1996); FSFG Serv. Corp. v. Kim (In re Kim), 71
B.R. 1011, 1015 (Bankr.C.D.Cal.1987). Once a prima facie case has been established, the burden shifts to the debtor
to show that relief from the stay is unwarranted. Sonnax, 907 F.2d at 1285; Duvar Apt., 205 B.R. at 200. If the
movant fails to meet its initial burden to demonstrate cause, relief from the automatic stay should be denied.
Spencer v. Bogdanovich ( In re Bogdanovich), 292 F.3d 104, 110 (2nd Cir.2002); Mazzeo, 167 F.3d at 142; Kim, 71
B.R. at 1015.
FN10. Section 362(g) states:
In any hearing under subsection (d) or (e) of this section concerning relief from the stay of any act under
subsection (a) of this section-
(1) the party requesting such relief has the burden of proof on the issue of the debtor’s equity in property;
and
(2) the party opposing such relief has the burden of proof on all other issues.
11 U.S.C. § 362(g).
FN11. A prima facie case requires the movant to establish “a factual and legal right to the relief that it
seeks.” In re Elmira Litho, Inc., 174 B.R. 892, 902 (Bankr.S.D.N.Y.1994); see In re Planned Systems, Inc.,
78 B.R. 852, 859-60 (Bankr.S.D.Ohio 1987). See generally, 3 Collier on Bankruptcy ¶ 362.10, at 362-117
(Alan N. Resnick & Henry J. Sommers eds., 15th ed. rev.2003).
[8][9] Motions for stay relief are summary proceedings. Johnson v. Righetti (In re Johnson), 756 F.2d 738, 740 (9th
Cir.1985), cert. denied, 474 U.S. 828, 106 S.Ct. 88, 88 L.Ed.2d 72 (1985); Santa Clara, 180 B.R. at 566. Stay
litigation is confined to the issues of “ ‘lack of adequate protection, the debtor’s equity in the property, and the
necessity of the property to an effective reorganization of the debtor, *558 or the existence of other cause for relief
from the stay.’ ” Computer Communications, 824 F.2d at 729,quotingS.Rep. No. 95-989, at 55 (1978), reprinted in
1978 U.S.C.C.A.N. at 5841; see Johnson, 756 F.2d at 740 (stating that the “validity of the claim or contract
underlying the claim is not litigated during the hearing”); Wade v. State Bar of Arizona (In re Wade), 115 B.R. 222,
230 (9th Cir. BAP 1990), aff’d, 948 F.2d 1122 (9th Cir.1991) (stating that “the assertion of counterclaims in relief
from stay litigation is improper”). The decision whether to grant or deny stay relief is within the broad discretion of
the bankruptcy court. Santa Clara, 180 B.R. at 566.
In re Elmore, 94 B.R. 670, 20 Collier Bankr.Cas.2d 1589, 18 Bankr.Ct.Dec. 1097, Bankr. L. Rep. P 72,562
(Bankr.C.D.Cal.,Dec 14, 1988)
Residential property is necessary for effective reorganization in Chapter 13

[1] Bankruptcy 51 2430.5(2)
51 Bankruptcy
51k2430 Adequate Protection
51k2430.5 Particular Creditors or Claimants
51k2430.5(2) k. Mortgagees. Most Cited Cases
Secured creditor was not entitled to relief from stay based on lack of adequate protection, though debtor had failed
to make postconfirmation mortgage payments, **in that property was not declining in value; overruling In re Kim,
71 B.R. 1011. Bankr.Code, 11 U.S.C.A. § 362(d)(1)
In re Pettit, 217 F.3d 1072, 36 Bankr.Ct.Dec. 91, Bankr. L. Rep. P 78,213, 24 Employee Benefits Cas. 2695,
00 Cal. Daily Op. Serv. 5475, 2000 Daily Journal D.A.R. 7317, 4 Cal. Bankr. Ct. Rep. 68 (9th Cir.(Cal.),Jul 06,
2000)
Facts are not similar. New York law is distinguished from California
regarding summary judgment
In In re Pettit, the order directing release of registry funds was

executed by judge and filed on the same day. In Soon Chey’s case the
order was stated to be signed on April 28 but filed by the clerk after
the Notice of Bankruptcy Stay was filed.
51 Bankruptcy
51V The Estate
51V(C)1 In General
51k2534 k. Effect of State Law in General. Most
Cited Cases
Although question of whether an interest claimed by debtor is
“property of the estate” is federal question, which is to be decided
by federal law, **bankruptcy courts must look to state law to
determine whether and to what extent debtor has any legal or equitable
interests in property as of commencement of case. Bankr.Code, 11
U.S.C.A. § 541(a).
The key facts of the case are different and the opinion is not
analagous
A comparison of these facts with the facts of this case shows that
they do not compare
A comparison of the facts in in Re Pettit with the facts in this case

shows that they are different
A comparison of the facts in In Re Pettit with the facts of in this
case shows that they are different and based on these differences the
opinion does not apply
Within the context of the rules of law
That they are materially different from this case and that In re
Pettit is inapplicable, is not applicable
An identification of the material facts in In Re Pettit shows that
Kwan then cites in re Pettit but a close look at the material facts of
in re Pettit shows that they
are materially different.
An identification of the material facts in In Re Pettit shows that the

are materially different
Question: In re Pettit as to the timing sequence between judgment and

order to release registry funds.
“The trial resulted in a $1.8 million jury verdict in favor of the Trust Funds and judgment was entered on
**April 15, 1996. The award also entitled the Trust Funds to attorneys’ fees, for which they claimed an excess
of $1.2 million. The Pettits appealed the judgment, which this court recently affirmed in a published opinion. See
Local 159 v. Nor-Cal Plumbing, 185 F.3d 978 (9th Cir.1999).”
**Following the trial, the Pettits moved for **(1) judgment as a matter of law; **(2) a new trial; **(3) a stay of
execution pending appeal to the Ninth Circuit; and **(4) a reduction or waiver of the funds in the court’s registry
serving as judgment security which, because the district court permitted the Pettits to make two withdrawals for
legal fees before trial, totaled approximately $523,000 at the time of the verdict. **On May 21, 1996, the
district court denied all of the Pettits’ motions and **ordered the balance of the registry funds to be released to
the Trust Funds.
**Accordingly, Judge Illston immediately signed the order releasing the funds in the court registry to the Trust
Funds. **The “Order Directing Clerk’s Release of Funds,” **executed and filed on
May 21, 1996, provided that:
**A judgment having been entered on the jury’s verdict herein, the Clerk of the court is hereby directed to release
all funds being held on deposit in this action and to disburse said funds, including accrued interest, to the law firm of
McCarthy, Johnson & Miller as attorneys for the plaintiffs herein.
The order disbursing the funds executed and filed on May 21, 1996, which was a ministerial
act, came after the judgment was already entered on April 15, 1996
This is distinguished from Soon’s case in that the minute order

granting summary judgment is an interim order and
California Forms Of Pleading And Practice, Ch 374, Section
374.15, A “minute order granting a motion for summary judgment is an

interim order subject to a motion to reconsider [see George Ball
Pacific, Inc. v. Coldwell Banker & Co. (1981) 117 Cal.App.3d 248, 252-
253, 172 Cal.Rptr.597 (prior law of CCP 1008); see also Stratton v.
First Nat.Life Ins. Co. (1989) 210 Cal.App.3d 1071, 1081-1082, 258
Cal.Rptr.721 (prior law of CCP 1008; criticized on another ground in
Passavanti v. Williams (1990) 225 Cal.App.3d 1602, 1608 n.5, 275
Cal.Rptr. 887)]”
In Soon Chey’s case the order was stated to be signed on April 28 but filed by the clerk
after the Notice of Bankruptcy Stay was filed . In In re Pettit, the order, [**A judgment
having been entered on the jury’s verdict herein, the Clerk of the court is hereby directed to release all
funds being held on deposit in this action and to disburse said funds, including accrued interest, to the law firm of
McCarthy, Johnson & Miller as attorneys for the plaintiffs herein.]
directing release of registry funds was executed by judge and filed on the same day.
(In re Pettit , supra, 217 F.3d at p. 1076) and came after the judgment was entered on
April 15, 1996.
In Soon Chey’s case when the minute order was filed there was no judgment filed for
summary judgment. And a judgment after a minute order is not a ministerial act
because it triggers the ten day time to file a motion for reconsideration and the court can
change its decision on sua sponte under the authorization of Section 1008 of the Code
of Civil Procedure of the State of California.
Bankruptcy 51 2392
51 Bankruptcy
51k2392 k. Property and Claims Subject to Stay. Most Cited Cases
Bankruptcy 51 2547
51 Bankruptcy
51V The Estate
51k2547 k. Property Held in Trust or Custody for Debtor; Deposits. Most Cited Cases
Even assuming that contingent interest that debtors possessed in registry funds which they had deposited with
district court, as judgment security, was not extinguished upon entry of adverse judgment against them, any interest
that debtors had was nevertheless extinguished prepetition, **when district court judge signed order directing that
registry funds be released to opposing parties, **though it was not until one day later, after debtors had filed their
bankruptcy petition, that clerk of district court actually issued check in accordance with **district court’s disbursal
order; clerk of court’s issuance of check was mere “ministerial act,” the absence of which was not sufficient to
preserve any interest of debtors in funds, such as would be protected by automatic stay. Bankr.Code, 11 U.S.C.A. §§
362(a), 541(a).
Rexnord Holdings, Inc. v. Bidermann, 21 F.3d 522 (2nd Cir.(N.Y.) Apr 07, 1994)
Must look to California law.

An order on summary judgment under California law is not a judgment.
Interpreting and applying federal law to, “and, on July 1, 1993, RHI brought on a
motion by order to show cause for judgment under the Agreements.” (Id. at p. 524)
Rexnord Holdings, Inc. v. Bidermannn 21 F.3d 522 (2nd Cir.(N.Y. Apr

07, 1994)
Applying federal law to a federal motion by order to show cause for judgment under
the Agreements, applying federal law for motion for summary judgment different than
applying California motion for summary judgment
**Applying Rule 56 of the Federal Rules of Civil Procedure as opposed to Section

437(c) of the Code of Civil Procedure of the State of California
Document of the minute order and its signature with the date of April 28, 2009
claiming to be signed on the date, was effective on the date that it was entered by
the clerk not the date April 28, 2009.
Confusing distinction between minute order and judgment. In Rexnord judgment was
entered by the clerk the day after the the oral pronouncement
The minute order with the date stating to be signed on April 28, 2009 but filed on
later
Minute order with the signature is valid the date that it is filed not the date
that the signature states that it was signed.
In In re Pettit signed order for release of funds was followed by action of clerk
to issue check according to order.
“**The clerk’s subsequent involvement was only to issue the check, which was not a discretionary act and was thus
purely ministerial
CRC Rule 3.1312

Rule 3. 1312. Preparation of order
(a) Prevailing party to prepare
Unless the parties waive notice or the court orders otherwise, the party
prevailing on any motion must, within five days of the ruling, mail or
deliver a proposed order to the other party for approval as conforming to the
court’s order. Within five days after the mailing or delivery, the other
party must notify the prevailing party as to whether or not the proposed
order is so approved. The opposing party must state any reasons for
disapproval. Failure to notify the prevailing party within the time required
shall be deemed an approval. Code of Civil Procedure section 1013, relating
to service of papers by mail, does not apply to this rule.
(b) Submission of proposed order to court
The prevailing party must, upon expiration of the five-day period provided
for approval, promptly transmit the proposed order to the court together with
a summary of any responses of the other parties or a statement that no
responses were received.
(c) Failure of prevailing party to prepare form
If the prevailing party fails to prepare and submit a proposed order as

required by (a) and (b) above, any other party may do so.
(d) Motion unopposed
This rule does not apply if the motion was unopposed and a proposed order was
submitted with the moving papers, unless otherwise ordered by the court.
Younger on California Motions § 8:59, Order Granting Summary Judgment.
Is permanent minutes the civil docket. Yes.
In federal court the order is final on rendition, in state court the order is not
final on rendition.
date the minutes filed after the notice of stay
Rexnord Holdings, Inc. v. Bidermannn 21 F.3d 522 (2nd Cir.(N.Y. Apr

07, 1994)
Plaintiff sued defendant for defendant’s alleged breach of settlement agreement in failing to make payments due
under agreement. The United States District Court for the Southern District of New York, Robert P. Patterson, Jr., J.,
entered money judgment in favor of plaintiff, and defendant, who had filed for Chapter 11 relief prior to entry of
judgment by clerk of court, appealed. The Court of Appeals, Miner, Circuit Judge, held that: **(1) plaintiff did not
breach its implied duty of good faith and fair dealing by agreeing to extend time for payments under settlement
agreement only in exchange for release of other unrelated obligations; and **(2) **ministerial act of entry of
judgment by clerk of court did not constitute the “continuation of judicial proceeding” against debtor, such as would
violate automatic stay.
Affirmed.
West Headnotes

170AXVII Judgment
170AXVII(C)3 Proceedings
170Ak2542 Evidence
170Ak2544 k. Burden of Proof. Most Cited Cases
Once moving party properly supports its motion for summary judgment, nonmoving party must establish genuine
issue of material fact in order to preclude grant of summary judgment. Fed.Rules Civ.Proc.Rule 56, 28 U.S.C.A.
[2] Federal Civil Procedure 170A 2470.2

170AXVII Judgment
170AXVII(C)1 In General
170Ak2465 Matters Affecting Right to Judgment
170Ak2470.2 k. Admitted or Undisputed Facts; Conflicting Inferences or Conclusions. Most Cited
Cases
Mere existence of some alleged factual dispute between parties will not defeat an otherwise properly supported
motion for summary judgment. Fed.Rules Civ.Proc.Rule 56, 28 U.S.C.A.
[5] Contracts 95 332(1)
95 Contracts
95VI Actions for Breach
95k331 Pleading
95k332 Declaration, Complaint, or Petition in General
Under New York law, action for breach of contract requires proof of existence of contract, of performance of
contract by one party, of breach by other party, and of damages.

170AXVII Judgment
170AXVII(C)2 Particular Cases
170Ak2492 k. Contract Cases in General. Most Cited Cases
Defendant’s mere identification of alleged issues of fact, **unsupported by affidavit or other appropriate evidence,
in memorandum submitted in response to plaintiff’s motion for summary judgment was not sufficient to preclude
entry of summary judgment in plaintiff’s favor, once plaintiff established prima facie case of defendant’s breach of
settlement agreement based on uncontroverted evidence that defendant was in default of his payment obligations
under agreement. Fed.Rules Civ.Proc.Rule 56(e), 28 U.S.C.A.
51 Bankruptcy
51IV(D) Enforcement of Injunction or Stay
51k2462 k. Validity of Acts in Violation of Injunction or Stay. Most Cited Cases
Commencement or continuation of judicial action or proceeding in violation of automatic stay is void and without
vitality. Bankr.Code, 11 U.S.C.A. § 362(a)(1).
51 Bankruptcy
51k2394 Proceedings, Acts, or Persons Affected
51k2395 k. Judicial Proceedings in General. Most Cited Cases
Simple, ministerial act of entry of judgment by clerk of court, in accordance with oral directions for entry of
judgment given by district judge prior to judgment debtor’s filing for Chapter 11 relief, did not constitute the
“continuation of judicial proceeding” in violation of automatic stay, though judgment debtor filed for bankruptcy
between time of trial judge’s oral pronouncement and entry of judgment by clerk. Bankr.Code, 11 U.S.C.A. § 362(a)
(1).
Defendant-appellant Maurice Bidermann appeals from a money judgment entered in the United States District Court
for the Southern District of New York (Patterson, J.) in favor of plaintiff-appellee Rexnord Holdings, Inc. (“RHI”)
in the amount of $12,989,312.64, the district court having found that Bidermann was in breach of his obligations
under a Settlement Agreement and a Stock Purchase Agreement (“Agreements”) dated November 25, 1991. The
Agreements represented the resolution of a contract action brought by RHI against Bidermann. The breach occurred
when Bidermann defaulted on a scheduled payment due under the provisions of the Agreements. On appeal,
Bidermann contends that the district court erred in directing judgment for RHI because there were genuine issues of
material fact concerning RHI’s breach of the Agreements and its lack of good faith. Bidermann also argues that the
judgment should be vacated because it was entered after the filing of his Chapter 11 bankruptcy petition, in violation
of the automatic stay provided by 11 U.S.C. § 362. For the reasons that follow, we affirm.
BACKGROUND
On August 1, 1991, RHI commenced an action against Bidermann in the United States District Court for the
Southern District*524 of New York for breach of contract for Bidermann’s failure to purchase securities of
Bidermann Industries U.S.A., Inc. from RHI. RHI originally had purchased the securities from Bidermann Industries
subject to an option agreement providing that Bidermann would buy back the securities upon the exercise of the
option by RHI. When RHI later sought to exercise the buy-back option, Bidermann refused to purchase the
securities.
The parties resolved their dispute by executing the Agreements. The Agreements required Bidermann to pay RHI
$22,571,748 in five installments: four payments in the amount of $5,000,000 each to be made on November 11,
1991, June 30, 1992, December 31, 1992 and June 30, 1993, and one final payment of $2,571,748 to be made on
December 30, 1993. The terms of the Agreements allowed Bidermann a grace period until the following payment
date before his failure to pay an installment would be an event of default under the Agreements. FN1 On November
26, 1991, the parties stipulated to an order of dismissal of RHI’s complaint. The Stipulation and Order of Dismissal
provided that the district court would retain jurisdiction for the purpose of enforcing the Agreements. The
Agreements provide that the district court “retains jurisdiction over the parties for the purpose of enforcing the
[Agreements]. Any proceeding with respect to or arising out of [the Agreements] by or between the parties hereto
shall be brought before the [district] court upon notice by personal service upon the attorneys for the parties.”
It is undisputed that Bidermann failed to remit the scheduled December 31, 1992 payment, but that this failure was
not deemed a default until June 30, 1993. Under the terms of the Agreements, RHI could accelerate the amounts due
or **“reduce its claim to judgment by any available judicial procedure” in the event of a default. The Agreements
also provided that the “remedies provided herein are cumulative and not exclusive of any remedies provided by law
or any other agreement.”
On June 28, 1993, Bidermann informed RHI and its CEO, Jeffrey Steiner, that he could not meet the impending
June 30 deadline for payment. Bidermann requested a 90-day moratorium on payments due under the Agreements to
allow him to complete refinancing efforts or at least the opportunity to make a good-faith partial payment of the
December 31, 1992 installment. On June 30, RHI allegedly informed Bidermann that it would not agree to the
moratorium unless Bidermann made certain concessions on other business and financial issues that were unrelated to
Bidermann’s obligations under the Agreements. Bidermann rejected this proposal and, on July 1, 1993, RHI brought
on a motion by order to show cause for judgment under the Agreements.
On that same day, RHI also effected service in France of orders attaching Bidermann’s principal assets there,
including shares of stock and bank accounts. These orders had been obtained ex parte by RHI from the Tribunal de
Grande Instance in Paris on June 11, 1993, but did not become effective until July 1, the day after Bidermann was
deemed in default of the Agreements. Also on July 1, RHI, ex parte, obtained from the district court an order of
attachment for Bidermann’s assets in the United States and served that order.
At a hearing that began at 2:30 p.m. on July 7, 1993, the district court heard arguments of counsel regarding the
entry of judgment in favor of RHI. In support of its motion, RHI had submitted on July 1, 1993 an affidavit, with
attached exhibits, subscribed by Donald Miller, Vice President and General Counsel of RHI. On July 7, 1993,
Bidermann submitted a memorandum of law in opposition to the motion for judgment, but failed to submit any
affidavits or documentary evidence. During the hearing, Bidermann’s counsel conceded the default, but argued that
RHI’s application for an ex parte order of attachment in France violated both the express provisions of the
Agreements and RHI’s implied obligations of good faith and fair dealing. Counsel also alleged that *525 RHI
sought to condition negotiations regarding the moratorium upon a waiver by Bidermann of certain rights in
unrelated transactions that he had with RHI and Steiner. **At the conclusion of the hearing, the district court stated:
“I’m going to order that judgment be entered in favor of [RHI] in the amount of $12,946,748 principal and accrued
interest.... So I’m going to endorse the original documents to that effect on this application.... I want to enter this
today.”
That same day, Bidermann’s counsel advised the district court and RHI by letter that Bidermann had commenced a
proceeding under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern
District of New York by filing a petition at 3:18 in the afternoon, following the district court hearing. **The
following day, July 8, the money judgment was entered on the district court docket by the court clerk.FN2 This appeal
was taken following the entry of an order by the bankruptcy court modifying the automatic stay to permit
Bidermann to appeal from the district court’s judgment.
FN2. Although there is some confusion regarding whether the judgment was entered on July 7 or 8, **we assume
for the purpose of our discussion that the judgment was entered on July 8, after the filing of Bidermann’s Chapter 11
petition.
DISCUSSION
On appeal, Bidermann argues that the judgment of the district court directing payment to RHI for the total amount
owed under the Agreements should be vacated for two reasons. He first contends that there were genuine issues of
material facts that should have precluded the district court from summarily granting judgment and, second, that the
judgment is void because it was entered in contravention of the automatic stay that took effect when Bidermann
filed his bankruptcy petition. We consider each claim in turn.
1. Summary Judgment
[1][2][3] Although RHI’s motion was for entry of judgment upon Bidermann’s default under the Agreements, both
parties have agreed that the standard applicable to a motion for summary judgment under Rule 56 of the Federal
Rules of Civil Procedure should be applied.
Accordingly, we will review the district court’s grant of judgment under those standards for the purpose of deciding
this appeal. Summary judgment is appropriate “if the pleadings ... together with the affidavits, if any, show that there
is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986); accord Brown v.
E.F. Hutton Group, Inc., 991 F.2d 1020, 1030 (2d Cir.1993). Once the moving party properly supports its motion
for summary judgment, the non-moving party must establish a genuine issue of material fact in order to preclude a
grant of summary judgment. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-86, 106 S.Ct.
1348, 1355-56, 89 L.Ed.2d 538 (1986). “[T]he mere existence of some alleged factual dispute between the parties
will not defeat an otherwise properly supported motion for summary judgment[.]” Anderson, 477 U.S. at 247-48,
106 S.Ct. at 2510. We review the grant of a motion for summary judgment de novo, see Peoples Westchester Sav.
Bank v. FDIC, 961 F.2d 327, 330 (2d Cir.1992), and conclude that it was proper in this case.
[4][5] Initially, we note that RHI established a prima facie right to summary judgment. A settlement agreement is to
be construed according to general principles of contract law. See City of Hartford v. Chase, 942 F.2d 130, 134 (2d
Cir.1991). Under New York law,FN3 an action for breach of contract requires proof of (1) a contract; (2) performance
of the contract by one party; (3) breach by the other party; and (4) damages. Bank Itec N.V. v. J. Henry Schroder
Bank & Trust Co., 612 F.Supp. 134, 137-38 (S.D.N.Y.1985). Here, it is manifest that there was a contract between
RHI and Bidermann and that RHI had performed its obligations thereunder. Moreover, RHI submitted the *526
affidavit of Miller, together with the Agreements, to establish that there was a breach by Bidermann and that RHI
was entitled to judgment for damages in the amount owed under the Agreements. Indeed, it is uncontroverted that
Bidermann was in default of his obligations under the Agreements. Therefore, it is clear that RHI established a
breach of contract by Bidermann under New York law.
FN3. The Agreements provide that New York law governs their construction and enforcement.
[6] Since RHI properly supported its motion, Bidermann then had the burden of showing that there was a genuine
issue of material fact to preclude summary judgment in favor of RHI. Bidermann, however, failed to submit
competent evidence to meet his burden. SeeFed.R.Civ.P. 56(e) (adverse party must respond to summary judgment
motion by affidavit or other appropriate evidence and failure to do so results in the entry of judgment if it otherwise
is appropriate). Accord Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986)
(Rule 56(e) requires that non-movant with burden of proof on dispositive issue oppose proper summary judgment
motion with any of the evidentiary materials-affidavit, depositions, answers to interrogatories and admissions-listed
in Rule 56(c)); Boruski v. United States, 803 F.2d 1421, 1428 (7th Cir.1986) (in submitting unverified memorandum
plaintiff failed to meet requirement of defeating summary judgment with counter-affidavits or other competent
evidentiary material); Brown v. Chaffee, 612 F.2d 497, 504 (10th Cir.1979) (once movant established prima facie
case for summary judgment, opponent must show by “affidavits or otherwise” that there is a genuine issue of fact).
Although Bidermann pointed to certain issues of fact in his memorandum of law and at oral argument, he failed to
provide evidentiary support for his contentions. See British Airways Bd. v. Boeing Co., 585 F.2d 946, 952 (9th
Cir.1978) (legal memoranda and oral argument are not evidence and cannot create issues of fact capable of defeating
otherwise valid motion for summary judgment); Smythe v. American Red Cross Blood Servs., 797 F.Supp. 147, 152
(N.D.N.Y.1992) (same); Paulson, Inc. v. Bromar, Inc., 775 F.Supp. 1329, 1332 (D.Haw.1991) (same). Since
Bidermann failed to offer competent evidence raising a genuine issue of material fact sufficient to preclude
summary judgment, entry of judgment in favor of RHI was proper.FN4
2. Automatic Stay
[10][11][12] Bidermann also argues that the judgment of the district court should not be given effect because it was
docketed after the filing of his Chapter 11 petition and thus was entered in violation of the automatic stay in
bankruptcy. Section 362 of the Bankruptcy Code provides that the filing of a bankruptcy petition creates an
automatic stay against “the commencement or continuation ... of a judicial, administrative, or other action or
proceeding against the debtor that was or could have been commenced before the commencement of the case.” 11
U.S.C. § 362(a)(1). The stay is effective immediately upon the filing of the petition, Shimer v. Fugazy (In re Fugazy
Express, Inc.), 982 F.2d 769, 776 (2d Cir.1992); Maritime Elec. Co. v. United Jersey Bank, 959 F.2d 1194, 1204 (3d
Cir.1991), and any proceedings or actions described in section 362(a)(1) are void and without vitality if they occur
after the automatic stay takes effect, see 48th St. Steakhouse, Inc. v. Rockefeller Group, Inc. (In re 48th St.
Steakhouse, Inc.), 835 F.2d 427, 431 (2d Cir.1987), cert. denied, 485 U.S. 1035, 108 S.Ct. 1596, 99 L.Ed.2d 910
(1988).
While the commencement or continuation of a judicial action or proceeding clearly is subject to the automatic stay
of section 362, we do not believe that the simple and “ministerial” act of the entry of a judgment by the court clerk
constitutes the continuation of a judicial proceeding under section 362(a)(1). See Savers Fed. Sav. & Loan Assoc. v.
McCarthy Constr. Co. ( In re Knightsbridge Dev. Co.), 884 F.2d 145, 148 (4th Cir.1989) (noting that, while court
must halt deliberations when bankruptcy intrudes, an arbitration award may be approved “as valid under the
[automatic] stay only if the panel decided it in word and deed before [the petition date], leaving for post-petition
achievement only the clerical act of recording the award”); *528Teachers Ins. & Annuity Ass’n v. Butler, 58 B.R.
1019, 1022 (S.D.N.Y.) (rejecting argument that entry of judgment was “void and of no legal force or effect” on
ground that filing of the signed judgment and entry on the docket by the clerk “was a purely ministerial act” that did
not violate the automatic stay of § 362), motion to stay granted in part and denied in part, 803 F.2d 61 (2d
Cir.1986). See also Heikkila v. Carver (In re Carver), 828 F.2d 463, 464 (8th Cir.1987) (rejecting debtor’s claim
that “routine certification” by clerk of court that debtor failed to redeem contract within redemption period was
“judicial proceeding” within meaning of § 362).
In the present case, the district court “So ordered” the entry of judgment and endorsed RHI’s motion papers to that
effect on July 7, prior to the filing of Bidermann’s bankruptcy petition later that afternoon. The judicial proceedings
were concluded at the moment the judge directed entry of judgment, a decision on the merits having then been
rendered. See Teacher’s Ins. & Annuity Ass’n v. Butler, 803 F.2d 61, 66 (2d Cir.1986) (judgment entered on docket
after automatic stay became effective nevertheless was final for res judicata purposes). The clerk’s subsequent entry
of the judgment, after the automatic stay became effective, therefore did not violate section 362(a)(1). See
Knightsbridge Dev. Co., 884 F.2d at 148 (section 362(a)(1) permits “rote post-petition activity” according to “plain
sense” of statute).
The authorities relied upon by Bidermann as suggesting that entry of judgment violates the automatic stay are
inapposite because the cases cited involve judicial decisions made after the filing of petitions in bankruptcy. Those
cases do not implicate mere ministerial acts performed by the clerk following the completion of the judicial
function. See, e.g., Ellis v. Consol. Diesel Elec. Corp., 894 F.2d 371, 372-73 (10th Cir.1990) (district court decision
granting summary judgment two weeks after bankruptcy petition was filed held invalid); Ellison v. Northwest Eng’g
Co., 707 F.2d 1310, 1311 (11th Cir.1983) (automatic stay provision barred appellate court from rendering decision
on case that had been briefed and argued prior to commencement of stay). Because the entry of a judgment on the
court docket is not the continuation of a judicial proceeding within the meaning of section 362(a)(1), the judgment
entered in this case was not entered in violation of the automatic stay and, accordingly, is valid.
[ Le Francois v. Goel, (2005) 35 Cal.4th 1094, 112 P.3d 636, 29 Cal.Rptr.3d

249, at pp. 257-258
“We agree with the court in ***258Kerns v. CSE Ins. Group, supra, 106
Cal.App.4th at page 389, 130 Cal.Rptr.2d 754, that "by eliminating the
distinction between a trial court’s action taken sua sponte and that made in
response to a litigant’s motion, the more recent cases such as Remsen and
Wozniak go too far toward eviscerating the clear jurisdictional language of
section 1008, essentially rendering the provisions of the statute
meaningless."
Such a construction would abrogate the provisions of section 1008 of the Code
of Civil Procedure.]
Misplacing judgment and order, in motion for summary judgment.
Judgment cannot be entered until termination / dismissal of the action. [See

Witkin Summary Judgment]
Ten Eyck v. Industrial Forklifts Co., 216 Cal.App.3d 540, 265 Cal.Rptr. 29
(Cal.App. 2 Dist.,Dec 12, 1989)
**31 Entry of a judgment in the register of actions is not specifically

mentioned in rule 2. Rule 2(b) states that the date of entry of a judgment is
either (1) the date of its entry in the judgment book or (2) (in those
counties which *544 follow one of the three procedures set out in section
668.5,FN4 as does the County of Los Angeles) the date of filing the judgment
with the clerk. By its language alone, the first of these two alternatives in
rule 2(b) does not contemplate that entry of the judgment in the register of
actions is necessary in order for a judgment to be considered “entered.”
Plaintiff cites no cases which hold that entry in the register of actions as
well as in the judgment book is necessary, and we know of none. Indeed, as of
January 1, 1982, a superior court’s use of the register of actions becomes
optional. (Govt.Code, § 69845.)
FN4. Section 668.5 states: “In those counties where the clerk of the court
places individual judgments in the file of actions and either [1] a microfilm
copy of the individual judgment is made, or [2] the judgment is entered in
the register of actions, or [3] into the court’s electronic data-processing
system, prior to the placement of the judgment in the file of actions, the
clerk shall not be required to enter judgments in a judgment book, and the
date of filing the judgment with the clerk shall constitute the date of its
entry.” (Emphasis added.)
Nor is the result any different under rule 2(b)‘s second alternative for
accomplishing entry of a judgment. We hold that the word “filing,” as used in
rule 2(b)‘s directive “The date of entry of a judgment shall be ... the date
of filing the judgment with the clerk pursuant to [section 668.5],” requires
only that the judgment be signed by the judge and file stamped by the clerk;
it does not require that the judgment be entered in the register of actions.
[Federal Law is distinguished from State Law]
Federal Rules of Civil Procedure, Rule 58 provides,
Rule 58. Entering Judgment
Federal Rules of Civil Procedure, Rule 58 Entering Judgment provides,
(a) Separate Document. Every judgment and amended judgment must be set
out in a separate document, but a separate document is not required
for an order disposing of a motion:
(1) for judgment under Rule 50(b);
(2) to amend or make additional findings under Rule 52(b);
(3) for attorney’s fees under Rule 54;
(4) for a new trial, or to alter or amend the judgment, under Rule 59;
or
(5) for relief under Rule 60.
(b) Entering Judgment.
(1) Without the Court’s Direction. Subject to Rule 54(b) and unless
the court orders otherwise, the clerk must, without awaiting the
court’s direction, promptly prepare, sign, and enter the judgment
when:
(A) the jury returns a general verdict;

(B) the court awards only costs or a sum certain; or
(C) the court denies all relief.
(2) Court’s Approval Required. Subject to Rule 54(b), the court must
promptly approve the form of the judgment, which the clerk must
promptly enter, when:
(A) the jury returns a special verdict or a general verdict with

answers to written questions; or
(B) the court grants other relief not described in this subdivision
(b).
(c) Time of Entry. For purposes of these rules, judgment is entered at

the following times:
(1) if a separate document is not required, when the judgment is

entered in the civil docket under Rule 79(a); or
(2) if a separate document is required, when the judgment is entered

in the civil docket under Rule 79(a) and the earlier of these
events occurs:
(A) it is set out in a separate document; or
(B) 150 days have run from the entry in the civil docket.
(d) Request for Entry. A party may request that judgment be set out in
a separate document as required by Rule 58(a).
(e) Cost or Fee Awards. Ordinarily, the entry of judgment may not be
delayed, nor the time for appeal extended, in order to tax costs
or award fees. But if a timely motion for attorney’s fees is made
under Rule 54(d)(2), the court may act before a notice of appeal
has been filed and become effective to order that the motion have
the same effect under Federal Rule of Appellate Procedure 4(a)(4)
as a timely motion under Rule 59.
In In Re Pettit 217 F.3d 1072, 1078 (9th Cir. (Cal.), Jul 06, 2000)
The court stated,”
Although the question whether an interest claimed by the debtor is
‘property of the estate’ is a federal question to be decided by
federal law, bankruptcy courts must look to state law to determine
whether and to what extent the debtor has any legal or equitable
interests in property as of the commencement of the case. See Butner

v. United States, 440 U.S. 48, 54-55, 99 S.Ct. 914, 59 L.Ed.2d 136
(1979).”
In federal court an order on a motion can be a judgment.
Section 1008. Subsequent application, of the Code of Civil Procedure
of the State of California provides:
(a) When an application for an order has been made to a judge, or to a
court, and refused in whole or in part, or granted, or granted
conditionally, or on terms, any party affected by the order may,
within 10 days after service upon the party of written notice of
entry of the order and based upon new or different facts,
circumstances, or law, make application to the same judge or court
that made the order, to reconsider the matter and modify, amend,
or revoke the prior order. The party making the application shall
state by affidavit what application was made before, when and to
what judge, what order or decisions were made, and what new or
different facts, circumstances, or law are claimed to be shown.

(b) A party who originally made an application for an order which was
refused in whole or part, or granted conditionally or on terms,
may make a subsequent application for the same order upon new or
different facts, circumstances, or law, in which case it shall be
shown by affidavit what application was made before, when and to
what judge, what order or decisions were made, and what new or
different facts, circumstances, or law are claimed to be shown.
For a failure to comply with this subdivision, any order made on a
subsequent application may be revoked or set aside on ex parte
motion.
(c) If a court at any time determines that there has been a change of
law that warrants it to reconsider a prior order it entered, it
may do so on its own motion and enter a different order.
(d) A violation of this section may be punished as a contempt and with
sanctions as allowed by Section 128.7. In addition, an order made
contrary to this section may be revoked by the judge or
commissioner who made it, or vacated by a judge of the court in
which the action or proceeding is pending.
(e) This section specifies the court’s jurisdiction with regard to
applications for reconsideration of its orders and renewals of
previous motions, and applies to all applications to reconsider
any order of a judge or court, or for the renewal of a previous
motion, whether the order deciding the previous matter or motion
is interim or final. No application to reconsider any order or for
the renewal of a previous motion may be considered by any judge or
court unless made according to this section.
(f) For the purposes of this section, an alleged new or different law
shall not include a later enacted statute without a retroactive
application.
(g) This section applies to all applications for interim orders.
California Forms Of Pleading And Practice, Ch 374, Section
374.15, A “minute order granting a motion for summary judgment is an
interim order subject to a motion to reconsider [see George Ball
Pacific, Inc. v. Coldwell Banker & Co. (1981) 117 Cal.App.3d 248, 252-
253, 172 Cal.Rptr.597 (prior law of CCP 1008); see also Stratton v.
First Nat.Life Ins. Co. (1989) 210 Cal.App.3d 1071, 1081-1082, 258
Cal.Rptr.721 (prior law of CCP 1008; criticized on another ground in
Passavanti v. Williams (1990) 225 Cal.App.3d 1602, 1608 n.5, 275
Cal.Rptr. 887)]”
Rexnord Holdings, Inc. v. Bidermann, 21 F.3d 522, 523 (2nd Cir.(N.Y.)
Apr 07, 1994)
“On August 1, 1991, RHI commenced an action against Bidermann in the

United States District Court for the Southern District*524 of New York
for breach of contract for Bidermann’s failure to purchase securities
of Bidermann Industries U.S.A., Inc. from RHI. RHI originally had
purchased the securities from Bidermann Industries subject to an
option agreement providing that Bidermann would buy back the
securities upon the exercise of the option by RHI. When RHI later
sought to exercise the buy-back option, Bidermann refused to purchase
the securities”
And,
“The parties resolved their dispute by executing the Agreements. The

Agreements required Bidermann to pay RHI $22,571,748 in five
installments: four payments in the amount of $5,000,000 each to be
made on November 11, 1991, June 30, 1992, December 31, 1992 and June
30, 1993, and one final payment of $2,571,748 to be made on December
30, 1993. The terms of the Agreements allowed Bidermann a grace period
until the following payment date before his failure to pay an
installment would be an event of default under the Agreements.FN1 On
November 26, 1991, the parties stipulated to an order of dismissal of
RHI’s complaint. The Stipulation and Order of Dismissal provided that
the district court would retain jurisdiction for the purpose of
enforcing the Agreements. The Agreements provide that the district
court “retains jurisdiction over the parties for the purpose of
enforcing the [Agreements]. Any proceeding with respect to or arising
out of [the Agreements] by or between the parties hereto shall be
brought before the [district] court upon notice by personal service
upon the attorneys for the parties.” (Rexnord Holdings, Inc. v.
Bidermann, supra, 21 F.3d 522 at p. 524)
“On June 28, 1993, Bidermann informed RHI and its CEO, Jeffrey
Steiner, that he could not meet the impending June 30 deadline for
payment. Bidermann requested a 90-day moratorium on payments due under
the Agreements to allow him to complete refinancing efforts or at
least the opportunity to make a good-faith partial payment of the
December 31, 1992 installment. On June 30, RHI allegedly informed
Bidermann that it would not agree to the moratorium unless Bidermann
made certain concessions on other business and financial issues that
were unrelated to Bidermann’s obligations under the Agreements.
Bidermann rejected this proposal and, on July 1, 1993, RHI brought on
a motion by order to show cause for judgment under the Agreements.”
(Rexnord Holdings, Inc. v. Bidermann, supra, 21 F.3d 522 at p. 524)
“Although RHI’s motion was for entry of judgment upon Bidermann’s
default under the Agreements, both parties have agreed that the
standard applicable to a motion for summary judgment under Rule 56 of
the Federal Rules of Civil Procedure should be applied.” (Rexnord
Holdings, Inc. v. Bidermann, supra, 21 F.3d 522 at p. 525)
In In Re Pettit 217 F.3d 1072, 1075 (9th Cir.(Cal.) Jul 06, 2000, the
court stated,”
The Pettits are debtors in a bankruptcy case pending before the United
States Bankruptcy Court for the Eastern District of California. The
Trust Funds, which are established under Section 302 of the Labor
Management Relations Act, 29 U.S.C. § 186, manage the employee benefit
contributions that Appellants were required to pay under a collective
bargaining agreement.”
“In 1987, the Trust Funds sued the Pettits in the United States
District Court for the Northern District of California for violations
of federal labor law and, in 1992, obtained a $4.55 million award on
summary judgment. The Pettits appealed, and execution of judgment was
stayed pending appeal on condition that the Pettits deposit $700,000
into the district court’s registry fund in lieu of a supersedeas bond.
On appeal, this court reversed the district court’s grant of summary
judgment and remanded the matter for trial.” (In Re Pettit, supra, 217
F.3d 1075)
“The trial resulted in a $1.8 million jury verdict in favor of the
Trust Funds and judgment was entered on April 15, 1996. The award also
entitled the Trust Funds to attorneys’ fees, for which they claimed an
excess of $1.2 million. The Pettits appealed the judgment, which this
court recently affirmed in a published opinion. See Local 159 v. Nor-
Cal Plumbing, 185 F.3d 978 (9th Cir.1999).
Following the trial, the Pettits moved for (1) judgment as a matter of
law; (2) a new trial; (3) a stay of execution pending appeal to the
Ninth Circuit; and (4) a reduction or waiver of the funds in the
court’s registry serving as judgment security which, because the
district court permitted the Pettits to make two withdrawals for legal
fees before trial, totaled approximately $523,000 at the time of the
verdict. On May 21, 1996, the district court denied all of the
Pettits’ motions and ordered the balance of the registry funds to be
released to the Trust Funds. (In Re Pettit, supra 217
F.3d at p. 1075)
“Judge Illston immediately signed the order releasing the funds in the
court registry to the Trust Funds. The ‘Order Directing Clerk’s
Release of Funds,’ executed and filed on May 21, 1996, provided that:
A judgment having been entered on the jury’s verdict herein, the Clerk
of the court is hereby directed to release all funds being held on
deposit in this action and to disburse said funds, including accrued
interest, to the law firm of McCarthy, Johnson & Miller as attorneys
for the plaintiffs herein.
Because no one was available in the clerk’s office after the hearing,
counsel for the Trust Funds could not get a check for the registry
funds issued that evening.
Hours after Judge Illston signed the order directing the clerk to
release the funds, the Pettits filed bankruptcy petitions in the
Eastern District of California under Chapter 11 of the Bankruptcy
Code. Specifically, the Chapter 11 petition for Elmar and Audrey
Pettit was filed at 8:49 p.m. on May 21, 1996, and the petition for
their corporation, North Bay Plumbing, was filed earlier in the day at
4:56 p.m. After filing the petitions, counsel for the Pettits notified
the Trust Funds’ counsel that the Pettits and North Bay had filed
bankruptcy petitions, and that ‘any action taken by you or your
clients to enforce any judgment would be in violation of the automatic
stay provisions of 11 U.S.C. § 362(a).’
The following morning, May 22, 1996, John J. Davis, Jr., an
attorney with McCarthy, Johnson, counsel for the Trust Funds, went to
the clerk’s office at the United States District Court for the
Northern District of California and obtained a check for $523,117.69
drawn on the court’s registry account, pursuant to the ‘Release of
Funds’ order signed the day before by Judge Illston.” (In Re Pettit,
supra 217 F.3d at p. 1076-1077)
“The bankruptcy court’s reasoning was incomplete. While the

court correctly stated that the Pettits had an interest in the funds
before the pending trial, it failed to take the next step and analyze
the property interests after judgment was entered against them. The
time period relevant to assessing what interest, if any, the Pettits
had in the registry funds was at the time the bankruptcy petitions
were filed. The Pettits did not file their bankruptcy petitions until
May 21, 1996, over a month after judgment was entered.” (In Re Pettit,
supra 217 F.3d at p. 1079)
“In its analysis, the district court applied what other
circuits have termed the “ministerial act” exception to the automatic
stay provisions of the bankruptcy code. See, e.g., Soares v. Brockton
Credit Union (In re Soares), 107 F.3d 969, 973-74 (1st Cir.1997)
(noting that ministerial acts, even if undertaken in a state judicial
proceeding subsequent to a bankruptcy filing, do not fall within the
proscription to the automatic stay); Rexnord Holdings, Inc. v.
Bidermann, 21 F.3d 522, 527 (2nd Cir.1994) (holding that act of entry
of judgment by court clerk was ministerial act and did not violate
stay). This exception stems from the common-sense principle that a
judicial ‘proceeding’ within the meaning of section 362(a) ends once a
decision on the merits has been rendered. Ministerial acts or
automatic occurrences that entail no deliberation, discretion, or
judicial involvement do not constitute continuations of such a
proceeding. We now adopt the ministerial act exception for this
circuit and apply it to the case before us.” (In Re Pettit, supra 217
F.3d at p. 1080)
In Soares v. Brockton Credit Union (In Re Soares), 107 F.3d
969, 974 (1st Cir.1997), the court cited,” (stating that In re Capgro
Leasing Assocs., 169 B.R. 305, 315-16 (Bankr.E.D.N.Y.1994) the court
stated that “entry of a judgment will constitute a ‘ministerial act’
where the judicial function has been completed and the clerk has
merely to perform the rote function of entering the judgment upon the
court’s docket’). By the same token, however, acts undertaken in the
course of carrying out the core judicial function are not ministerial
and, if essayed after bankruptcy filing, will be deemed to violate the
automatic stay.”
In In Re Braught 307 B.R. 399 (Bankr.S.D.N.Y.,Mar 25, 2004)
“The Court finds that Judge LaBuda was performing a judicial function
*404 when he signed the judgment a month after the Debtors’ filed
their first bankruptcy proceeding. Signing a judgment constitutes the
continuation of a judicial proceeding against the debtor within the
meaning of 11 U.S.C. § 362(a)(1). See In re Capgro Leasing Assoc., 169
B.R. 305, 316 (Bankr.E.D.N.Y.1994). [FN4] Judicial actions taken
against a debtor are void ab initio, absent a relief from the
automatic stay. See In re Patti, supra * 7; see also In re Best
Payphones, Inc., 279 B.R. 92, 97-98 (Bankr.S.D.N.Y.2002)”
See also Musso v. Otashko 468 F.3d 99, (2nd Cir.(N.Y.),Nov 06, 2006),
In re Nelson 335 B.R. 740, (Bankr.D.Kan.,Nov 04, 2004).
STAY PENDING APPEAL
Rule 8005. Stay Pending Appeal
A motion for a stay of the judgment, order, or decree of a bankruptcy
judge, for approval of a supersedeas bond, or for other relief pending
appeal must ordinarily be presented to the bankruptcy judge in the
first instance. Notwithstanding Rule 7062 but subject to the power of
the district court and the bankruptcy appellate panel reserved

hereinafter, the bankruptcy judge may suspend or order the
continuation of other proceedings in the case under the Code or make
any other appropriate order during the pendency of an appeal on such
terms as will protect the rights of all parties in interest. A motion
for such relief, or for modification or termination of relief granted
by a bankruptcy judge, may be made to the district court or the
bankruptcy appellate panel, but the motion shall show why the relief,
modification, or termination was not obtained from the bankruptcy
judge. The district court or the bankruptcy appellate panel may
condition the relief it grants under this rule on the filing of a bond
or other appropriate security with the bankruptcy court. When an
appeal is taken by a trustee, a bond or other appropriate security may
be required, but when an appeal is taken by the United States or an
officer or agency thereof or by direction of any department of the
Government of the United States a bond or other security shall not be
required.
In Sammartano v. First Judicial District Court, in and for
County of Carson City, 303 F.3d 959, (9th Cir.(Nev.),Aug 26, 2002)
The court stated,”
‘Preliminary injunctive relief is available to a party who
demonstrates either (1) a combination of probable success on the
merits and the possibility of irreparable harm; or (2) that serious
questions are raised and the balance of hardships tips in its favor.’
A & M Records, 239 F.3d at 1013 (internal quotation omitted). Each of
these two formulations requires an examination of both the potential
merits of the asserted claims and the harm or hardships faced by the
parties. We have held that ‘[t]hese two formulations represent two

points on a sliding scale in which the required degree of irreparable
harm increases as the probability of success decreases.’ Id. (internal
citation and quotation omitted); see also Sun Microsystems, Inc. v.
Microsoft Corp., 188 F.3d 1115, 1119 (9th Cir.1999)
In Billings v. Hall (1857) 7 Cal.1, 4 1857 WL 637
The court stated,
“the Constitution of this State. Section first of Article I, of the
Constitution of California, declares that ‘all men are by nature free
and independent, and have certain inalienable rights, amongst which
are those of enjoying and defending life and liberty, acquiring
possession, protecting property, and pursuing and obtaining safety and
happiness.’ This principle is as old as the Magna Charta. It lies at
the foundation of every constitutional government, and is necessary to
the existence of civil liberty and free institutions. It was not
lightly incorporated into the Constitution of this State as one of
those political dogmas designed to tickle the popular ear, and
conveying no substantial meaning or idea; but as one of those
fundamental principles of enlightened government, without a rigorous
observance of which there could be neither liberty nor safety to the
citizen.”
And
“A right to land, in its broadest sense, implies a right to the
possession” (Billings v. Hall, supra 7 Cal. at p. 7)
Section 3387 of the Civil Code of the State of California
provides:
It is presumed that the breach of an agreement to transfer real
property cannot be adequately relieved by pecuniary compensation.
In the case of a single family dwelling which the party seeking

performance intends to occupy, this presumption is conclusive. In
all other cases, this presumption is a presumption affecting the
burden of proof.
The Appellate Court of the State of California stated in Pitt
In Pitt v. Mallalieu (1948) 85 Cal.App.2d 77, 81, the court stated,
“It is a presumption that the breach of an agreement to transfer real
property cannot be adequately relieved by pecuniary compensation.”
The defendants Bank of the West, and Financial Title Company
have not shown evidence that negatived the joint tenancy of Soon Chey
and her deceased husband Young Chey or that Soon Chey would not be
reasonably probable in prevailing, or that if in comparison of the
balancing of the harms that she would not suffer the irreparable
injury and the greater harms. And that the property Property
necessary for effective reorganization.
Soon Chey will suffer the balance of the harms, the loss of personal residential
property loss of effective reorganization.
Cite the balance of the hardships used in motion for preliminary injunction.
Public interest benefited involving the stability of real property laws.
In federal court the order on summary judgment could be the judgment

also.
Necessity of file stamp in federal court for starting time is yes
Is there a necessity for file stamp in state court for minute order?
Beaudry Motor Co. v. Abko Props., Inc., 780 F.2d 751, 754-55 (9th Cir.1986)
(holding that a civil minute order that is prepared at the direction of the
district judge, noted in the docket, **file stamped, and ended with the
language “IT IS SO ORDERED” “clearly put plaintiff’s counsel on notice that
an order had been entered against his client” and satisfied Rule 58 despite
the lack of entry of a formal, separate document).
In federal court entry of judgment could be a ministerial act.
In federal court order on summary judgment can be a judgment in contrast to state

law.
Under federal law an order can be a judgment.
In state law an interim order is never a judgment.
Under California Civil Procedure an interim order on summary judgment is

not a judgment
never a judgment
An interim order is not a judgment
In re Braught, 307 B.R. 399 (Bankr.S.D.N.Y.,Mar 25, 2004)
excellent case
**[11] Furthermore, a creditor has an affirmative duty to take steps to vacate any judgments signed and entered after
the filing of a bankruptcy petition in violation of the automatic stay. See Sucre, supra, at 348 (Upon learning of a
bankruptcy filing, a creditor has an affirmative duty to return the debtor to a status quo position as of the time of the
filing of the petition). See also In re Patti, 2001 WL 1188218 at *7 (Bankr.E.D.Pa. Sept. 14, 2001), in which a
creditor was held to have willfully violated the stay even though the action that constituted the violation was taken
by the New York State Court and not the creditor, because the creditor had an affirmative duty to vacate the New
York judgment signed and entered after the filing of a bankruptcy petition, and failed to do so. Sullivan County
maintains that it did not take any action to enforce its judgment, which the County does not dispute was entered
during the pendency of the Debtors’ first bankruptcy filing. On the other hand, Sullivan County did not provide this
Court with any evidence that it took action to vacate the judgment signed and entered in violation of the stay, despite
having an affirmative duty to do so.
[12][13] **The Court finds that Judge LaBuda was performing a judicial function *404 when he signed the
judgment a month after the Debtors’ filed their first bankruptcy proceeding. Signing a judgment constitutes the
continuation of a judicial proceeding against the debtor within the meaning of 11 U.S.C. § 362(a)(1). See In re
Capgro Leasing Assoc., 169 B.R. 305, 316 (Bankr.E.D.N.Y.1994). [FN4] Judicial actions taken against a debtor are
void ab initio, absent a relief from the automatic stay. See In re Patti, supra * 7; see also In re Best Payphones, Inc.,
279 B.R. 92, 97-98 (Bankr.S.D.N.Y.2002)(Bernstein, C.J.)(any proceedings or actions described in § 362(a)(1) are
void and without vitality if they occur after the automatic stay takes effect). As actions taken in violation of the
automatic stay are void, and not voidable, the Debtors do not have to reopen their prior Chapter 13 case to redress
the stay violation. See In re Prine, supra, at 612; D’Alfonso supra, at 508; In re Schwartz, supra at 571-2. The Court
holds that the judgment signed by Judge LaBuda after the filing of the petition was a violation of the automatic stay
and therefore a nullity. Furthermore, Sullivan County failed to take affirmative action to vacate the judgment signed
by the State Court judge in violation of the stay. Therefore, Sullivan County’s actions amounted to a willful
violation of the automatic stay, and Sullivan County is liable for any actual damages as well as Debtors’ attorney’s
fees. See 11 U.S.C. § 362(h). [FN5]
FN4. The Court recognizes that the entry of the judgment by the clerk might have been a mere "ministerial act" and
might not constitute the continuation of judicial proceeding pursuant to 11 U.S.C. § 362(a)(1). See Rexnord
Holdings, Inc. v. Bidermann, 21 F.3d 522 (2d Cir.1994).
Musso v. Ostashko, 468 F.3d 99, 56 Collier Bankr.Cas.2d 1785, Bankr. L. Rep. P 80,771 (2nd Cir.
(N.Y.),Nov 06, 2006)
Collier Bankruptcy Practice Guide
“[2] Moving for the Stay Pending Appeal
The procedure for obtaining a stay pending appeal is relatively

simple.n4 Regardless of whether an appeal is taken from (1) the
bankruptcy court to the district court or a designated bankruptcy
appellate panel, (2) the district court or bankruptcy appellate panel
to the court of appeals, or (3) the bankruptcy court directly to the
court of appeals as provided in 28 U.S.C. § 158(d)(2),n4a a stay
pending appeal will ordinarily be granted only on motion. The
procedure and criteria for obtaining a stay pending appeal are
substantively identical in all cases.n5 A stay pending appeal is in
the nature of a preliminary injunction,n6 and will only be granted
upon a showing that:
(1) the petitioner is likely to prevail on the merits of its

appeal;n7
(2) without a stay, the petitioner will suffer irreparable injury;n8
(3) other interested persons will suffer no substantial harm;n9 and
(4) the public interest will not be harmed.n10”
Look up in search engine right to possession. Lookup pleading for

preliminary injunction quiet title case.
Billings v. Hall, 7 Cal. 1, 1857 WL 637 (Cal. Jan Term 1857)

Having premised thus far, with regard to the Act, so far as it is supposed to
conflict with the Federal Constitution, we come now to inquire whether it can
be upheld under the Constitution of this State. Section first of Article I,
of the Constitution of California, declares that “all men are by nature free
and independent, and have certain inalienable rights, amongst which are those
of enjoying and defending life and liberty, acquiring possession, protecting
property, and pursuing and obtaining safety and happiness.”This principle is
as old as the Magna Charta. It lies at the foundation of every constitutional
government, and is necessary to the existence of civil liberty and free
institutions. It was not lightly incorporated into the Constitution of this
State as one of those political dogmas designed to tickle the popular ear,
and conveying no substantial meaning or idea; but as one of those fundamental
principles of enlightened government, without a rigorous observance of which
there could be neither liberty nor safety to the citizen.
If, then, one of the primary objects of government is to enable the citizen
to acquire, possess, and defend property, and this right has been guaranteed
by the Constitution, how can it be impaired by legislation? It will not be
denied that the Legislature*7 possesses uncontrolled power over the subject
of the remedy or process of her Courts, but when the remedy is so altered as
to affect the right, then it becomes a question, how far such legislation is
legitimate, the only question of difficulty being, in many cases, to draw the
line of demarkation between the right of property and the remedy. **A right
to land, in its broadest sense, implies a right to the possession, and the
profits accruing therefrom, since without the latter, the former can be of no
value.
Balancing of the harms in that the prohibit

Property necessary for effective reorganization.
Poplar Grove Planting and Refining Co., Inc. v. Bache Halsey Stuart, Inc.,
600 F.2d 1189, 28 Fed.R.Serv.2d 213 (5th Cir.(La.) Aug 20, 1979)
170B Federal Courts

170BVIII(F) Effect of Transfer and Supersedeas or Stay
170Bk684 Supersedeas or Stay of Proceedings
170Bk687 k. Bond or Security. Most Cited Cases
If judgment debtor objectively demonstrates present financial ability to
easily respond to money judgment and presents to court financially secure
plan for maintaining same degree of solvency during period of appeal, court
may then exercise discretion to substitute some form of guaranty of judgment
responsibility for usual supersedeas bond, **or if judgment debtor’s present
financial condition is such that posting of full bond would impose undue
financial burden, court is similarly free to exercise discretion to fashion
some other arrangement for substitute security through appropriate restraint
on judgment debtor’s financial dealings, which would furnish equal protection
to judgment creditor. Fed.Rules Civ.Proc. rule 62(d), 28 U.S.C.A.; Fed.Rules
App.Proc. rule 7, 28 U.S.C.A.
“**Contrariwise, if the judgment debtor’s present financial condition is such

that the posting of a full bond would impose an undue financial burden, the
court similarly is free to exercise a discretion to fashion some other
arrangement for substitute security through an appropriate restraint on the
judgment debtor’s financial dealings, which would furnish equal protection to
the judgment creditor. See Trans World Airlines, Inc. v. Hughes, supra, 314
F.Supp. 94; C. Albert Sauter Co., Inc. v. Richard S. Sauter Co., Inc., supra,
368 F.Supp. 501. The district court in the present case did not base its
exercise of discretion upon the existence of either circumstance detailed.”
NORTON BANKRUPTCY LAW AND PRACTICE 2d

Copyright © 2007 by Clark Boardman Callaghan
a division of Thomson Legal Publishing Inc.
**** THIS DOCUMENT IS CURRENT THROUGH THE JUNE 2007 SUPPLEMENT ****
PART 18. LITIGATION

CHAPTER 148. APPEALS
IV. APPELLATE PROCEDURE
Norton Bankruptcy Law and Practice 2d § 148:60
**§ 148:60. Stays Pending Appeal-Discretionary Stays

**Bankruptcy court is free to fashion remedy other than requiring posting of
supersedeas bond, for stay pending appeal, where appellant’s financial
condition prevents it from obtaining such bond. In re Byrd,
Bkrtcy.W.D.Wash.1994, 172 B.R. 970. Bankruptcy 3776.5(3)
Johnson v. California State Bd. of Accountancy, 72 F.3d 1427, 96 Cal. Daily

Op. Serv. 13, 96 Daily Journal D.A.R. 17 (9th Cir.(Cal.) Dec 29, 1995)
Bad outcome
[3] Injunction 212 138.1
212 Injunction
212IV Preliminary and Interlocutory Injunctions
212IV(A) Grounds and Proceedings to Procure
212IV(A)2 Grounds and Objections
Injunction 212 138.21
212 Injunction
212k138.21 k. Likelihood of Success, or Presence of
Substantial Questions, Combined with Other Elements. Most Cited Cases
Traditional equitable criteria for granting preliminary injunctive relief
are: strong likelihood of success on merits, possibility of irreparable
injury to plaintiff if preliminary relief is not granted, balance of
hardships favoring plaintiff, and advancement of public interest;
alternatively, court may issue preliminary injunction if moving party
demonstrates either combination of probable success on merits and possibility
of irreparable injury, or that serious questions are raised and balance of
hardships tips sharply in his favor.
212 Injunction
212k138.21 k. Likelihood of Success, or Presence of
Substantial Questions, Combined with Other Elements. Most Cited Cases
Under test for propriety of preliminary injunctive relief, asking whether
serious questions are raised and balance of hardships tips sharply in favor
of moving party, even if balance of hardships tips decidedly in favor of
moving party, it must be shown as irreducible minimum that there is fair
chance of success on merits.
Divergence of opinion to support likelihood of success
In re Dobslaw, 20 B.R. 922 (Bankr.E.D.Pa.,Jun 14, 1982)
[2] In determining the likelihood of success on the merits, we have the

opportunity to review the correctness of our own decision. However, the Third
Circuit has already ruled that cognovit notes create judicial liens in In re
Ashe, 669 F.2d 105 (3d Cir. 1982). Our decision in this case was consistent
with that of the Circuit Court. The liens in the instant case both arose
subsequent to October 1, 1979, the effective date of the Bankruptcy Reform
Act of 1978. We are aware that an appeal is pending before the United States
Supreme Court from one of the two Circuit Court decisions which held 11
U.S.C. s 522(f) unconstitutional when retroactively applied.[FN2] However,
the question of retroactive application does not arise in the instant case.
For this reason, there appears to be very little likelihood that the Bank
will prevail on appeal.
Collier Bankruptcy Practice Guide, 6-117, P 117.11, page 83
**[2] Moving for the Stay Pending Appeal
The procedure for obtaining a stay pending appeal is relatively

simple.n4 Regardless of whether an appeal is taken from (1) the
bankruptcy court to the district court or a designated bankruptcy
appellate panel, (2) the district court or bankruptcy appellate panel
to the court of appeals, or (3) the bankruptcy court directly to the
court of appeals as provided in 28 U.S.C. § 158(d)(2),n4a a stay
pending appeal will ordinarily be granted only on motion. The
procedure and criteria for obtaining a stay pending appeal are
substantively identical in all cases.n5 A stay pending appeal is in
the nature of a preliminary injunction,n6 and will only be granted
upon a showing that:
**(1) the petitioner is likely to prevail on the merits of its

appeal;n7
**(2) without a stay, the petitioner will suffer irreparable
injury;n8
**(3) other interested persons will suffer no substantial harm;n9
and
**(4) the public interest will not be harmed.n10
In re White Motor Corp., 25 B.R. 293, 297 7 Collier Bankr.Cas.2d 357, 9

Bankr.Ct.Dec. 1042 (N.D.Ohio,Sep 28, 1982)
. **In considering bankruptcy cases involving stays pending appeal, the

criteria invoked in determining whether to grant an injunction under the
Federal Rule of Civil Procedure 62(c), are applicable. In re Sung Hi Lim, 7
B.R. 319 (D.Haw.1980).
This Court finds:
(1) That in light of this Court’s decision of September 20, 1982, 23 B.R. 276
(D.C.1982) ruling that the Bankruptcy Court did not have the authority to
appoint a Special Master for the disposition of product liability claims, and
recognizing that the Special Master’s only purpose was to formulate the
challenged Program, the appellants are likely to succeed on the merits of
their appeal challenging the Bankruptcy Court’s approval of the Program;
(2) That irreparable harm will result to appellants and the judicial system
from the continued implementation of a Program which may be determined to be
constitutionally impermissible;
(3) That no other parties will be substantially harmed by this Court’s stay,
maintaining the status quo for the next few days pending a decision on the
merits of the appeal; and
(4) That the public interest will be served by prohibiting all parties from
incurring additional expenses and further depleting the assets of the
Bankrupt’s estate through continued implementation of the challenged Program.
For the above reasons, the Stay is continued until October 1, 1982.
Soon Chey will suffer irreparable injury, loss of single family residential
property for which there is no pecuniary compensation for its loss.

Regents of University of California v. American Broadcasting Companies, Inc.,
747 F.2d 511
C.A.9.Cal.,1984
**Party is not entitled to preliminary injunction unless he or she can
demonstrate more than simply damages of pecuniary nature.Copr. (C) West 2008
No Claim to Orig. U.S. Govt. Works

Washington Capitols Basketball Club, Inc. v. Barry, 304 F.Supp. 1193
N.D.Cal.,1969
“Irreparable injury” which must be shown in order to support granting of
preliminary injunction, is injury which is certain and great and which cannot
be compensated by award of money damages. Fed.Rules Civ.Proc. rule 65, 28
U.S.C.A .See publication Words and Phrases for other judicial constructions
and definitions.
Copr. (C) West 2008 No Claim to Orig. U.S. Govt. Works
Soon Chey will suffer the balance of the harms

Balance of the harms
Loss of personal residential property loss of effective reorganization.
Cite the balance of the hardships used in motion for preliminary injunction.
Public interest benefited involving the stability of real property laws.
Winter v. Natural Resources Defense Council, Inc., 129 S.Ct. 365, 367 172
L.Ed.2d 249
Establishes the criteria for not possibility of harm but a likelihood

of harm.
**(a) The lower courts held that when a plaintiff demonstrates a strong
likelihood of success on the merits, a preliminary injunction may be entered
based only on a “possibility” of irreparable harm. **The “possibility”
standard is too lenient. This Court’s frequently reiterated standard requires
plaintiffs seeking preliminary relief to demonstrate that irreparable injury
is likely in the absence of an injunction.
Even if plaintiffs have demonstrated a likelihood of irreparable injury, such

injury is outweighed by the public interest and the Navy’s interest in
effective, realistic training of its sailors. For the same reason, it is
unnecessary to address the lower courts’ holding that plaintiffs have
established a likelihood of success on the merits. Pp. 374 - 377.
(b) A preliminary injunction is an extraordinary remedy never awarded as of

right. In each case, courts must balance the competing claims of injury and
consider the effect of granting or withholding the requested relief, paying
particular regard to the public consequences. Weinberger v. Romero-Barcelo,
456 U.S. 305, 312, 102 S.Ct. 1798, 72 L.Ed.2d 91. Military interests do not
always trump other considerations, and the Court has not held that they do,
but courts must give deference to the professional judgment of military
authorities concerning the relative importance of a particular military
interest. Goldman v. Weinberger, 475 U.S. 503, 507, 106 S.Ct. 1310, 89
L.Ed.2d 478.
Prudential Real Estate Affiliates, Inc. v. PPR Realty, Inc., 204 F.3d 867,
00 Cal. Daily Op. Serv. 1365, 2000 Daily Journal D.A.R. 1931 (9th Cir.(Cal.)
Feb 23, 2000)
Applying California law.
Walczak v. EPL Prolong, Inc., 198 F.3d 725, 45 Fed.R.Serv.3d 296, 1999
Daily Journal D.A.R. 12,213 (9th Cir.(Cal.),Dec 03, 1999)
Description of abuse of discretion
[3][4][5][6] We review a district court’s decision regarding a preliminary

injunction for an abuse of discretion. Bay Area Addiction Research &
Treatment, Inc. v. City of Antioch, 179 F.3d 725, 730 (9th Cir.1999). In
issuing a preliminary injunction, a district court abuses its discretion by
basing its decision on either an erroneous legal standard or clearly
erroneous factual findings. Affordable Media, 179 F.3d at 1233. A district
court’s decision is based on an erroneous legal standard if: (1) the court
did not employ the appropriate legal standards that govern the issuance of a
preliminary injunction; or (2) in applying the appropriate standards, the
court misapprehended the law with respect to the underlying issues in the
litigation. Sports Form, 686 F.2d at 752. On the other hand, a district
court’s decision is based on clearly erroneous factual findings if “the
reviewing court on the entire evidence is left with the definite and firm
conviction that a mistake has been committed.” United States v. United States
Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746 (1948). Thus, we
will reverse the district court’s issuance of a preliminary injunction in
favor of Walczak only if the district court based its decision on an
erroneous legal standard or clearly erroneous findings of fact. See
Affordable Media, 179 F.3d at 1233.
Sammartano v. First Judicial District Court, in and for County of Carson
City, 303 F.3d 959, 02 Cal. Daily Op. Serv. 7782, 2002 Daily Journal D.A.R.
9819 (9th Cir.(Nev.),Aug 26, 2002)
[3] Civil Rights 78 1457(2)
78 Civil Rights
78III Federal Remedies in General
78k1449 Injunction
78k1457 Preliminary Injunction
78k1457(2) k. Public Accommodations or Facilities. Most
Cited Cases
(Formerly 78k268)
High probability of success on the merits of claim, that rule restricting
access to portions of government building by persons wearing clothing
indicating biker organization affiliation violated First Amendment, warranted
preliminary injunctive relief; ban was unreasonable inasmuch as no evidence
showed existence of risks asserted, ban was not viewpoint neutral inasmuch as
no evidence showed it was not motivated by nature of the message, loss of
First Amendment freedoms constituted irreparable harm, and the public
interest supported protection of First Amendment activities. U.S.C.A.
Const.Amend. 1.
[3] Civil Rights 78 1457(2)
78 Civil Rights
78III Federal Remedies in General
78k1449 Injunction
78k1457 Preliminary Injunction
78k1457(2) k. Public Accommodations or Facilities. Most
Cited Cases
(Formerly 78k268)
High probability of success on the merits of claim, that rule restricting
access to portions of government building by persons wearing clothing
indicating biker organization affiliation violated First Amendment, warranted
preliminary injunctive relief; ban was unreasonable inasmuch as no evidence
showed existence of risks asserted, ban was not viewpoint neutral inasmuch as
no evidence showed it was not motivated by nature of the message, loss of
First Amendment freedoms constituted irreparable harm, and the public
interest supported protection of First Amendment activities. U.S.C.A.
Const.Amend. 1.
212 Injunction
Preliminary injunctive relief is available to a party who demonstrates either
(1) a combination of probable success on the merits and the possibility of
irreparable harm, or (2) that serious questions are raised and the balance of
hardships tips in its favor.
212 Injunction
212k138.15 k. Balancing Hardships or Equities. Most
Cited Cases
If the movant has a 100% probability of success on the merits, this alone
entitles it to reversal of a district court’s denial of a preliminary
injunction, without regard to the balance of the hardships.
212 Injunction
212k138.12 k. Harm to Defendant or Third Parties;
Public Interest. Most Cited Cases
In cases where the public interest is involved, the district court, in
determining whether preliminary injunctive relief is warranted, must also
examine whether the public interest favors the plaintiff.
The stability of real property laws
Students of California School for the Blind v. Honig, 736 F.2d 538, 18 Ed.
Law Rep. 260, 15 Fed. R. Evid. Serv. 1802 (9th Cir.(Cal.),Jun 29, 1984)
Balancing of harms examined.
III. The Standard for Granting a Preliminary Injunction
[3][4] We note as a threshold matter that the district court applied the
proper legal standard for granting a preliminary injunction. In its
Memorandum of Decision filed August 17, 1982, the district court found that
the appellants’ contentions raised serious questions regarding the seismic
safety of the Fremont facility and that the dangers to the students if they
remained at the facility decidedly outweighed the hardships the state
defendants would sustain if additional seismic tests were ordered. In this
circuit, a preliminary injunction is properly granted if the moving party has
demonstrated “either a combination of probable success on the merits and a
possibility of irreparable injury, or that serious questions are raised and
the balance of hardships tips sharply in the moving party’s favor.” Beltran
v. Myers, 677 F.2d 1317, 1320 (9th Cir.1982) (emphasis in original). The
“balance of hardships” is a critical element in justifying a preliminary
injunction, and the public interest is also an important factor strongly to
be considered. See Lopez v. Heckler, 725 F.2d at 1498 (citing extensive
authority).
Beltran v. Myers, 677 F.2d 1317, 1320 (9th Cir.(Cal.),May 25, 1982)
Balancing of harms
“A. Under The First Branch Of The Test
1. Probable Success On The Merits
Turning to the probable success on the merits of the plaintiffs-appellees,

the Boren-Long Amendment, as already mentioned, prohibits states from
applying to Medicaid applicants transfer of assets rules more restrictive
than the rules for recipients of SSI. See 42 U.S.C.A. ss 1396a(j), 1382b(c)
(Supp. 1975-1981); see n.2 & 4, supra. The California rule appears to be
significantly more restrictive in at least one respect. In two other respects
there are differences of lesser and varying significance. Whether these
latter two standing together, but without the first, would be significantly
more restrictive is doubtful; however, they do not stand alone. After
considering all differences we conclude that the California rule, when
considered as a whole, appears to be significantly more restrictive. We
recognize that the district court may well conclude, when considering whether
to make the injunction permanent, that certain of the differences are
insufficiently significant to be enjoined.
a. Transfer of exempt property.”
At p. 1322,
“*1322 2. Irreparable Injury
Plaintiffs have shown a risk of irreparable injury, since enforcement of the

California rule may deny them needed medical care. That is a sufficient
showing.
B. Under The Second Branch Of The Test
Even if plaintiffs-appellees had not shown probable success on the merits,

they would certainly have **raised serious questions. Where the meaning of
the Medicaid legislation or its implementing regulations is unclear, the
resulting uncertainty is a consequence of a failure of the governmental
process to operate efficiently. The financial consequences of this
inefficiency under the circumstances of this case ought not to be visited
upon individuals such as the plaintiffs-appellees. **Balancing the medical or
financial hardship to the plaintiffs-appellees against the financial hardship
to the state resulting from its inability to recover for medical services
should its rules ultimately be held valid, it was not an abuse of discretion
for the district judge to find that the balance of hardships tipped sharply
in favor of plaintiffs. “
Washington Capitols Basketball Club, Inc. v. Barry, 304 F.Supp. 1193

(N.D.Cal.,Oct 03, 1969)
Examines and defines serious questions, defines irreparable injury,
[5] Injunction 212 147
212 Injunction
212IV(A)4 Proceedings
212k147 k. Evidence and Affidavits. Most Cited Cases
In order for plaintiff to succeed in motion for preliminary injunction, it is
not necessary that he prove his case with absolute certainty, but only that
he raise questions going to the merits so serious, substantial, difficult,
and doubtful as to make them fair grounds for litigation and for more
deliberate investigation.
212 Injunction
212k138.6 k. Nature and Extent of Injury; Irreparable
Injury. Most Cited Cases
“Irreparable injury” which must be shown in order to support granting of
preliminary injunction, is injury which is certain and great and which cannot
be compensated by award of money damages. Fed.Rules Civ.Proc. rule 65, 28
U.S.C.A.
Federal Ins. Co. v. County of Westchester, 921 F.Supp. 1136 (S.D.N.Y. Apr
08, 1996)
Without of bond
170B Federal Courts

If appellant qualifies for stay of judgment pending appeal, district court
has some discretion to dispense with further requirement of bond. Fed.Rules
Civ.Proc.Rule 62(d), 28 U.S.C.A.
[2][3][4] Second, the Court concludes that the defendant is likewise not
entitled to a stay without bond under Fed.R.Civ.P. 62(d). In the familiar
formula of the Supreme Court, determination of whether an appellant is
entitled to a stay under Rule 62(d) requires the court to assess: “(1)
whether the stay applicant has made a strong showing that he is likely to
succeed on the merits; (2) whether the applicant will be irreparably injured
absent a stay; (3) whether issuance of the stay will substantially injure the
other parties interested in the proceeding; and (4) where the public interest
lies.” Hilton v. Braunskill, 481 U.S. 770, 776, 107 S.Ct. 2113, 2119, 95
L.Ed.2d 724 (1987). If an appellant qualifies for a stay under this four-part
test, the district court has some discretion to dispense with the further
requirement of a bond, see Morgan Guaranty, 702 F.Supp. at 65,supra; but the
Court need not reach this further issue here, for (as the Court preliminarily
indicated at the March 13 hearing) the County has failed to carry its burden
under the four-part test.
Morgan Guar. Trust Co. of New York v. Republic of Palau, 702 F.Supp. 60
(S.D.N.Y. Dec 09, 1988)
stay without bond
170B Federal Courts

District court has discretion to grant stay of judgment with no supersedeas
bond or with only partial supersedeas bond if doing so does not unduly
endanger judgment creditor’s interest in ultimate recovery.
[5] Despite these advantages, however, the Second Circuit has recognized that
“an inflexible requirement for impressment of a lien and denial of a stay of
execution unless a supersedeas bond in the full amount of the judgment is
posted can in some circumstances be irrational, unnecessary, and self-
defeating, amounting to a confiscation of the judgment debtor’s property
without due process.” Texaco Inc. v. Pennzoil Co., 784 F.2d 1133, 1154 (2d
Cir.1986), rev’d on other grounds, 481 U.S. 1, 107 S.Ct. 1519, 95 L.Ed.2d 1
(1987). Accordingly, the district court has discretion to grant a stay of
judgment with no supersedeas bond or with only a partial supersedeas bond if
doing so does not unduly endanger the judgment creditor’s interest in
ultimate recovery. See id. at 1155; see, e.g., Miami Int’l Realty Co. v.
Paynter, 807 F.2d 871 (10th Cir.1986) ($500,000 malpractice insurance
proceeds placed in escrow and restrictions on transfer of assets to secure
$2.1 million judgment); Trans World Airlines, Inc. v. Hughes, 314 F.Supp. 94
(S.D.N.Y.1970) ($75 million bond to secure a judgment of $145,448,140); C.
Albert Sauter Co. v. Richard S. Sauter Co., 368 F.Supp. 501 (E.D.Pa.1973)
( $100,000 bond, stock placed in escrow, and restrictions imposed on
financial commitments to secure $1.2 million judgment).
Collier on Bankruptcy - 15th Edition Revised
Copyright 2009, Matthew Bender & Company, Inc., a member of the

LexisNexis Group.
Part VIII BANKRUPTCY RULES, Appeals to District Court or Bankruptcy

Appellate Panel
Chapter 8005 Stay Pending Appeal
10-8005 Collier on Bankruptcy-15th Edition Rev. P 8005.07
P 8005.07 Standards Governing Grant of Discretionary Stay
The defendant did not contest, oppose, or whose objections to evidence

were overruled
evidence that was requested by the respondent to be admitted, were

overruled.
Defendants did not refute, oppose or whose objections to evidence

admitted in the motion,
disprove, rebut: to contradict, to controvert, to argue or reason against, deny or

dipute.
show facts warranted under existing rule of law,

show facts warranted under existing law
did not establish facts, and or admissible evidence, according to the established
Federal Rules Evidence, to
in accordance with competent or admissible evidence.
truth: quality of being in accordance with experience, facts, or reality, being

authentic, under the established, Federal Rules of Evidence, requirements of the
evidence code that is in force and effect
failed to comply with the requirements of the law regulating the duty and
responsibility of an attorney at law.
The petitioners,
to place them in dispute, did not oppose or provide evidence to disprove the
points, authorities, and
rebut: to contradict, refute, or oppose by argument, proof et., as in a debate
defendants did not contest, provide evidence to disprove the points, or authorities
and evidence, and whose objection evidence that was requested by the
petitioner to be admitted, were overruled.
Of the underlying documents being void, I refer to and incorporate Exhibit “10,”
and referred to, “The first deed recorded on January 30, 1998, in the public
records of the County of Orange as instrument number 19980051462. A true and
correct certified copy of that deed is attached hereto as Exhibit ‘10,’ and
incorporated herein by this reference.” (Opposition To Relief From Stay Of Movant
at p.17, line 8) I refer to and incorporate Exhibit “11,” and referred to, “The
second deed was recorded on December 23, 2003, in the public records of the County
of Orange as instrument number 20030001508349. A true and correct certified copy
of that deed is attached hereto as Exhbit ‘11,’ and incorporated herein by this
reference. And I request the court to take judicial notice under the
authorization of rule 201 of the Federal Rules of Evidence. (Opposition To Relief
From Stay Of Movant at p.17, line 13)
And I refer to and incorporate Exhibit “12,” referred to, “The third deed was
recorded on October 3, 2005, in the public records of Orange County as instrument
number 2005000781940. A true and correct certified copy of that deed is attached
hereto as Exhibit ‘12,’ and incorporated herein by this reference. And I request
the court to take judicial notice under the authorization of rule 201 of the
Federal Rules of Evidence. (Opposition To Relief From Stay Of Movant at p.17, line
13)
And that at all times relevant to this action, Soon Chey held a joint tenancy
interest with the right of survivorship with her spouse, Young Chey Ph.D., now
deceased. And now holds the surviving joint tenant interest in the Property (at
the address 3741 Avenida Sausalito, Irvine, California 92606) from the date of May
17, 2007, the date of the death of Young Chey, and from the right of survivorship.
I refer to and incorporate Grant Deed of Young Chey and Soon Chey, establishing the
Joint Tenancy, recorded in the Official Records of Orange County, California on the
date of August 9, 1978, of which a true and correct certified copy is attached
hereto as Exhibit “1,” in the Opposition To Relief From Stay Of Movant and
incorporated herein by this reference. And I request the court to take judicial
notice under the authorization of Rule 201 of the Federal Rules of Evidence.
I refer to and incorporate the Corrected Affidavit of Death of Joint Tenant, Dated
October 7, 2008, which is re-recorded to correct the recording reference of
Document#: 2007000350252 Affidavit of Death to Grant Deed of Young Chey and Soon
Chey establishing the Joint Tenancy, recorded in the Official Records of Orange
County, California on the date of August 9, 1978, of which a true and correct copy
is attached hereto as Exhibit “2,” in the Opposition To Relief From Stay Of Movant,
and incorporated herein by this reference. And I request the court to take
judicial notice under the authorization of Rule 201 of the Federal Rules of
Evidence.
And in applying the rule of law to the facts of the case, the deeds being signed
without the capacity of the grantor, forged and when the grantor signs the document
and does not realize the nature of the instrument being executed and because of
fraud, he or she believes it to be some type of document other than a deed there is
fraud in the inception and:
“A void conveyance passes no title, *277 and cannot be made the foundation of a
good title even under the equitable doctrine of bona fide purchase.” (Gibson
v.Westoby, supra 115 Cal.App.2d at p. 276) In Trout v. Taylor (1934) Cal. 652,
656 [32 P.2d 968], the court held, “Numerous authorities have established the rule
that an instrument wholly void, such as an undelivered deed, a forged instrument,
or a deed in blank, cannot be made the foundation of a good title, even under the
equitable doctrine of bona fide purchase. (Promis v. Duke, 208Cal. 420 [281 Pac,
613]; Gould v. Wise, 97 Cal. 532 [32 Pac. 576, 33 Pac. 323]; Bardin v. Grace,
supra.) Consequently, the fact that defendant Archer acted in good
faith in dealing with persons who apparently held legal title, is not
in itself sufficient basis for relief.” And in Erickson v. Bohne, supra,
130 Cal.App.2d at p. 556, the court held “A void deed passes no title, and
cannot be made the foundation of a good title even under the equitable doctrine of
bona fide purchase.”
And that from contructive notice, actual notice, imputed, notice was not a bona
fide encumbrancer or a bona fide purchaser.
And,
11 U.S.C. 541. Property of the estate provides:

(a) The commencement of a case under section 301, 302, or 303 of this
title creates an estate. Such estate is comprised of all the
following property, wherever located and by whomever held:
(1) Except as provided in subsections (b) and (c)(2) of this
section, all legal or equitable interests of the debtor in property
as of the commencement of the case.
ed., 2009 update) § 7.67 pages 580-582
“A completed sale may be set aside on the same grounds that would
support an action to enjoin the sale (see §§7.25-7.38), unless the
property has been purchased by a BFP (see §7.65), in which case the
plaintiff may be limited to money damages. See Weingard v. Atlantic
Sav. & Loan Ass’n (1970) 1 C3d 806, 819, 83 CR 650.
See also §7.70. Justifications in reported cases for setting aside
the trustee sale include the following:
Assertions that no breach occurred or that the trustee did not have
power to foreclose. Hauger v. Gates (1954) 42 C2d 752, 269 P2d 609
(setoff equaled amount owed); Bank of America v. La Jolla Group II
(2005) 129 CA4th 706, 28 CR3d 825 (reinstatement of loan); System
Inv. Corp. v Union Bank (1971) 21 CA3d 137, 98 CR 735 (waiver of
breach); Saterstrom v. Glick Bros. Sash Door & Mill Co. (1931) 118 CA
379, 5 P2d 21 (void deed of trust); Van Noy v. Goldberg (1929) 98 CA
604, 277 P 538 (debt not matured).
...
Purported sale conducted by a former trustee who was substituted out
v. Emerald Props. (2000) 81 CA4th 868, 97 CR2d 255. But see Jones v.
First Am. Title Ins. Co. (2003) 107 CA4th 381, 131 CR2d 859 cited in
§§2.22, 2.25-2.26, 2.74, 2.98.”
In Saterstrom v. Glick Bros. Sash, Door & Mill Co., (1931) 118
Cal.App. 379, 383 [5 P.2d 21], the court held under a foreclosure sale on a
deed of trust that is “void for a lack of sufficient description of the
property conveyed, the sale and all proceedings under the deed of trust would
likewise be wholly ineffective and void.”
In Stirton v. Pastor 177 Cal.App.2d 232, 234, 2 Cal.Rptr.
135, The court stated,” It is a general rule that if a delivery
of mortgage or trust deed is upon conditions, there is no
effective delivery and no lien is created unless the conditions
are fulfilled. (Citations) (4) It is recognized in California
that where a foreclosure sale is had pursuant to a power of sale
contained in a trust deed, the sale may be attacked upon proper
showing in an equitable action”
And,
In In re Worcester, (1987) 811 F.2d 1224, 1228 (9th Cir. (Call.), the
Court stated, If the appellant, “Worcester has the right under California law to
set aside a foreclosure sale after the sale has taken place, after deeds have
been recorded, and after the property has been sold to a third party, then she
has the right in bankruptcy to do the same and that right is property of the
estate. See 11 U.S.C. § 541(a)(1)(property of the estate includes ‘all legal and
equitable interests of the debtor in property’). If Worcester does have such a
right under California law, we are not powerless to enforce it, and we may grant
Worcester relief to the same extent California courts would in similar
circumstances.”
In In re Elmore, 94 B.R. 670 (Bankr.C.D.Cal., Dec 14, 1988) The court stated, a
“debtor’s principal residence in a Chapter 13 case is virtually always necessary
to an effective reorganization.”
Collier, Exceptions to the Stay Involving Certain Residential Property
Evictions, 2008 Emerging Issues 1531, December 14, 2007, states,
“SUMMARY: Bankruptcy Code section 362(b)(22) provides that the automatic stay
under section 362(a)(3), subject to the provisions of section 362(l), does not
apply to the continuation of an eviction, unlawful detainer action, or similar
proceeding involving residential property in which the debtor resides as a tenant
under a lease or rental agreement if the lessor has obtained a judgment for
possession of such property against the debtor before the commencement of the
bankruptcy case. This Expert Commentary covers the circumstances under which the
automatic stay does not apply, the filing of a certification with the petition by
the debtor that negates the effect of section 362(b)(22) for at least a period of
30 days, the filing of an objection by the lessor to the certification, and the
inapplicability of the automatic stay if the residential property eviction
involved the endangerment of the property or illegal drug use on the property.
...
The stay exception under subsection (b)(22) applies only if the prepetition
judgment for possession relates to rental property in which the debtor resides
under a lease or rental agreement. It does not apply, for example, to an eviction
judgment obtained by a purchaser of property at foreclosure who does not have a

3
lease or rental agreement with a debtor occupying the property.
...
3
. See In re McCray, 342 B.R. 668 (Bankr. D.D.C. 2006).”
And
I refer to and incorporate the Bank Of The West, Deed Of Trust, a true and
correct copy is attached hereto as Exhibit “14,” in the Opposition To Relief From
Stay Of Movant and incorporated herein by this reference. And I request the court
to take judicial notice under the authorization of rule 201 of the Federal Rules of
Evidence.
I refer to and incorporate the Alliance Title Company, Notice Of Default,
a true and correct copy is attached hereto as Exhibit “15,” in the Opposition
To Relief From Stay Of Movant and incorporated herein by this reference. And I
request the court to take judicial notice under the authorization of rule 201 of
the Federal Rules of Evidence.
I refer to and incorporate the Alliance Title Company, Notice Of Trustee
Sale, a true and correct copy is attached hereto as Exhibit “16,” in the Opposition
The original trustee is First Santa Clara Corporation.
The trustee listed in the notice of default is Alliance Title Company, a
California Corporation as for the beneficiary and the by North American Title
Company., As Agent.
§ 2934a. Substitution of trustee; mailing; recording; contents of
substitution; substitution after notice of default; authorization of trustee to
act; new notice of sale, of the Civil Code of the State of California provides:
(a)(1) The trustee under a trust deed upon real property or an estate for years
therein given to secure an obligation to pay money and conferring no other duties
upon the trustee than those which are incidental to the exercise of the power of
sale therein conferred, may be substituted by the recording in the county in
which the property is located of a substitution executed and acknowledged by: (A)
all of the beneficiaries under the trust deed, or their successors in interest,
and the substitution shall be effective notwithstanding any contrary provision in

any trust deed executed on or after January 1, 1968; or (B) the holders of more
than 50 percent of the record beneficial interest of a series of notes secured by
the same real property or of undivided interests in a note secured by real
property equivalent to a series transaction, exclusive of any notes or interests
of a licensed real estate broker that is the issuer or servicer of the notes or
interests or of any affiliate of that licensed real estate broker.
In Pro Value Properties, Inc., v. Quality Loan Service Corp., (2009) 170
Cal.App.4th 579, 581 [88 Cal.Rptr.3d 381] the court stated,
“At the request of the beneficiary of a Deed of Trust on a residence (the
Property), QLS instituted non-judicial foreclosure proceedings, commencing with
the recordation of a Notice of Default. QLS was not the trustee named in the deed
of trust, and so was required to record a Substitution of Trustee pursuant to
Civil Code section 2934a. This it neglected to do. Pursuant to a recorded Notice
of Trustee Sale, QLS sold the Property to the highest bidder, Pro Value, on June
9, 2005 for $842,000. QLS issued a Trustee’s Deed of Sale to Pro Value, which was
subsequently recorded.
Some time thereafter, QLS and FV-1, the beneficiary under the Deed of
Trust, realized that there was no recorded Substitution of Trustee naming QLS as
trustee. Consequently, both QLS and FV-1 determined that the Trustee’s Deed of
Sale was void.”
And,
“In August 2005, FV-1 filed this lawsuit, alleging causes of action for
cancellation of an instrument and declaratory relief. FV-1 named both QLS and Pro
Value as defendants. Pro Value cross-complained against FV-1 for breach of
contract, negligence and negligent misrepresentation, and against QLS for
negligence. ...
QLS moved for summary judgment as to FV-1’s complaint and Pro Value’s
cross-complaint. After hearing arguments on the motion on January 25, 2007, the
trial court ruled that the Trustee’s sale was void and that the Trustee’s Deed of
Sale which QLS issued to Pro Value was of no force or effect” (Pro Value
Properties, Inc., v. Quality Loan Service Corp., supra, 170 Cal.App.4th at p.582)
And the appellate court upheld the trial court.
I refer to and incorporate the declaration of David Chey a true
and correct copy is attached hereto as Exhibit “17,”. in the Opposition
To Relief From Stay Of Movant and he declares under penalty of perjury that has
went to the Orange County Clerk Recorder and that after searching their records he
could not find a recording for a substitution of trustee from First Santa Clara
Corporation to Alliance Title Company or from First Santa Clara Corporation to
Financial Title Company and incorporated herein by this reference.
And I request the court to take judicial notice under the
authorization of Rule 201 of the Federal Rules of Evidence.
WELLS FARGO BANK, did not contest, provide evidence to disprove the points,
or authorities and evidence.
In applying the rule of law to the facts of the case the Trustee’s Sale was
void, and the Trustee’s Deed Upon Sale was void.
“A void conveyance
I refer to and incorporate,
The Notice Of Motion And Motion For Relief From The Automatic Stay With Supporting
Declarations filed on June 4, 2009,
Reply To Debtor’s Opposition To Motion For Relief From The Automatic Stay filed on
June 26, 2009,
Supplemental Brief To Motion For Relief From The Automatic Stay filed on June 15,
2009,
Request For Judicial Notice In Support Of Supplemental Brief filed on July 15,
2009,
Reply To Debtor’s Supplemental Brief filed on July 22, 2009
Evidentiary Objections To Debtors Reply To Movant’s Supplemental Brief To Motion

For Relief From Automatic Stay.
Opposition to Relief From Stay Of Movant with Exhibits filed on June 16, 2009;
Declaration of Dr. Diego F. Lerner, M.D. filed on June 16, 2009;
Proof Of Service Of The Opposition To Relief From Stay Of Movant filed on June 18,
2009.
Request For Judicial Notice Exhibit “5” Copy Of The Activity Of Daily Living Log
For The Date Of January 24, 1998, And The Integrated Health Service Notes Of The
Twin Palms Health Care Center Located At 11900 E. Artesia Boulevard, Artesia,
California 90701, Declaration Arnold N. Ling, M.D. Under The Authorization Of Rule
201 Of The Federal Rules Of Evidence filed on June 25, 2009; Additional Proof Of
Service Office Of The United States Trustee, 411 West Fourth Street, Suite 9041,
Santa Ana, California 92701-8000 filed on
June 26, 2009
Opposition To Relief From Stay Of Movant Supplemental filed on June 29, 2009,
Opposition To Relief From Stay Of Movant Supplemental Proof Of Service filed on

June 30, 2009,
Opposition To Relief From Stay Of Movant Supplemental filed on July 15, 2009,
Opposition To Relief From Stay Of Movant Supplemental Proof Of Service filed on

July 16, 2009,
Opposition To Relief From Stay Of Movant Reply To The Movant’s Supplemental Brief,
Soon Chey, David Chey filed on July 22, 2009,
Opposition To Relief From Stay Of Movant Reply To The Movant’s Supplemental Brief,
Soon Chey, David Chey Proof Of Service filed on July 23, 2009,
Opposition To Relief From Stay Of Movant Reply To The Movant’s Supplemental Brief
Soon Chey Proof Of Service filed on July 24, 2009,
Opposition To Relief From Stay Of Movant Reply To The Movant’s Supplemental Brief
David Chey Proof Of Service filed on July 24, 2009,
Request For Judicial Notice Exhibit Exhibit “33” Certificate Of Electronic

Recording Monitor, Loujean Duncan, Under The Authorization Of Rule 201 Of The
Federal Rules Of Evidence Soon Chey filed on July 24, 2009,
Request For Judicial Notice Exhibit Exhibit “33” Certificate Of Electronic

Recording Monitor, Loujean Duncan, Under The Authorization Of Rule 201 Of The
Federal Rules Of Evidence David Chey filed on July 24, 2009,
Request For Judicial Notice Exhibit Exhibit “34” Notice Of Bankruptcy, Filed On
4/30/2009 Under The Authorization Of Rule 201 Of The Federal Rules Of Evidence
David Chey filed on July 27, 2009,
Request For Judicial Notice Exhibit Exhibit “35” Notice Of Stay Filed On 5/09/2009
Under The Authorization Of Rule 201 Of The Federal Rules Of Evidence David Chey
filed on July 27, 2009,
Request For Judicial Notice Exhibit Exhibit “36” Notice Of Bankruptcy, Filed On
4/30/2009 Under The Authorization Of Rule 201 Of The Federal Rules Of Evidence Soon
Chey filed on July 27, 2009,
Request For Judicial Notice Exhibit Exhibit “37” Notice Of Stay Filed On 5/09/2009
Under The Authorization Of Rule 201 Of The Federal Rules Of Evidence Soon Chey
filed on July 27, 2009,
Opposition To Relief From Stay Of Movant Additional Reply To The Movant’s

Supplemental Brief Soon Chey facsimile and U.S. Mail, first class postage fully
prepaid service, hand delivered to Courtroom Dropbox on July 28, 2009
Opposition To Relief From Stay Of Movant Additional Reply To The Movant’s

Supplemental Brief David Chey facsimile and U.S. Mail, first class postage service,
hand delivered to Courtroom Dropbox on July 28, 2009
provide admissible evidence, establish evidence, provide evidence to controvert,

provide evidence to support their points,
were requested by the petitioner to be admitted under the authorization of Rule 201
of the Federal Rules of Evidence were overruled.
Were not warranted by existing law, were not authorized by law
Would not be warranted within the scope of the Federal Rules of Evidence.
Comply with the requirements of the law, prescription of the law
cognizable or authorized under the requirements,
not in accordance with and warranted by the Federal Rules of Evidence.
existing law that is in force and effect.
did not oppose or provide evidence to
And did not show evidence to controvert or refute, rebut, them
To place the points, authorites, and evidence in dispute,
In re De la Cruz, 176 B.R. 19 (9th Cir.BAP (Cal.) Dec 22, 1994)
[6] Evidence 89
To rebut presumption that mail is received by addressee in ordinary course of
mails when mail is properly addressed, stamped and deposited in appropriate
receptacle, something more than mere declaration of addressee alleging
nonreceipt is required.
A. Receipt of Mail Presumption
[6] The Supreme Court has held that upon proof that mail is properly
addressed, stamped and deposited in an appropriate receptacle, it is presumed
to have been received by the addressee in the ordinary course of the mails.
Hagner v. United States, 285 U.S. 427, 430, 52 S.Ct. 417, 419, 76 L.Ed. 861
(1932). In order to rebut this presumption, something more than a mere
declaration of a creditor alleging non-receipt is required. For example,
the Ninth Circuit has held that the mailing presumption is rebutted when the
notice sent by certified mail was returned unclaimed. In re Carter, 511
F.2d 1203 (9th Cir.1975); See also Bucknum, 951 F.2d at 207 ("[m]ail that is
properly addressed, stamped and deposited into the mail is presumed to be
received by the addressee") (quoting Ricketts, 80 B.R. 495, 498-99 (9th Cir.
BAP 1987) (Jones, J., concurring)); In re Ricketts, 80 B.R. at 497 (holding
that if denial of receipt alone could rebut presumption that notice was
given, then the scheme of deadlines and bar dates under the Bankruptcy Code
would come unraveled). See generally, Barry Russell, Bankruptcy Evidence
Manual, § 301.8 (1994-95 ed.).
In re Kronemyer, 405 B.R. 915, 09 Cal. Daily Op. Serv. 7249, 2009 Daily
Journal D.A.R. 8502 (9th Cir.BAP (Cal.),May 27, 2009)
turned on unsettled issues under California law, and others see

opinion.
[12] Bankruptcy 2422.5(1)

51k2422.5(1) Most Cited Cases

Among the factors appropriate to consider in determining whether relief from
the automatic stay should be granted to allow state-court proceedings to
continue are considerations of judicial economy and the expertise of the
state court, as well as prejudice to the parties and whether exclusively
bankruptcy issues are involved. 11 U.S.C.A. § 362(d).
B. The Bankruptcy Court Did Not Abuse Its Discretion When It Granted Relief
From the Automatic Stay
[10][11] What constitutes "cause" for granting relief from the automatic
stay is decided on a case-by-case basis. Christensen v. Tucson Estates, Inc.
(In re Tucson Estates, Inc.), 912 F.2d 1162, 1166 (9th Cir.1990); see also
Piombo Corp. v. Castlerock Props. (In re Castlerock Props.), 781 F.2d 159,
163 (9th Cir.1986).
[12] Among factors appropriate to consider in determining whether relief

from the automatic stay should be granted to allow state court proceedings to
continue are considerations of judicial economy and the expertise of the
state court, see MacDonald v. MacDonald (In re MacDonald), 755 F.2d 715, 717
(9th Cir.1985), as well as prejudice to the parties and whether exclusively
bankruptcy issues are involved, see Ozai v. Tabuena (In re Ozai), 34 B.R.
764, 766 (9th Cir.BAP1983).
As advocated by Mr. Kronemyer, the bankruptcy court applied factors (the

"Curtis Factors") articulated in In re Curtis, 40 B.R. 795, 799-800
(Bankr.D.Utah 1984), and adopted more recently by the bankruptcy court in
Truebro, Inc. v. Plumberex Specialty Prods., Inc. (In re Plumberex Specialty
Prods., Inc.), 311 B.R. 551, 559-60 (Bankr.C.D.Cal.2004). We agree that the
Curtis factors are appropriate, nonexclusive, factors to consider in deciding
whether to grant relief from the automatic stay to allow pending litigation
to continue in another forum.
The bankruptcy court determined that the Surcharge Request constituted an

existing proceeding for purposes of the Motion despite the fact that it had
not been initiated by ACIC. ACIC asserted in its motion that as a surety, it
had the right to participate in the Surcharge Request proceeding. We agree.
ACIC has a substantial interest, as a surety whose contingent claim is being
liquidated, in the Surcharge Request proceeding. It is ACIC that will have
initial liability to the Leal Estate for any surcharge ordered against Mr.
Kronemyer in the State Court. It is disingenuous to suggest otherwise.
Additionally, although stayed by an order of this Panel, the Surcharge

Request was ready for prompt determination in the State Court. Thus, judicial
economy weighs in favor of allowing the Surcharge Request to proceed in the
State Court. Further, the Surcharge Request is unique *922 to the
guardianship proceeding, and thus squarely within the expertise of the State
Court.
The bankruptcy court further determined that resolution of the Surcharge

Request would assist the bankruptcy court in determining whether ACIC has a
claim against Mr. Kronemyer. Despite the fact that ACIC’s claim has since
been disallowed under § 502(e)(1), resolution of the Surcharge Request
remains important to determining ACIC’s rights in the bankruptcy context both
pursuant to § 502(e)(2), and with respect to the pending Adversary Proceeding
ACIC brought for a determination that its claim is excepted from Mr.
Kronemyer’s discharge.
Finally, the bankruptcy court considered and rejected Mr. Kronemyer’s

assertion that the Motion should be denied because the Criminal Court
Judgment was preclusive as to the Surcharge Request. As noted by the
bankruptcy court, Mr. Kronemyer remains free to raise preclusion defensively
in the State Court with respect to the Surcharge Request. Since Mr.
Kronemyer’s preclusion argument raises issues that must be resolved under
California state law, we conclude that the bankruptcy court did not abuse its
discretion in deferring to the state court to determine the preclusive
effect, if any, of the Criminal Court Judgment with respect to the Surcharge
Request. Diamond v. Kolcum (In re Diamond), 285 F.3d 822, 826 (9th Cir.2002)
("In determining whether a party should be estopped from relitigating an
issue decided in a prior state court action, the bankruptcy court must look
to that state’s law of collateral estoppel.") (citation omitted).
The bankruptcy court did not abuse its discretion in granting the Motion to
allow the Surcharge Request to proceed before the State Court.
In re Plumberex Specialty Products, Inc., 311 B.R. 551 (Bankr.C.D.Cal. Jun

07, 2004)
(2) "cause" did not exist to lift stay to allow creditor that had obtained
$2.1 million judgment against Chapter 11 debtor in patent infringement action
to prosecute debtor for its alleged contempt in selling another product,
other than that whose sale had been enjoined, which allegedly also infringed
on creditor’s patent.
Motion denied.
West Headnotes

Congress intended for scope of automatic stay to be broad, staying nearly
every type of formal or informal action against debtor or property of the
estate. Bankr.Code, 11 U.S.C.A. § 362(a).

"Cause" may exist to lift or modify stay when necessary to permit pending
litigation to be concluded in another forum. Bankr.Code, 11 U.S.C.A. § 362(d)
(1).

Judicial economy is factor that bankruptcy court must consider when deciding
whether to lift stay to permit pending litigation to be concluded in another
forum. Bankr.Code, 11 U.S.C.A. § 362(d)(1).

On motion for relief from stay, bankruptcy court must be cognizant of entire
bankruptcy case and its progress, and adjudicate stay relief issues from that
perspective. Bankr.Code, 11 U.S.C.A. § 362(d).

Burden of proof on motion to modify automatic stay is shifting one: while
movant must first establish prima facie case that "cause" exists for stay
relief, burden then shifts to debtor, once this prima facie case has been
established, to show that relief from stay is unwarranted. Bankr.Code, 11
U.S.C.A. § 362(d)(1).

Relief from automatic stay should be denied if movant fails to satisfy its
initial burden of demonstrating prima facie case. Bankr.Code, 11 U.S.C.A. §
362(d)(1).

Motions for relief from stay are summary proceedings, which are confined to
issues of lack of adequate protection, debtor’s equity in property, and
necessity of property to an effective reorganization, **or existence of other
"cause" for relief from stay. Bankr.Code, 11 U.S.C.A. § 362(d).
[9] Bankruptcy 2441

Decision whether to grant or deny stay relief is within broad discretion of
bankruptcy court. Bankr.Code, 11 U.S.C.A. § 362(d).

Among factors which bankruptcy court may consider when deciding whether to
lift stay to permit pending litigation to continue in another forum are the
so-called Curtis factors: (1) whether stay relief to allow this litigation to
continue will result in partial or complete resolution of issues; (2) lack of
any connection, or interference, with bankruptcy case; (3) whether foreign
proceeding involves the debtor as fiduciary; (4) whether specialized tribunal
has been established to hear particular cause of action; (5) whether debtor’s
insurer has assumed full financial responsibility for defending litigation;
(6) whether litigation essentially involves third parties, and debtor
functions only as bailee or conduit; (7) whether litigation will prejudice
interests of other creditors, creditors’ committee, and other interested
parties; (8) whether judgment claim arising from the foreign action is
subject to equitable subordination; (9) whether movant’s success in foreign
proceeding would result in judicial lien avoidable by debtor; (10) interests
of judicial economy; (11) whether foreign proceeding has progressed to point
that parties are prepared for trial; and (12) impact of stay on parties and
balance of the hurt. Bankr.Code, 11 U.S.C.A. § 362(d)(1).

All of the Curtis factors bearing on propriety of lifting stay to permit
pending litigation to continue in another forum are not relevant in every
case, nor is court required to give each of these factors equal weight in
making its decision. Bankr.Code, 11 U.S.C.A. § 362(d)(1).

Whether debtor has exhibited lack of good faith in filing for bankruptcy, as
circumstance that may constitute "cause" to lift stay, depends on amalgam of
factors, and not upon any specific fact; test is whether debtor is attempting
to unreasonably deter and harass creditors or attempting to effect a speedy,
efficient reorganization on a feasible basis. Bankr.Code, 11 U.S.C.A. §
362(d)(1).

Debtor has exhibited a lack of good faith in filing for bankruptcy, as
circumstance that may constitute "cause" to lift stay, only when debtor’s
actions constitute a clear abuse of bankruptcy process. Bankr.Code, 11
U.S.C.A. § 362(d)(1).

Timing of debtor’s bankruptcy filing is factor to be considered in deciding
whether debtor has exhibited a lack of good faith in filing for bankruptcy,
as circumstance that may constitute "cause" to lift stay. Bankr.Code, 11
U.S.C.A. § 362(d)(1).


Timing of debtor’s Chapter 11 filing, shortly after entry of $2.1 million
judgment against it in patent infringement action, was insufficient, without
more, to establish that petition was filed in "bad faith," as circumstance
allegedly constituting "cause" to lift automatic stay to permit patent holder
to prosecute contempt action against debtor in foreign court, where there was
no evidence that debtor had financial ability on petition date to satisfy
this $2.1 million judgment or to obtain bond to stay enforcement thereof, and
where there was evidence that debtor, faced with this huge judgment and real
threat of being driven out of business, had filed for bankruptcy as last
resort. Bankr.Code, 11 U.S.C.A. § 362(d)(1).
[16] Bankruptcy 2422.5(4.1)

51k2422.5(4.1) Most Cited Cases
**"Cause" did not exist to lift stay to allow creditor that had obtained $2.1
million judgment against Chapter 11 debtor in patent infringement action to
prosecute debtor for its alleged contempt in selling another product, other
than that whose sale had been enjoined, which allegedly also infringed on
creditor’s patent, where requiring debtor to defend litigation in another
forum on opposite coast of the United States would interfere with its
reorganization, and where lifting of stay to allow litigation to proceed
would not result in complete resolution of issues between parties.
Bankr.Code, 11 U.S.C.A. § 362(d)(1).
In re Lamberjack, 149 B.R. 467 (Bankr.N.D.Ohio Oct 09, 1992)

(Formerly 228k828(3.53))
Collateral estoppel applied to judgment of state court issuing mandatory
injunction requiring debtor to remove gas pump and hook from channel of creek
so as to preclude debtor from challenging judgment on motion for relief from
automatic stay filed by successful party in state court litigation, even
though appeal of state court’s judgment was pending. Bankr.Code, 11 U.S.C.A.
§ 362(d)(1).
[2] Bankruptcy 2422.5(4.1)

51k2422.5(4.1) Most Cited Cases
(Formerly 51k2422.5(4))
Successful party in state court litigation against debtor which resulted in
issuance of mandatory injunction requiring debtor to remove gas pump and hook
from creek channel established "cause" for relief from automatic stay to
permit enforcement of mandatory injunction, where movant established that gas
pump and hook in channel represented nuisance with respect to navigation and
that the optimal time for remedying situation was before onset of winter.
Bankr.Code, 11 U.S.C.A. § 362(d)(1).

Cause may support request for relief from stay, permitting matter to proceed
in another forum. Bankr.Code, 11 U.S.C.A. § 362(d)(1).

**In determining whether to lift automatic stay, court is guided by following
factors: whether the relief would result in partial or complete resolution of
issues; **lack of any connection with or interference with bankruptcy case;
whether other proceeding involves debtor as fiduciary; **whether specialized
tribunal with necessary expertise has been established to hear cause of
action; whether debtor’s insurer had assumed full responsibility for
defending it; whether action primarily involves third party; **whether
litigation in another forum would prejudice interests of other creditors;
whether judgment claim arising from other action is subject to equitable
subordination; whether movant’s success in other proceeding would result in
judicial lien avoidable by debtor; **interests of judicial economy and
expeditious and economical resolution of litigation; whether parties are
ready for trial in other proceeding; and **impact of stay on parties and
balance of harms. Bankr.Code, 11 U.S.C.A. § 362(d)(1).
In re Siragusa, 27 F.3d 406, 31 Collier Bankr.Cas.2d 890, Bankr. L. Rep. P

75,965 (9th Cir.(Nev.) Jun 20, 1994)
51 Bankruptcy
51XIX Review
51XIX(B) Review of Bankruptcy Court
51k3784 k. Discretion. Most Cited Cases
Court of Appeals applies abuse of discretion standard to bankruptcy court’s
decision to abstain based on comity.
I. Standard of Review
[1][2] We review the district court’s decision on an appeal from a bankruptcy

court de novo. In re Tucson Estates, Inc., 912 F.2d 1162, 1166 (9th
Cir.1990). We apply the same standard applied by the district court-abuse of
discretion-to the bankruptcy *408 court’s decision to abstain based on
comity. Stock West, Inc. v. Confederated Tribes, 873 F.2d 1221, 1229 (9th
Cir.1989).
In re Menk, 241 B.R. 896, 43 Collier Bankr.Cas.2d 336, 99 Cal. Daily Op.
Serv. 9368, 1999 Daily Journal D.A.R. 12,027, 4 Cal. Bankr. Ct. Rep. 80 (9th
Cir.BAP (Cal.),Nov 05, 1999)
Discussion or arising under title 11 and 1334 jurisdiction.

Distinguishes In re Siragusa,
In re Sonnax Industries, Inc., 907 F.2d 1280, 23 Collier Bankr.Cas.2d 132

(2nd Cir.(Vt.),Jun 25, 1990)
Discusses Curtis factors.
Definition of void title under California law nullity of no force and

effect. Describe statute for cancellation.
Utilize the argument in In Re Worcester as to “under California law,”
Definition of void title under California law nullity of no force and

effect. Describe statute for cancellation.
The court did not state that the
Miller & Starr California Real Estate 3D Recording and Priorities,

Section 11:7, page 36,
Title of a purchaser at a foreclosure sale.
Whenever property is purchased at a foreclosure sale by a third person

other than the beneficiary, or the property is purchased at the
foreclosure sale and sold to a bona fide purchaser, there is a
conclusive presumption from the recitals in the trustee’s deed that
the statutory procedural requirements for the foreclosure have been
satisfied. 9
FN9 See § 10:206 (when the sale becomes final; reformation)

(purchaser’s title)...
Recording and Priorities, Section 11:12, page 43
Case example: A person prepared a deed for an easement naming herself

as both grantor and grantee purportedly granting an easement over
property that she did not own. The court held that the deed was an
invalid instrument and its recordation was a public offense. It waws
not a forged document because the signature of the grantor was
genuine, but the preparation of a deed relating to property that is
not owned by the grantor is a false instrument, and its recordation is
a public offense.
11:12 Effect of forgery
Effect of recordation of a forged instrument. A forged document is

totally void, and no title or lien is created even if it is recorded.1
The title or lien of a bona fide purchaser based on a forged
instrument in the chain of title is unenforceable against the true
owner of the property, even though the purchaser relied on the public
record.2
FN1 See § 8:53 (deeds; forgery)

FN2 See § 8:53 (deeds; forgery)
California Civil Practice Real Estate Secured Transactions Section

4:106, page 4-153
Garfinkle v. Superior Court of Contra Costa County (1978) 21 Cal.3d

268 146 Cal.Rptr. 208(in which California Supreme Court states
That it expresses no opinion as to validity and effect of conclusive
evidence clause in Civ. Code § 2924) These statutory presumptions
apply only to the propriety of notices and are inapplicable to the
other requirements of the sales process. [Garfinkle v. Superior Court
of Contra Costa County (1978) 21 Cal.3d 268 146 Cal Rptr 208...
See Sample Complaint to set aside nonjudicial sale
“Although the trustee’s deed appears valid on its face, it is invalid,

and of no force and effect, for the reasons set forth in paragraphs 10
of this complaint.”
4. Cancellation and Reformation
5:7 Cancellation of deeds
Facts were shown to establish that the deed is void invalid.
“A deed may be cancelled if its is void...”
§ 27327. Improper recording but corrected index as notice, of the

Government Code provides:
Any instrument filed for record in the office of the county recorder
of the county where it is entitled to record and which is copied into
a book of record other than that designated by law, but which is
thereafter indexed in the proper book of indices, imparts notice of
its contents to all persons from the date of such indexing, and any
subsequent purchaser, mortgagee, lien-holder, and encumbrancer
purchases and takes with the same notice and effect as if the
instrument were copied or recorded in the proper book of record.
What is the minimum time between the notice of the trustee sale and
the date of the trustee sale under cc 2924 ? 20 days
Substitution of trust deed has to be recorded on the property on which

the trust deed is recorded property
Need an interpretation that at all times the trustee must be
authorized to act.
Miller & Starr, California Real Estate 3D, Chapter 10, Section 10:8,
Substitution of trustee – statutory procedure,
p. 38, states,”
When effective. A substitution that is recorded prior to the

recordation of a notice of default is effective on recordation, and it
is not necessary to mail copies to anyone. A failure to record the
substitution invalidates the notice of default. 13
A substitution that is recorded after the notice of default is recorded but prior
to the notice of sale must be mailed prior to recordation to all persons to whom
the notice of default must be mailed. A copy must be mailed to the former trustee
of record and an affidavit must be attached to the recorded document of
substitution that it has been mailed as required. The requirements for mailing
are the same as for the mailing of the notice of default. 14
13
. Civ. Code, § 2934a, subd. (b)
13
. Civ. Code, § 2934a, subd. (b)
Bernhardt, Cal. Mortgage and Deed of Trust Practice (Cont.Ed.Bar 3d

ed., 2009 update) § 2.23, p77., states,
“2.23 2. Effect of Substitution on Validity of Notices
Provisions requiring service of a copy of the substitution on

all persons entitled to receive notice of default are in CC §
2934a(b)-(c). Effective January 1, 2005, these were amended to (1)
allow the substituted trustee to act before recordation of the
substitution (CC § 2934a(d) and (2) modify the required timing for
service of the substitution so that recipients of notices of default
or sale are aware of the substitution (CC § 2934a(b), (c). See Stats
2004, ch 177, §5; Senate Judiciary Committee Analysis of SB 1277 (Apr.
13, 2004). If the substitution is executed (but not recorded) before
or concurrently with the recordation of the notice of default, then a
copy of the substitution must be mailed before or concurrently with
the recordation of the notice of default. CC §2934a(c). In either
event the substituted trustee is authorized to act as the trustee
under the mortgage or deed of trust from the date the substitution is
executed. CC § 2934a(d).”
Miller & Starr, California Real Estate 3D, Section 10:181, Notice of
default-in general, p. 552, states,”
Purpose of the notice of default. The purpose of the notice of default

is to provide notice to the trustor, the trustor’s successors, to
junior lienors, other interested persons, and notice to the world that
there has been a default and of the nature of the default. Its
objective is also to inform the trust of the default and the nature of
the default so that the trustor has an opportunity to reinstate the
secured obligation.10
In addition, it establishes the minimum period within which the

default can be cured before the property can be sold by the trustee.11
Because of the importance of the notice to the protection of the

rights and property of the trustor, a valid foreclosure by private
power of sale requires strict compliance with the requirements of the
statute. A trustee’s sale which is based upon a defective notice of
default is invalid. 12

Dist. Jun 21, 2000)
In Dimock v. Emerald Properties LLC, (2000) 81 Cal.App.4th 868, 871 97

Cal.Rptr.2d 255
“(Civ. Code, [FN1] § 2934a, subd. (a).) By its terms the statute provides
that after such a substitution has been recorded, ‘the new trustee shall succeed to
all the powers, duties, authority, and title granted and delegated to the trustee
named in the deed of trust.’ (§ 2934a, subd. (a)(4).)”
And
“On August 15, 1996, Bankers recorded a substitution of trustee which

substituted defendant and respondent Calmco Trustee Services, Inc. (Calmco), as the
trustee of record in the place and stead of Commonwealth. The substitution was
prepared by TD acting on Bankers’s behalf.
Also on August 15, 1996, TD, acting on behalf of Calmco, recorded a notice
of default and election to sell. Consistent with statutory requirements, the notice
of default stated: ‘No sale date may be set until three months from the date this
notice of default may be recorded.’
According to an employee of TD, the recording of the Calmco substitution and

the recording of the Calmco notice of default were mistakes. According to the TD
employee, at the time these documents were recorded TD did not know that it had
previously recorded a notice of default on Commonwealth’s behalf and that a
foreclosure file already existed with respect to Dimock’s home. When a title
company advised TD about the earlier Commonwealth notice of default, TD "abandoned"
the Calmco file it had created to process the Dimock foreclosure and instead
proceeded with the foreclosure using its earlier Commonwealth file.
Because it discovered the error shortly after recording the documents, TD

did not send Dimock copies of either the Calmco substitution or the Calmco notice
of default. However, other than abandoning its own file on the matter, TD did not
record any document which expressly abandoned or otherwise vacated the Calmco
substitution or Calmco notice of default.” (Dimock v. Emerald Properties LLC,
supra, 81 Cal.App.4th 872)
“On August 27, 1996, TD, acting on behalf of Commonwealth, recorded a notice
of trustee’s sale which set September 18, 1996, as the date for a *873 trustee’s
sale.” (Dimock v. Emerald Properties LLC, supra, 81 Cal.App.4th pp.
872-873)
“A. Calmco Had the Sole Power to Convey the Property
Under the unambiguous terms of section 2934a, [FN2] subdivision (a)(4), the
recording of the substitution of trustee transferred to Calmco the exclusive *875
power to conduct a trustee’s sale. This plain reading of the statute is consistent
with the law as it existed before the predecessor statute was enacted in 1935 and
the power to substitute a trustee depended solely on the express provisions of a
deed of trust. (See Witter v. Bank of Milpitas (1928) 204 Cal. 570, 577-578 [269 P.
614]; Pacific S. & L. Co. v. N. American etc. Co. (1940) 37 Cal.App.2d 307, 309-
310 [99 P.2d 355 ].) " ‘ "Upon the appointment being made under the power, the new
trustee becomes vested, ipso facto, with the title to the trust premises and is
clothed with the same power as if he had been originally named ...." ‘ " (Witter v.
Bank of Milpitas, supra, 204 Cal. at p. 578.) *876” (Dimock v. Emerald
Properties LLC, supra, 81 Cal.App.4th pp. 874-876)
In applying this rule of law to the facts of the case, I refer to the date
of the signed Substitution of Trustee April 22, 2008 in which the trustee was
authorized to act. From April 22, 2008 to July 11, 2008 which is the date of the
Trustee Sale, is 80 days. This is not three months plus twenty days.
“Our reading of the statute is also consistent with practical necessity:
there simply cannot be at any given time more than one person with the power to
conduct a sale under a deed of trust. We would create inestimable levels of
confusion, chaos and litigation were we to permit a beneficiary to appoint multiple
trustees, each one retaining the power to sell a borrower’s property.” (Dimock v.
Emerald Properties LLC, supra, 81 Cal.App.4th at p. 876)
Bernhardt, Cal. Mortgage and Deed of Trust Practice (Cont.Ed.Bar 3d

ed., 2009 update) § 12.144, p1257., states,
“4. Manner of Sale
The required manner of a trustee sale is that the sale must be

conducted by a properly appointed and serving trustee under the deed
of trust at the time of:
the recordation of the notice of default;
the trustee sale; and

the issuance of the trustee deed.
Former trustees and all others who are not properly appointed and
serving trustee (see §§2.21-2.26) at the time of the step taken will
be unable to convey title and the sale will be ‘void’ and not just
‘voidable.’ See Dimock v. Emerald Props. (2000) 81 CA4th 868, 97 CR2d
255. In Dimock, the trustee service agent abandoned the notice of
default recorded by a substituted-in trustee when it discovered an
earlier notice of default recorded by the predecessor trustee.
Without nullifying documents installing the new trustee, the service
agent conducted a trustee sale and had the former trustee sign the
trustee’s deed. The court of appeal held that the sale was ‘void’ and
not just ‘voidable,’ because the former trustee had no power to convey
title at the time of sale.”
Witkin Security Transactions in Real Property, § 151 Posting, Publication and

Recording
(2) Publication. A copy must be published once a week for ‘three consecutive
calendar weeks, the first publication at least 20 days before the date of the sale’
in a newspaper of general circulation in the city or judicial district ‘in which
the property or some part thereof is situated.’ (C.C. 2924f(b)(1); see Hotchkiss v.
Darling (1933) 130 C.A. 625, 626, 20 P.2d 343.)
Witkin Security Transactions in Real Property, § 164 Effect of Recitals in

Trustee’s Deed.
The presumptions in C.C. 29224 regarding the propriety of a foreclosure sale
‘pertain only to notice requirements, not to every defect or inadequacy short of
fraud.’ Thus a foreclosure sale performed in error after the trustor and
beneficiary had mutually agreed to cure the default and reinstate the load was
invalid even though the deed was delivered to the buyer and recorded. Because the
beneficiary had no right to sell, the statutory presumption of valid title that
would have been applicable had the sale been proper did not apply. (Bank of America
v. La Jolla Group II (2005) 129 Cal.App.4th 706 28 C.R.3d 825 [criticizing Moeller
v. Lien (1994) 25 C.A.4th 822, 30 C.R.2d 777, text, pl. 963
C.E.B. Mortgages, Deeds of Trust and Foreclosure Litigation, Bernhardt, Roger,

§2.23, Effect of Substitution on the Validity of Notices, If the substitution is
effected after the notice of default has been recorded but before the recordation
of the notice of sale, a copy of the substitution must be mailed before or
concurrently with the recordation of the notice of sale. CC § 2934 a(c)
By implication then there would be two trustees authorized to act.
A reading of the Successor Trustee paragraph, B of W. trust deed page 11, paragraph
9, shows,”
Successor Trustee. Lender, at Lender’s option, may from time to time appoint a
successor Trustee to any Trustee appointed under this Deed of Trust by an
instrument executed and acknowledged by Lender and recorded in the office of the
recorder of Orange County, State of California. The instrument shall contain, in
addition to all other matters required by state law, the names of the original
Lender, Trustee, and successor trustee, and the instrument shall be executed and
acknowledged by Lender or its successors in interest. The successor trustee,
without conveyance of the Property, shall succeed to all the title, power, and
duties conferred upon the Trustee in this Deed of Trust and by applicable law.
This procedure for substitution of Trustee shall govern to the exclusion of all
other provisions for substitution.”
Need authority: An invalid notice renders the sale void.
Jones v. First American Title Ins. Co., 107 Cal.App.4th 381, 131
(Cal.App. 2 Dist. Mar 25, 2003)
Case involved mutual mistake among the parties, in this case this was a
unilateral mistake.
This case was not a mutual mistake but a failure to follow follow
procedure.
U. S. Hertz, Inc. v. Niobrara Farms, 41 Cal.App.3d 68, 116 Cal.Rptr. 44 (Cal.App. 3 Dist. Jul 15, 1974)
Substitution a day after trustee that was unauthorized recorded a

notice of default, didn’t cause prejudice to the trustor.
The error caused prejudice because it shortened the time to which to

exercise all available rights including the right to sell the property
before, in fact the property was sold the day before the trustee
sale
On February 1, 1972, Niobrara executed two forms of substitution of trustees. In each substitution, **Title Insurance
and Trust Company (herein ‘Title Insurance’) was substituted as trustee in place of North American. One of the
substitutions was recorded in Butte County, the other in Tehama County.
**On February 1, 1972, Niobrara executed separate notices of default and election to sell the properties secured by
the respective deeds of trust to satisfy the obligations secured thereby. **The notices were recorded on February 8,
1972, in the respective counties of Butte and Tehama.
Miller v. Cote, 127 Cal.App.3d 888, 179 Cal.Rptr. 753 (Cal.App. 4 Dist.,Jan
14, 1982)
[3] The notice of default upon which appellants rely was defective in two
fundamental respects. First, even if respondents’ conduct had been an act
sufficient to trigger the “due on” clause, **the notice of default was
premature, thus shortening the statutorily prescribed period in which the
obligation could be reinstated. **Secondly, the default specified in the
notice was no default, and appellants are bound by their notice of default;
they cannot assert any ground of default other than that stated in the
notice. ( System Inv. Corp. v. Union Bank, supra, 21 Cal.App.3d at p. 153, 98
Cal.Rptr. 735; Tomczak v. Ortega (1966) 240 Cal.App.2d 902, 904, 50 Cal.Rptr.
20.)
This shortened the statutorily prescribed period and prejudice resulted. I refer
to and incorporate the sales contract of 3741 Avenida Sausalito showing that the
house was sold the day before the sale July 10, 2008
A void deed is a nullity and of no force and effect, prevails against a facially
valid deed. Even if the conditions which make it void are not apparent on its face.
In cancellation, although a deed may appear valid on its face, it is invalid and of
no force and effect.
The particular irregularity must be shown to have injured or prejudiced the

plaintiff. California Trust Co. v. Smead Invest. Co. 6 Cal.App.2d 432, 44 P.2d
624 California Civil Practice Real Estate Secured Transactions, Section 4:104, p.4-
151
In re Boyd is not applicable in that the facts of the case did not involve a void
deed.
In Little v. CFS Service Corp., 188 Cal.App.3d 1354, 233 Cal.Rptr. 923, the court,
stated,
“The word ‘void’ in its strictest sense, means that which has no force and effect,
is without legal efficacy, is incapable of being enforced by law, or has no legal
or binding force”
Little v. Cfs Service Corp., 188 Cal.App.3d 1354, 233 Cal.Rptr. 923
(Cal.App. 2 Dist. Jan 27, 1987)
Discussion
** "The word ‘void,’ in its strictest sense, means that which has no force
and effect, is without legal efficacy, is incapable of being enforced by law,
or has no legal or binding force, but frequently the word is used and
construed as having the more liberal meaning of ‘voidable."‘ (Black’s Law
Dict. (5th ed. 1979) p. 1411, col. 2.) "Voidable" is defined as "[t]hat which
may be avoided, or declared void; not absolutely void, or void in
itself ...." (Ibid.)
** Another term frequently used in cases dealing with sales under trust deeds
is " invalid," which is defined in Black’s as "Vain; inadequate to its
purpose; not of binding force or legal efficacy; lacking in authority or
obligation." (Id., at p. 739, col. 2.)
In many of the cases, void, voidable, and invalid appear to be used

interchangeably. Examples of cases in which the terminology is difficult to
understand are Seccombe v. Roe (1913) 22 Cal.App. 139 [133 P. 507] and Mack
v. Golino (1950) 95 Cal.App.2d 731 [213 P.2d 760].
The general rule in the United States on voidness or voidability of sale is

set out in 55 American Jurisprudence Second: "[D]efects and irregularities in
a sale under a power render it merely voidable and not void .... However,
substantially defective sales have been held void where the defect lay in a
particular as to which the statutory provision was regarded as mandatory ..."
(55 Am.Jur.2d, Mortgages, § 746, p. 673.) "A sale under a power in a mortgage
without reasonable notice will be set aside." (Id., § 775, p. 691.)
Irreparable injury
In re Vylene Enterprises, Inc., 968 F.2d 887, 27 Collier Bankr.Cas.2d 771,
23 Bankr.Ct.Dec. 236, Bankr. L. Rep. P 74,737 (9th Cir.(Cal.) Jun 29, 1992)
9th ciruit practice
Remand standard of review, p. 7-93
Rucker v. Davis, 237 F.3d 1113, 2001 Daily Journal D.A.R. 889 (9th Cir.
(Cal.),Jan 24, 2001)
212 Injunction
To obtain a preliminary injunction, the moving party must show either (1) a
combination of probable success on the merits and the possibility of
irreparable harm, or (2) that serious questions are raised, and the balance
of hardships tips sharply in favor of the moving party.
170B Federal Courts

170BVIII(K) Scope, Standards, and Extent
170BVIII(K)1 In General
170Bk754 Review Dependent on Whether Questions Are of
Law or of Fact
170Bk755 k. Particular Cases. Most Cited Cases
Court of Appeals reviews whether district court employed the appropriate
legal standards governing the issuance of a preliminary injunction and
whether the district court correctly apprehended the law with respect to the
underlying issues in the case.
People v. Sanders, 67 Cal.App.4th 1403, 79 Cal.Rptr.2d 806, 98 Cal. Daily

Op. Serv. 8678, 98 Daily Journal D.A.R. 12,082 (Cal.App. 2 Dist. Nov 24, 1998)
Exemplifies that a void deed is a nullity and of no force and effect.
Further, the instruction is based upon a faulty premise. (5) The recording of
a forged deed does not convey title. (Firato v. Tuttle, supra, 48 Cal.2d 136,
139; Bryce v. O’Brien, supra, 5 Cal.2d 615, 616; Trout v. Taylor, supra, 220
Cal. 652, 656; Fallon v. Triangle Management Services, Inc., supra, 169
Cal.App.3d 1103, 1105; Wutzke v. Bill Reid Painting Service, Inc., supra, 151
Cal.App.3d 36, 43-44.) *Thus, even if there were no obligation to establish
that Sanders had made material false representations to each of the purported
grantors, there would not have been a theft for the reason that the recording
of a false deed does not convey title. Nor does the filing of such a deed
combined with the redemption of the property by payment of back taxes convey
title. (Potter v. County of Los Angeles, supra, 251 Cal.App.2d 280, 286 [59
Cal.Rptr. 335]; 2 Ehrman, Taxing Cal. Property, supra, § 29.17 et seq.; see
Rev. & Tax. Code, § 4101 et seq.)
Make showing against every ground asserted for relief from stay
Including petitioner has no equity based on case of Boyd
In re Boyd, 107 B.R. 541 (Bankr.N.D.Miss.,Aug 02, 1989)
United States on behalf of Farmers Home Administration moved for relief from stay and abandonment in Chapter 13
case. The Bankruptcy Court, David W. Houston, III, J., held that: **(1) when debtor filed Chapter 13 petition 33
months after foreclosure sale had been concluded and trustee’s deed had been recorded, debtor had no legal rights in
mortgaged property under Mississippi law, and **(2) debtor could not reinstate payment obligations set forth in note
associated with mortgage, as debtor had lost all legal rights to property and any equitable rights to property were
extinguished by order of eviction, even though confirmation order was entered in Chapter 13 case without objection.
Lifting of stay found justified.
West Headnotes
51 Bankruptcy
51XVIII Individual Debt Adjustment
51k3704 Plan
51k3711 Curing Defaults
51k3711(4) k. Accelerated Maturity; Effect of Foreclosure. Most Cited Cases
Although filing of Chapter 13 bankruptcy case allows debtor to reinstate mortgage indebtedness, such right is
generally considered extinguished by prepetition foreclosure that has been fully consummated. Bankr.Code, 11
U.S.C.A. § 1301 et seq.
51 Bankruptcy
51V The Estate
51k2545 k. Property Pledged or Encumbered; Redemption Rights. Most Cited Cases
When debtor filed Chapter 13 petition 33 months after foreclosure sale had been concluded and trustee’s deed had
been recorded, debtor had no legal rights in the property under Mississippi law. Bankr.Code, 11 U.S.C.A. § 1301 et
seq.

Fed.R.Serv.3d 733, Bankr. L. Rep. P 71,637 (9th Cir.(Cal.) Feb 26, 1987)
Purchaser of debtor’s property sold at foreclosure sale and his transferee

filed a complaint to vacate the automatic stay and the debtor filed a
counterclaim seeking to set aside the foreclosure sale. The Bankruptcy Court,
28 B.R. 910, James R. Dooley, J. granted debtor’s motion for judgment as to
title as to one parcel and ordered foreclosure sale on parcel which had been
subject to deed of trust set aside. Purchaser and his transferee appealed.
The United States District Court for the Central District of California,
Irving Hill, J., validated the foreclosure sale and reversed, and debtor
appealed. The Court of Appeals, Cynthia Holcomb Hall, Circuit Judge, held
that: (1) appeal was not moot on ground debtor had failed to obtain stay of
foreclosure sale pending appeal; (2) debtor had made valid tender of payment
of indebtedness owing, under California law, even though she admitted she
could not borrow money and had none available; and (3) purchaser and his
transferee had constructive notice of misdescription of property contained in
foreclosure sale documents.
Decision of the District Court reversed; case remanded.
51 Bankruptcy
51XIX Review
51k3781 k. Moot Questions. Most Cited Cases
(Formerly 51k465)
Appeal by debtor from district court judgment reversing bankruptcy court and
holding that foreclosure sale effected valid transfer of debtor’s four-acre
parcel and residence would not be dismissed as moot on ground debtor failed
to obtain stay of foreclosure sale pending appeal; if debtor had right under
California law to set aside foreclosure sale after sale had taken place,
deeds had been recorded, and property had been sold to third party, she then
had right in bankruptcy to do same, and that right was property of the
estate, and Court of Appeals determined that debtor satisfied requirements
for setting aside foreclosure sale and was entitled to relief under
California law, so appeal was not moot.
51 Bankruptcy
51XIX Review
51k3785 Findings of Fact
51k3787 k. Particular Cases and Issues. Most Cited Cases
(Formerly 51k446(8.2))
District court properly reviewed bankruptcy court’s findings of both fact and
law de novo, on appeal from proceedings involving claim by debtor that
foreclosure sale should be set aside, which claim was “related” case, under
emergency rule which was in effect at time of district court proceedings.
51 Bankruptcy
51I In General
51I(C) Jurisdiction
51k2045 k. Particular Proceedings or Issues. Most Cited Cases
Proceedings relating to validity of foreclosure sale of debtor’s property
involved only state-created rights, and were therefore “related” case rather
than “core proceedings”.

170B Federal Courts
170BVIII(K) Scope, Standards, and Extent
170BVIII(K)1 In General
170Bk776 k. Trial De Novo. Most Cited Cases
Court of Appeals reviews de novo question of whether irregularity in
foreclosure sale is material, for purposes of setting aside foreclosure sale
under California law that question is one of law.
[6] Mortgages 266 529(7)
266 Mortgages
266X(M) Sale
slight unfairness or irregularity; **full description of property referred to
[7] Mortgages 266 529(8)
266 Mortgages
266X(M) Sale
266k529(8) k. Form of Remedy and Conditions Precedent.
Most Cited Cases
Under California law, debtor, who obtained loans secured by deeds of trust on
her residence and its four-acre lot, made valid tender of payment of
indebtedness required of one seeking to set aside foreclosure sale; debtor
expressed her willingness to tender amount owed through answer and
counterclaim requesting court to order appraisal and sale of part of real
property to recover its market value for benefit of creditors and remit
balance to debtor or allow debtor to redeem property, and tender was
“effective” under California law, even though debtor admitted she could not
borrow money and had none available, given fact land was worth many times
amount owed by debtor. West’s Ann.Cal.Civ.Code §§ 1493, 1495.
[8] Mortgages 266 529(8)
266 Mortgages
266X(M) Sale
266k529(8) k. Form of Remedy and Conditions Precedent.
Most Cited Cases
Fact that debtor who sought to set aside foreclosure sale did not have cash
immediately available to support her tender of payment of indebtedness owing
was not fatal under California law, which required one seeking to set aside
foreclosure sale to make valid and viable tender of payment of indebtedness
owing to cancel voidable sale under deed of trust. West’s Ann.Cal.Civ.Code §§
1493, 1495.
[9] Mortgages 266 538
266 Mortgages
266X(M) Sale
266k538 k. Effect of Defects or Irregularities in Judgment,
Decree, or Sale. Most Cited Cases
**California relation back doctrine, providing that title at foreclosure sale
cannot be affected by adverse claims or interests arising after execution of
deed of trust, applied only to title taken at valid foreclosure sale.
266 Mortgages
266X(M) Sale
266k536 k. Bona Fide Purchasers. Most Cited Cases
Whether purchaser of debtor’s property at foreclosure sale or his transferee
knew of debtor’s action against mortgage company alleging fraud and breach of
fiduciary duty for arranging loans secured by deeds of trust that included
balloon payments was irrelevant in action **to set aside foreclosure sale on
basis that price paid was grossly inadequate and there was irregularity in
sale that contributed to inadequacy of price, under California law.
266 Mortgages
266X(M) Sale
Purchaser of debtor’s property at foreclosure sale and his transferee had
constructive notice of misdescription of property which was to be subject of
sale, where deed of trust contained accurate description of property subject
to foreclosure, but notice of trustee’s sale, trustee’s deed to purchaser,
and purchaser’s deed to his transferee incorrectly stated that property
included another parcel, which had not been subject of deed of trust, and
investigation would have disclosed property misdescription.
Norma E. Worcester appeals from the decision of the district court validating
a California foreclosure sale of her residence and reversing a decision of
the bankruptcy court. The district court held that Worcester failed to
satisfy certain requirements under California law necessary to set aside a
foreclosure action. Specifically, the district court held that California law
required Worcester to tender payment of the amount necessary to redeem the
deed of trust at the time she filed suit to set aside the foreclosure sale,
and the court determined that she had failed to satisfy this requirement. The
district court also concluded that Worcester did not demonstrate that any
misdescription of the subject property resulted in prejudice to Worcester’s
interests at the foreclosure sale as mandated by the law of California.
**We reverse and remand to the district court.
On October 6, 1977, Worcester entered into three loan agreements with

National Mortgage Security Company (National Mortgage). The loans in the
amounts of $20,000, $11,000, and $1,800 were secured by deeds of trust on
Worcester’s residence and its four-acre lot. While Worcester claims that she
specifically negotiated with National Mortgage for fully amortized loans, the
loan agreements Worcester signed provided for balloon payments after three
years.
In 1980, the balloon payments fell due and Worcester was unable to make them.
National Mortgage rejected the partial payments Worcester sent to them, and
Worcester and National Mortgage failed to reach any agreement on refinancing
the amount owed. In June 1981, Worcester filed suit against National
Mortgage, Trust Deed Diversified Services (Trust Services), and their
employees, alleging fraud and breach of fiduciary duty for arranging loans
for her that included balloon payments.
Worcester owned a forty-acre parcel of unimproved land adjacent to the four-

acre plot containing her residence. The deeds of trust securing Worcester’s
loans only encumbered the four-acre plot containing the house. Yet, when
Trust Services filed their Notice of Trustee’s Sale, the notice appeared to
refer to land in addition to the four-acre parcel containing Worcester’s *1227
house. The notice referred to two parcels, Parcel 1 and Parcel 2. The
description under the words “Parcel 1” accurately described the four-acre lot
surrounding Worcester’s residence. Under “Parcel 2” the notice read:
THE SOUTHWEST CORNER OF THE NORTHWEST QUARTER OF SECTION 2, TOWNSHIP ONE

SOUTH, RANGE 17 WEST, SAN BERNARDINO MERIDIAN, ACCORDING TO THE OFFICIAL PLAT
OF THE SURVEY OF SAID LAND ON FILE IN THE BUREAU OF LAND MANAGEMENT. EXCEPT
THEREFROM ONE-HALF OF ALL OIL RIGHTS, AS RESERVED BY IDA MABEL MCCLAIN IN
DEED RECORDED MAY 21, 1947 IN BOOK 24548 PAGE 440, OFFICIAL RECORDS.
AND EXCEPTING THEREFROM A 25 PERCENT ROYALTY OF AND THE RIGHTS TO ALL OIL,
GAS OR OTHER HYDROCARBONS OR THE PROCEEDS THEREOF, WHICH MAY BE PRODUCED FROM
SAID PREMISES, AS SAID 25 PERCENT ROYALTY INTEREST IS RESERVED IN DEED
RECORDED OCTOBER 2, 1951 AS INSTRUMENT NO. 19523, IN BOOK 37329 PAGE 145, OF
OFFICIAL RECORDS, SUCH RESERVATION BEING IN FAVOR OF TERESA PASQUARO.
The parties agree that if the description had stated the “Southwest Quarter”
as opposed to the “Southwest Corner” it would accurately describe the 40-acre
parcel.
The foreclosure sale was held on February 5, 1982. The minimum bid price was
set at $14,026.53. Irving Rosner purchased the property for $14,975. There
were only two bidders at the auction. On February 12, 1982, Rosner filed an
unlawful detainer action against Worcester, and she answered on February 23.
On February 22, 1982, Rosner sold the property to William Little for
$130,000. An appraiser testified before the bankruptcy court that the parcel
was worth $240,000. In Re Worcester, 28 B.R. 910, 913 & n. 3
(Bankr.C.D.Cal.1983).
On March 12, 1982, Worcester filed a Chapter 13 bankruptcy petition, and on

March 23, 1982, **Rosner and Little filed with the bankruptcy court a
complaint to vacate the automatic stay. Worcester answered this complaint on
April 14 and counterclaimed to set aside the trustee’s sale, naming as
counterdefendants, Rosner, Little, the lender, the mortgage brokers, and the
trustee.
On June 3, 1982, the bankruptcy court granted Worcester’s motion for judgment
as to title to her 40-acre parcel, and on April 8, 1983, the bankruptcy court
ordered the foreclosure sale on the four-acre parcel set aside. Id. at 915.
Rosner and Little appealed to the district court. The district court, in an
unpublished order, reversed and entered judgment on May 25, 1984, holding
that the foreclosure sale effected a valid transfer of the four-acre parcel
and residence. Worcester filed her notice of appeal eleven days later, on
June 5, 1984.
III
[2] Appellees also argue that this appeal should be dismissed as moot because
Worcester failed to obtain a stay of the foreclosure sale pending appeal.
In Algeran, Inc. v. Advance Ross Corp., 759 F.2d 1421 (9th Cir.1985), we
adopted the Eleventh Circuit’s approach as to when a stay pending appeal is
required in order to prevent mootness. That circuit held in Sewanee Land,
Coal & Cattle, Inc. v. Lamb (In re Sewanee Land, Coal & Cattle, Inc.), 735
F.2d 1294 (11th Cir.1984), that, in certain circumstances, the failure to
obtain a stay renders an appeal moot. Mootness results when the court of
appeals becomes “powerless to grant the relief requested by the appellant.”
Id. at 1295 (quoting American Grain Association v. Lee-Vac, Ltd., 630 F.2d
245, 247 (5th Cir.1980)).
**Bankruptcy is basically a procedural forum designed to provide a collective

proceeding for the sorting out of non-bankruptcy entitlements. See Jackson,
Bankruptcy, Non-Bankruptcy Entitlements, and the Creditors’ Bargain, 91 Yale
L.J. 857, 859-71 (1982); Baird & Jackson, Corporate Reorganizations and the
Treatment of Diverse Ownership Interests: A Comment on Adequate Protection of
Secured Creditors in Bankruptcy, 51 U.Chi.L.Rev. 97, 101-09 (1984).
Consequently, the Supreme Court has repeatedly held that the rights of
parties to a bankruptcy proceeding are “created and defined by state law.”
Butner v. United States, 440 U.S. 48, 54-55, 99 S.Ct. 914, 917-18, 59 L.Ed.2d
136 (1979). See also Ohio v. Kovacs, 469 U.S. 274, 285-86, 105 S.Ct. 705,
712, 83 L.Ed.2d 649 (1985) (“the classification of Ohio’s interest as either
a lien on the property itself, a perfected security interest, or merely an
unsecured claim depends on Ohio law”) (O’Connor, J., concurring); Bank of
Marin v. England, 385 U.S. 99, 101, 87 S.Ct. 274, 276, 17 L.Ed.2d 197 (1966)
(trustee assumes rights debtor had prior to filing of petition); Board of
Trade v. Johnson, 264 U.S. 1, 15, 44 S.Ct. 232, 235, 68 L.Ed. 533 (1924)
(same).
If Worcester has the right under California law to set aside a foreclosure
sale after the sale has taken place, after deeds have been recorded, and
after the property has been sold to a third party, then she has the right in
bankruptcy to do the same and that right is property of the estate. See11
U.S.C. § 541(a)(1) (property of the estate includes “all legal and equitable
interests of the debtor in property”). If Worcester does have such a right
under California law, we are not powerless to enforce it, and we may grant
Worcester relief to the same extent California courts would in similar
circumstances.
Since we determine that Worcester satisfied the requirements for setting

aside the foreclosure sale and is entitled to relief under California law,
this appeal is not moot.FN1 See City of Valdez v. Waterkist Corp. (In re
Waterkist Corp.), 775 F.2d 1089, 1091 (9th Cir.1985).
FN1. Rosner and Little also claim this appeal is moot under In re Madrid, 725
F.2d 1197 (9th Cir.1984). That case, which addressed the ability to set aside
a transfer under 11 U.S.C. § 548(a) and Nevada law, is inapposite.
**We now turn to consider the question of whether Worcester satisfied

California’s requirements for setting aside the foreclosure sale. Under
California law, “gross inadequacy of price coupled with even slight
unfairness or irregularity is a sufficient basis for setting the sale aside.”
Whitman v. Transtate Title Co., 165 Cal.App.3d 312, 323, 211 Cal.Rptr. 582,
589 (1985); see also Sargent v. Shumaker, 193 Cal. 122, 129-30, 223 P.2d 464,
467 (1924). The bankruptcy court held that Worcester had successfully
demonstrated that the misdescription of the parcel for sale found in the
Trustee’s Deed and the Notice of *1229 Trustee Sale amounted to unfair
prejudice. In re Worcester, 28 B.R. at 915. The bankruptcy court found that
the phrase “Southwest Corner” was ambiguous and that bidders could be
confused as to whether or not it referred to the 40-acre parcel (which was
not subject to the deed of trust), and that this confusion was likely FN2 to
have dissuaded bidders seeking to purchase only single family residences from
attending the trustee’s sale of the 4-acre parcel. Id.
FN2. Under Crist v. House & Osmonson, Inc., 7 Cal.2d 556, 61 P.2d 758 (1936),
in order to justify setting aside a foreclosure sale, the court must find
that the misdescription resulted in actual prejudice or was “of such a
substantial nature that prejudice [was] likely to result to the trustors.”
Id. at 559, 61 P.2d at 759.
[3][4] The district court properly determined that this conclusion of the
bankruptcy court was a “recommendation,” and therefore subject to de novo
review. Pursuant to the 1982 Emergency Rule, passed in the wake of the
Supreme Court’s decision in Northern Pipeline Construction Co. v. Marathon
Pipe Line Co., 458 U.S. 50, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982) ,FN3 and
effective at the time of the district court proceedings,FN4 Worcester’s claim
to set aside the foreclosure sale was a “related” case. Thus the district
court properly reviewed the bankruptcy court’s findings of both fact and law
de novo.FN5 In reviewing the bankruptcy court’s determination of prejudice from
the misdescription, the district court reversed, finding that the phrase
“Southwest Corner” referred only to a point in space of infinitesimal size
and could not, therefore, be misleading. Although the district court found
the purchase price was “grossly inadequate,” the court concluded that there
was no material irregularity in the foreclosure sale and therefore no
prejudice to Worcester.
FN5. Emergency Model Rule (d)(3)(A) describes related proceedings as “civil

proceedings that, in the absence of a petition in bankruptcy, could have been
brought in a district court or a state court.” Rule (d)(3)(B) and Rule (e)
explain that the district court’s review in related proceedings is de novo.
Even if the 1984 Amendments governed this case, the same standard of review
would probably be applied, since “non-core” proceedings are subject to this
review. 28 U.S.C. § 157(c)(1) (where parties do not consent to bankruptcy
court’s jurisdiction). Cf. Collier at 3-49 and 28 U.S.C. § 157(c)(2). The
proceedings relating to the foreclosure sale’s validity involve only state-
created rights, and therefore are not “core” proceedings involving federal
bankruptcy concerns, such as the restructuring of the debtor-creditor
relationship. Marathon, 458 U.S. at 71, 102 S.Ct. at 2871 (plurality
opinion). In any event, courts “should avoid characterizing a proceeding as
‘core’ if to do so would raise constitutional problems.” Piombo Corp. v.
Castlerock Properties (In re Castlerock Properties), 781 F.2d 159, 162 (9th
Cir.1986).
[5][6] We review the question of whether an irregularity in the sale is

material de novo, since it is a question of law. See Crist v. House &
Osmonson, Inc., 7 Cal.2d at 558-60, 61 P.2d at 758-59 (1936). Cf. Friends of
Endangered Species, Inc. v. Jantzen, 760 F.2d 976, 981 (9th Cir.1985)
(question of whether genuine issue of material fact exists for summary
judgment is *1230 question of law). We find that the district court’s
conclusion that there was no material irregularity is incorrect. It may be
reasonable to literally construe the solitary term “Southwest Corner” as
indicating a point in space. The full description of the property, however,
specifically refers to oil and gas rights, which can only be understood
relative to a plot of land, not to a point in space. In addition, the
description refers to particular conveyances relating to the 40-acre parcel.
As a result, bidders interested in a smaller lot who would have researched
the described plot would have been deterred from attending the sale.
The California Supreme Court’s decision in Crist does not preclude our
conclusion that a material irregularity existed. The Crist requirement that
the misdescription by the inclusion of unencumbered property must cause
actual prejudice or it “must be of such a substantial nature that prejudice
is likely to result to the trustors” is met here. 7 Cal.2d at 559, 61 P.2d at
759. In addition, the parcel mistakenly included in this case is quite unlike
the one included in Crist: the latter was equivalent to one-nineteenth of the
property subject to the deed of trust and was practically worthless, 7 Cal.2d
at 560, 61 P.2d at 759; the former was ten times larger than the trust
property and may be worth in excess of one million dollars. 28 B.R. at 913.
**California law imposes a second requirement on those seeking to set aside a

foreclosure sale: “A valid and viable tender of payment of the indebtedness
owing is essential to an action to cancel a voidable sale under a deed of
trust.” Karlsen v. American Savings and Loan Assoc., 15 Cal.App.3d 112, 117,
92 Cal.Rptr. 851, 854 (1971).
[7] The district court held that Worcester could not succeed in her action to
set aside the foreclosure sale because “it seems to be totally clear that the
payment or tender must be made by the filing date either separately or in the
Complaint itself.... This requirement is absolute.” The district court erred
in concluding that Worcester did not make a valid tender as required under
California law. We hold that Worcester did meet the tender requirements of
sections 1493 and 1495 of the California Civil Code.FN6
FN6. Worcester asserts that the tender requirement is satisfied because she
has a right to an equitable setoff against the lenders as a result of her
state court fraud action against National Mortgage and Trust Services.
Worcester rests her argument on the California Supreme Court’s decision in
Hauger v. Gates, 42 Cal.2d 752, 269 P.2d 609 (1954). Hauger also involved an
action to set aside a foreclosure sale but the procedural posture of that
case was that of a motion to dismiss. Worcester correctly states that Hauger
stands for the proposition that a setoff can be used to satisfy the tender
requirement. Id. at 753, 269 P.2d at 610. We need not address the
applicability of Hauger since we find the tender requirement was satisfied
apart from Worcester’s alleged right to equitable setoff.
First, Worcester expressed her willingness to tender the amount owed, as

required by section 1495, in her Answer and Counterclaim before the
bankruptcy court.FN7 Second, we believe that Worcester’s tender was “effective”
since she had the ability under California law to perform according to her
offer.
FN7. Worcester asked the court: “To order an appraisal and sale of a portion
of said real property to recover its market value for the benefit of
creditors and remit the balance to Debtor, or to allow the Debtor to redeem
said property.” Both these alternatives express Worcester’s willingness to
pay. See Copsey v. Sacramento Bank, 133 Cal. 659, 662, 66 P. 7, 9 (1901)
(offer to redeem must be made to set aside sale). Worcester’s offer to redeem
is an offer to tender the amount of indebtedness, as she offered $7,922 more
than the amount of her indebtedness.
To satisfy section 1495, Worcester must have been able to tender payment. The
district court concluded that since Worcester admitted she could not borrow
money and had none available, she was unable to tender payment. The
authorities upon which the district court apparently relied in reaching this
conclusion FN8 deal *1231 with situations in which no tender was made in the
pleadings,FN9 the debtor refused to pay,FN10 or improper conditions were placed
upon payment,FN11 all of which are distinguishable from the present case.
FN8. See1 H. Miller & M. Starr, Current Law of California Real Estate, §
3:125, at 549-50 & n. 16 (1975 & Supp. Oct. 1986), and authorities cited
therein.
FN9. See, e.g., Py v. Pleitner, 70 Cal.App.2d 576, 582, 161 P.2d 393, 396
(1945).
FN10. See, e.g., Shimpones v. Stickney, 219 Cal. 637, 649, 28 P.2d 673, 678
(1934).
FN11. See, e.g., Weiner v. Van Winkle, 273 Cal.App.2d 774, 78 Cal.Rptr. 761
(1969) (conditioned upon abandonment of claim for attorneys’ fees).
[8] The fact that Worcester did not have cash immediately available is not
fatal under California law. In Backus v. Sessions, 17 Cal.2d 380, 110 P.2d 51
(1941), the California Supreme Court held that the ability to tender existed
where the debtor had convertible assets and the mere ability to borrow. Id.
at 389-90, 110 P.2d at 56. Worcester’s request for the sale of her land for
the benefit of the creditors and her offer to redeem provide the certainty of
sufficient proceeds to satisfy the tender amount, and supplies no less
certainty than the mere ability to borrow which constituted ability to tender
in Backus.
The decision in Karlsen v. American Sav. & Loan Assoc., 15 Cal.App.3d 112, 92
Cal.Rptr. 851 (1971), is instructive. In Karlsen, the California Court of
Appeal held that tender was insufficient where it consisted of the borrower’s
hope that the lender would release part of the property covered by the deed,
that an identified prospective purchaser would buy this part of the property,
and that certain entities would agree to refinance the remaining debt that
would not be satisfied from the sale. It is noteworthy that the court in
Karlsen did not dispose of the borrower’s claim simply because the borrower
did not have the cash to redeem and so did not make a satisfactory tender.
Instead, the court evaluated the precise conditions of the borrower’s offer
before concluding the offer was an inadequate “substitute tender.” Id. at
118-20, 92 Cal.Rptr. at 854-56.
The Karlsen court’s criticisms of the borrower’s tender do not apply here.
First, the court noted that the tender proposed by the borrower would leave
the lender without a remedy, as the borrower conditioned tender upon the
lender’s releasing property from the deed of trust and thereby eliminated the
lender’s security interest. Id. at 120, 92 Cal.Rptr. at 856. In the present
case, however, no such conditions were placed upon the tender. In fact,
Worcester asked that a neutral entity, the bankruptcy court, sell the
property that was free of any deed of trust and distribute the proceeds to
the creditors. Second, the borrower in Karlsen did not make an “unqualified
and unconditional statement that [he would] do equity.” Id. at 119, 92
Cal.Rptr. at 855. In this case, however, Worcester made an unconditional
offer to redeem or repay with money from the sale. Finally, the Karlsen court
was concerned that nothing there “even remotely suggest[ed] Karlsen would
have the ability to comply” with any terms of payment. Id. Worcester, in
contrast, does not rely on the mere “hope” of the sale of land for a
sufficient sum and the ability to refinance a $125,000 debt, as Karlsen did.
Here, the land is worth many times the amount owed by Worcester. No
refinancing would be necessary.
[9] Finally, Rosner and Little argue that, as bona fide purchasers, the
foreclosure sale cannot be set aside because they had no actual or
constructive notice of Worcester’s suit against National Mortgage and Trust
Services, filed in June 1981, or of the misdescription of the property
contained in the foreclosure documents.FN12 This argument fails under
California law.
FN12. Rosner and Little also claim that under the “relation back doctrine,”
title taken at a foreclosure sale cannot be affected by adverse claims or
interests arising after the execution of the deed of trust. Hohn v. Riverside
County Flood Control and Water Conservation Dist., 228 Cal.App.2d 605, 39
Cal.Rptr. 647 (1964). This doctrine only applies to title taken at a valid
foreclosure sale, and so is inapplicable here. Id. at 613-14, 39 Cal.Rptr. at
652.
[10][11] Worcester seeks to set aside the sale on the grounds that the price
Rosner*1232 paid was grossly inadequate and there was an irregularity in the
sale that contributed to the inadequacy of the price. Sargent v. Shumaker,
193 Cal. at 129-30, 223 P. at 467 (1924); Whitman, 165 Cal.App.3d at 323, 211
Cal.Rptr. at 589. Whether Rosner or Little knew of Worcester’s earlier suit
is irrelevant in an action to set aside a foreclosure sale on this basis.
Rosner and Little’s claim that they had no constructive notice is disproven
by the record before us. The deed of trust contains an accurate description
of the property subject to foreclosure; the Notice of Trustee’s Sale, the
trustee’s deed to Rosner, and Rosner’s deed to Little, however, incorrectly
state that the property included the 40-acre parcel. An investigation of the
record pertaining to the 4-acre parcel would have shown that the deed of
trust under which the property was foreclosed and the deed from the trustee
did not describe the same property. Under California law, “one whose search
of the record would disclose a defective property description is charged with
the duty of further investigation and with knowledge of whatever it would
have disclosed.” Sieger v. Standard Oil Co., 115 Cal.App.2d 649, 657, 318
P.2d 479, 484 (1957) (citing Leonard v. Osburn, 169 Cal. 157, 161, 146 P.
530, 532 (1915); see alsoCal.Civ.Code §§ 18-19 (West 1982). Inquiry would
have disclosed that the Notice of Trustee’s Sale also misdescribed the
property subject to foreclosure and thereby put Rosner and Little on notice
that there was an irregularity in the sale that may have prejudiced Worcester
by discouraging buyers interested only in residential properties. In other
words, reasonable investigation would have revealed that Worcester had the
right to avoid the sale under Whitman.
[12] We therefore reverse the decision of the district court and remand the
case for entry of an appropriate order.FN13 See 28 B.R. at 916-17.
FN13. Since we reverse, Appellees’ request for attorney’s fees is denied.
REVERSED and REMANDED.
Facts of Boyd are distinguished in that it, did not involve and underlying void
deed that was the foreclosing deed. Boyd involved the application of Mississippi
law.
Relief From Stay For Cause Based On Abstention; and In re Tuscon Estates
A petitioner’s residence should not be critical to a Chapter 13 plan, but if the

home or other properties generate rental income they may be and important part of
the proposed plan.
In re Avila (Bankr ND Cal. 2004) 311 BR 81
In, Miller & Starr, California Real Estate 3D, Section 8:22, page 37 states,”
Person of unsound mind; adjudicated situations. 10 A person who has been adjudicated
to be of unsound mind cannot make any contract or conveyance, or delegate any
right, 11 and any conveyance by the grantor subsequent to the adjudication is void
and can be set aside even if the grantee is a bona fide purchaser or encumbrancer
without notice of the adjudication.”
In Miller & Starr, California Real Estate 3D, Section 11:12, page 43, states,”
Effect of a forgery
Effect of a recordation of a forged instrument. A forged document is totally void,
and no title or lien is created even if it is recorded. 1 The title or lien of a
bona fide purchaser based on a forged instrument in the chain of title is
unenforceable against the true owner of the property, even though the purchaser
relied on the public record. 2
1
See Section 8:53 (deeds; forgery)
2
See Section 8:53 (deeds; forgery)
And,
Section 8:53 Forgery
A forged deed is void. A forged deed is completely and ineffective to transfer

any title to the grantee. 1 A subsequent title derived through a forged instrument
is completely unenforceable, even if recorded and held by a bona fide purchaser, 2
[FN1] Firato v. Tuttle (1957) 48 Cal.2d 136, 139 [308 P.2d 333] (deed of
reconveyance); Burns v. Ross (1923) 190 Cal. 269, 275 [212 P. 17] (assignment of
contract of sale); Cutler v. Fitzgibbons (1906) 148 Cal. 562, 563-564 [83 P. 1075];
Vaca Val. & C.L.R. Co. v. Mansfield (1890) 84 Cal. 560, 566 [24 P. 145] (blank deed
completed without authority); Handy v. Shiells (1987) 190 Cal.App.3d 512, 517 [235
Cal.Rptr. 543]; Wutzke v. Bill Reid Painting Service, Inc. (1984) 151 Cal.App.3d
36, 43 [198 Cal.Rptr. 418]; Forte v. Nolfi (1972) 25 Cal.App.3d 656, 674 [102
Cal.Rptr. 455] (note and deed of trust); Kessler v. Bridge (Super. Ct. 1958) 161
Cal.App.2d Supp. 837, 841 [327 P.2d 241]; Shurger v. Demmel (1957) 148 Cal.App.2d
307, 309 [306 P.2d 497]; Crittenden v. McCloud (1951) 106 Cal.App.2d 42, 50 [234
P.2d 642]; Montgomery v. Bank of America Nat. Trust & Savings Ass’n (1948) 85
Cal.App.2d 559, 564 [193 P.2d 475]; Gioscio v. Lautenschlager (1937) 23 Cal.App.2d
616, 619-620 [73 P.2d 1230].
See 8A Am. Jur. Pleading and Practice Forms, Deeds §§ 41 et seq..
[FN2] Bryce v. O’Brien (1936) 5 Cal.2d 615, 616 [55 P.2d 488] (deed signed by
grantor in blank); Trout v. Taylor (1934) 220 Cal. 652, 656 [32 P.2d 968]; Cutler
v. Fitzgibbons (1906) 148 Cal. 562, 563-564 [83 P. 1075]; Meley v. Collins (1871)
41 Cal. 663, 676-679; Wutzke v. Bill Reid Painting Service, Inc. (1984) 151
Cal.App.3d 36, 43-44 [198 Cal.Rptr. 418].
And Section 11:67, page 174 states,”
Fraud in the inception. When a party is unaware of the nature of the instrument
being executed because of the fraud of the grantee or the beneficiary, there is
fraud in the inception and the document is void and cannot be relied on by a bona
fide purchaser. 2
2
See Section 8:55 (deeds; fraud)
Bank of America, N.A. v. La Jolla Group II, 129 Cal.App.4th 706, 28
(Cal.App. 5 Dist. May 19, 2005)
In Bank of America, N.A. v. La Jolla Group II, 129 Cal.App.4th 706, 712 78
Cal.Rptr.3d 825, the court stated,”
In this case, it is undisputed that the trustor and beneficiary

entered into an agreement to cure the default. It follows that the
beneficiary had no right to sell afterward. Therefore, the foreclosure
sale was invalid.
And,
“[2] La Jolla argues that even if the foreclosure constituted a

violation by the beneficiary of the rights of the trustor, the
trustee’s deed that La Jolla received and recorded conveyed
unassailable title to it, because it was a bona fide purchaser. This
argument is based on certain statutory presumptions that become
effective when a trustee’s deed containing prescribed recitals is
delivered to a bona fide purchaser.” (Bank of America, N.A. v. La Jolla
Group II, supra, 129 Cal.App.4th at p. 713)
And,
“Like the statutory provisions regarding reinstatement, the provisions

La Jolla relies on regarding the rights of a recipient of a trustee’s
deed have no effect on this **830 case. The provisions in question
establish presumptions about the adequacy of notices related to a
foreclosure sale:
A recital in the deed executed pursuant to the power of sale of

compliance with all requirements of law regarding the mailing of
copies of notices or the publication of a copy of the notice of
default or the personal delivery of the copy of the notice of *714
default or the posting of copies of the notice of sale or the
publication of a copy thereof shall constitute prima facie evidence of
compliance with these requirements and conclusive evidence thereof in
favor of bona fide purchasers and encumbrancers for value and without
notice.”(§2924.)
There is no contention in this case that the foreclosure sale was not
properly noticed. The sale was improper because the loan was current
and therefore the beneficiary had no right to exercise the power of
sale. No statute creates a presumption-conclusive or otherwise-for any
purchaser-bona fide or otherwise-that any recitals in a trustee’s deed
render effective a sale that had no contractual basis.” (Bank of America,
N.A. v. La Jolla Group II, supra, 129 Cal.App.4th at pp. 714-715)
Remand / abstention factors

Although bankruptcy court determined that all of elements for
mandatory abstention had been shown, court also noted that remand on
basis of permissive abstention pursuant to 28 USCS § 1334(c)(1) would
also have been proper where (1) remand to state court would have had
no effect on efficient administration of bankruptcy estate; (2) (Garn
Act) proceeding involved exclusively state law issues; (3) sole source
of jurisdiction was 28 USCS § 1334; (4) matter was not core proceeding
but was "related to" proceeding; (5) case was large and would have
burdened bankruptcy court; (6) there did not appear to be any improper
forum shopping; and (7) existence of right to jury trial favored
remand. Alexander v Cintas Corp. (In re Terry Mfg. Co.) (2005, BC MD
Ala) 324 BR 147, 44 BCD 187.
Utilize in re Lazar there must be presence of a state court proceeding

In re Lazar, 237 F.3d 967
C.A.9.Cal.,2001
Bankruptcy court could not abstain from hearing removed adversary proceeding,
in which Chapter 7 trustee challenged State Water Resources Control Board’s
(SWRCB’s) denial of debtors’ claims for reimbursement from California
Underground Storage Tank Cleanup Fund, where as result of trustee’s
successful removal of proceeding, there was no pending state court action. 28
U.S.C.A. § 1334(c)(1, 2) .Copr. (C) West 2008 No Claim to Orig. U.S. Govt.
Works
In re Fietz, 852 F.2d 455, Bankr. L. Rep. P 72,420 (9th Cir.(Cal.),Jul 21,
1988)
Defines the relatedness test utilized in the Ninth Circuit
Various circuits have developed slightly different definitions of what

constitutes a “related” case under section 1471(b) and its identical
successor, section 1334(b). The Third Circuit articulated what has become the
dominant formulation:
The usual articulation of the test for determining whether a civil proceeding
is related to bankruptcy is whether the outcome of the proceeding could
conceivably have any effect on the estate being administered in bankruptcy.
[citations omitted]. Thus, the proceeding need not necessarily be against the
debtor or against the debtor’s property. An action is related to bankruptcy
if the outcome could alter the debtor’s rights, liabilities, options, or
freedom of action (either positively or negatively) and which in any way
impacts upon the handling and administration of the bankrupt estate.
Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir.1984) (emphasis in
original). The Fourth, Fifth and Eighth Circuits have adopted the Pacor
definition without modification. See Wood v. Wood (In re Wood), 825 F.2d 90,
93 (5th Cir.1987); Dogpatch Properties, Inc. v. Dogpatch U.S.A., Inc. (In re
Dogpatch, U.S.A., Inc.), 810 F.2d 782, 786 (8th Cir.1987); A.H. Robins Co.,
Inc. v. Piccinin (In re A.H. Robins Co., Inc.), 788 F.2d 994, 1002 n. 11 (4th
Cir.) (dicta), cert. denied, 479 U.S. 876, 107 S.Ct. 251, 93 L.Ed.2d 177
(1986).
The Second, Sixth and Seventh Circuits have adopted definitions similar to
the one announced in Pacor, but their formulations may deny jurisdiction in
cases where the dispute is “conceivably” related to the bankruptcy estate,
but that relationship is remote. See Turner v. Ermiger (In re Turner), 724
F.2d 338, 341 (2d Cir.1983); Kelley v. Nodine (In re Salem Mortgage Co.), 783
F.2d 626, 634 (6th Cir.1986); Elscint, Inc. v. First Wisconsin Fin. Corp. (In
re Xonics, Inc.), 813 F.2d 127 (7th Cir.1987).
[2] We conclude that the Pacor definition best represents Congress’s intent
to reduce substantially the time-consuming and expensive litigation regarding
a bankruptcy court’s jurisdiction over a particular proceeding. SeeH.Rep. No.
595, 95th Cong., 2d Sess., 43-48, reprinted in1978 U.S. Code Cong. & Admin.
News, 5787, 5963, 6004-08. The Pacor definition promotes another
congressionally-endorsed objective: the efficient and expeditious resolution
of all matters connected to the bankruptcy estate. See id. We therefore adopt
the Pacor definition quoted above.FN1 We reject any limitation on this
definition; to the extent that other circuits may limit jurisdiction where
the Pacor decision would not, we stand by Pacor. Applying the Pacor
definition to the facts at hand, we consider whether the outcome of Gordon’s
cross-claim conceivably could have affected the administration of Fietz’
bankruptcy estate when Gordon filed her cross-claim on July 14, 1983.FN2
FN1. We note that the bankruptcy judges in the Ninth Circuit have applied the
Pacor definition of relatedness. See National Acceptance Co. of Cal. v.
Levin, 75 B.R. 457, 458 (D.Ariz.1987); Taxel v. Commercebank (In re World
Financial Serv. Center, Inc.), 64 B.R. 980, 988 (Bankr.S.D.Cal.1986); Gennari
v. United States Dep’t of Treasury (In re Educators Inv. Corp.), 59 B.R. 910,
913 (Bankr.D.Nev.1986).
FN2. Subject matter jurisdiction should be determined as of the date that the
complaint, or in this case the cross-claim, was filed. See Nuclear Eng’g Co.
v. Scott, 660 F.2d 241, 248 (7th Cir.1981), cert. denied, 455 U.S. 993, 102
S.Ct. 1622, 71 L.Ed.2d 855 (1982); Gresham Park Community Org. v. Howell, 652
F.2d 1227, 1236 n. 25 (5th Cir. Unit B 1981). This is consistent with our
rule that diversity jurisdiction is determined as of the date the complaint
was filed. See Co-Efficient Energy Sys. v. CSL Indus., 812 F.2d 556, 557 (9th
Cir.1987); Mann v. City of Tucson, Dep’t of Police, 782 F.2d 790, 794 (9th
Cir.1986).
Goldie’s Bookstore, Inc. v. Superior Court of State of Cal., 739 F.2d 466,
469 (9th Cir.(Cal.),Aug 03, 1984)
Unlawful detainer action does not involve vital state interests.
**We concluded that Miofsky’s state proceeding was “private tort litigation”
not brought to “vindicate a vital state interest,”
In re Ahearn, 318 B.R. 638 (Bankr.E.D.Va.,Sep 30, 2003)
The court has carefully considered the 12 factors relative to permissive

abstention. The validity of an assignment of a deed of trust note is purely
a state law issue that ordinarily would be best left to the state court. On
the other hand, the issue is not complex, the interpleader can be
expeditiously and economically resolved by this court, and, if the fund is an
asset of the bankruptcy estate, it is important to the administration of the
bankruptcy case. *645 Also, Woodfin has asserted no prejudice to its interest
by having the case remain here. Thus, while comity with the state court
weighs in favor of remand, more important considerations persuade the court
to deny Woodfin’s motion to remand.
CC 2924 Gross disparity between the purchaser’s price and the value of the property
combined with some (even slight) unfairness or irregularity
Show that time presecribed of thirty days plus twenty days is statutorily mandated
in the manner of the one day postponement in Whitman v. Transtate Title Co.
Whitman v. Transtate Title Co., 165 Cal.App.3d 312, 211 Cal.Rptr. 582
(Cal.App. 4 Dist.,Mar 06, 1985)
266 Mortgages
266IX Foreclosure by Exercise of Power of Sale
266k360 k. Execution of Power and Conduct of Sale in General.
Most Cited Cases
Foreclosure procedure, being statutorily prescribed, must be strictly
complied with.
[8] Mortgages 266 369(3)
266 Mortgages
266k369 Setting Aside Sale
266k369(3) k. Fraud and Inadequacy of Price. Most Cited Cases
While mere inadequacy of price, standing alone, will not justify setting
aside trustee’s sale, gross inadequacy of price coupled with even slight
unfairness or irregularities is sufficient basis for setting sale aside.
[9] Mortgages 266 369(3)
266 Mortgages
Purchase of property with value of at least $65,000 for $12,690 at trustee’s
sale pursuant to foreclosure of first deed of trust, coupled with trustee’s
refusal to grant statutory one-day postponement of sale requested by
purchaser of property under third deed of trust constituted sufficient
grounds for avoiding sales. West’s Ann.Cal.Civ.Code § 2924g.
**586 I. The Statutory One-Day Postponement is Mandatory.
The conduct of trustee’s sales in nonjudicial foreclosures, including

postponements of sale, are governed by Civil Code section 2924g. (All
statutory references will be to the Civil Code unless otherwise specified.)
*318 Several pertinent provisions of section 2924g as it read before it was
amended in 1984 are set forth in the margin.FN2
FN2. After having been rewritten in 1979 (Stats.1979, ch. 1015, § 4, pp.
3474-3476) and amended in 1980 (Stats.1980, ch. 423, § 14, p. 844, urgency,
eff. July 11, 1980), section 2924g read in pertinent part:
“(a) All sales of property under the power of sale contained in any deed of
trust or mortgage shall be held in the county where such property or some
part thereof is situated, and shall be made at auction, to the highest
bidder, between the hours of 9 a.m. and 5 p.m. on any business day, Monday
through Friday.
“The sale shall commence at the time and location specified in the notice of
sale. Any postponement shall be announced at the time and location specified
in the notice of sale for commencement of such sale or pursuant to
subdivision (c)(1) herein.
“...
“(b) When the property consists of several known lots or parcels they shall
be sold separately unless the deed of trust or mortgage provides
otherwise; .... The trustor, if present at the sale, may also, unless the
deed of trust or mortgage otherwise provides, direct the order in which
property shall be sold, when such property consists of such several known
lots or parcels which may be sold to advantage separately, and the trustee
shall follow such direction....
“...
“(c)(1) There may be a postponement of the sale proceedings at any time prior
to the completion of the sale thereof at the discretion of the trustee, upon
instruction by the beneficiary to the trustee that the sale proceedings be
postponed, or upon the written request of the trustor provided the reason for
such request is to permit the trustor to obtain cash sufficient to satisfy
the obligation or bid at the sale. The trustor shall be entitled to make one
such request for postponement and any postponement made at the request of the
trustor shall be for a period not to exceed one business day.
“There may be a maximum of three postponements of the sale proceedings

pursuant to this subdivision. In the event that the sale proceedings are
postponed three times, the scheduling of any further sale proceedings shall
be preceded by the giving of a new notice of sale in the manner prescribed by
Section 2924f. A postponement made upon the request of the trustor shall not
be deemed a postponement for purposes of this paragraph.
“(2) The trustee shall postpone the sale upon the order of any court of
competent jurisdiction; or by operation of law; or by the mutual agreement,
whether oral or in writing, of any trustor and any beneficiary or any
mortgagor and any mortgagee. Any postponement pursuant to this paragraph
shall not be a postponement for purposes of determining the maximum number of
postponements permitted pursuant to this subdivision.”
The portion of section 2924g principally in contention is subdivision (c)(1)

which reads: “(c)(1) There may be a postponement of the sale proceedings at
any time prior to the completion of the sale thereof at the discretion of the
trustee, upon instruction by the beneficiary to the trustee that the sale
proceedings be postponed, or upon the written request of the trustor provided
the reason for such request is to permit the trustor to obtain cash
sufficient to satisfy the obligation or bid at the sale. The trustor shall be
entitled to make one such request for postponement and any postponement made
at the request of the trustor shall be for a period not to exceed one
business day.”
Pointing to the opening language “There may be a postponement” (emphasis

added) and the contrasting opening language of subdivision (2), “The trustee
shall postpone the sale upon the order of any court,” etc. (emphasis added),
*319 plaintiff argues that the word “shall” is generally interpreted as being
mandatory and the word “may” is generally interpreted as being discretionary
and concludes that the statute has segregated the causes for postponement
into two separate subdivisions, the first of which relates to postponements
which are discretionary with the trustee and the second of which relates to
mandatory postponements. Plaintiff further argues that the phrase “at the
discretion of the trustee” found in the first sentence of subdivision (c)(1)
appertains to the language “or upon the written request of the trustor” so
that, as he reads the statute, upon the written request of the trustor, there
may be a postponement of the sale at the discretion of the trustee. Although
it must be **587 conceded that the organization and structure of section 2924g
leaves much to be desired, we do not agree with plaintiff’s interpretation.
[1] In the first place, the language in subdivision (c)(1) “at the discretion
of the trustee” is not a phrase modifying either “upon instruction by the
beneficiary to the trustee” or “upon the written request of the trustor.” The
words “at the discretion of the trustee” are separated from the words “upon
instruction by the beneficiary” by a comma indicating that “at the discretion
of the trustee” is one situation in which the sale may be postponed and that
“upon instruction by the beneficiary to the trustee that the sale proceedings
be postponed, or upon the written request of the trustor provided the reason
for such request is to permit the trustor to obtain cash sufficient to
satisfy the obligation or bid at the sale” are two additional situations in
which the sale may be postponed. Grammatically, the three situations,
separated by commas, constitute a series.
Were there any doubt about the matter it would be dissipated by referring to
the language of the same provision before section 2924g was rewritten in
1979. It read: “There may be a postponement of the sale proceedings at any
time prior to the completion of the sale thereof at the discretion of the
trustee, or if the beneficiary instructs the trustee to postpone the sale
proceedings.” Thus, the section as it formerly read specified two situations
in which there might be a postponement of the sale, one of which was “at any
time prior to the completion of the sale ... at the discretion of the
trustee.” (Stats.1972, ch. 1056, § 4, p. 1943.) As rewritten in 1979 and
amended in 1980, three situations are specified, one of which remained “at
any time prior to the completion of the sale ... at the discretion of the
trustee.” FN3
FN3. Section 2924g was again amended in 1984. (See Stats.1984, ch. 1730, § 4,
No. 14, West’s Cal.Legis. Service, p. 580.) The principal change made by the
1984 amendment was the addition of a requirement that the written request for
a statutory one-day postponement identify the source from which the funds are
being obtained. Neither the 1984 amendment nor the added requirement are at
issue, however, on this appeal.
*320 In connection with his argument that the granting of a request for the
statutory one-day postponement is discretionary with the trustee, plaintiff
appears to place some reliance on a statement found in 1 Miller & Starr,
Current Law of California Real Estate, § 3:117, at page 532: “As a general
rule, the decision to postpone the sale is within the sole discretion of the
trustee, and he can do so over the objections of any party if he considers it
necessary to protect the interests of the trustor and/or beneficiary.” (Fn.
omitted.) While we have little doubt of the accuracy of the quoted statement
in context, the authors of the treatise make it clear the statement does not
pertain to the situation at hand. They state within the same section on the
next succeeding page: “The trustee is required to follow the instructions of
the beneficiary, and in practice he usually does” (fn. omitted) and, even
more pointedly, at page 260 of the 1984 supplement to volume 1, the authors
state: “The trustee must postpone the sale when requested by the trustor for
one business day in order to allow him time to obtain cash to satisfy the
obligation ....” (Orig. emphasis.)
[2] Finally, another provision found in subdivision (c)(1) unmistakably

indicates the Legislature intended the statutory one-day postponement to be
mandatory if properly requested. Subdivision (c)(1) limits the trustor to
making only one request for the statutory one-day postponement. (See fn. 1,
ante.) There would be no purpose to be served by such a limitation if the
request for a statutory one-day postponement could be granted or denied at
the discretion of the trustee. It is a cardinal principle of statutory
construction that every word, phrase and provision of the statute is to be
given meaning and that a statute will not be interpreted in such a way as to
render a portion of the statutory language meaningless. ( **588J.R. Norton
Co. v. Agricultural Labor Relations Bd. (1979) 26 Cal.3d 1, 36- 37, 160
Cal.Rptr. 710, 603 P.2d 1306; Clements v. T.R. Bechtel Co. (1954) 43 Cal.2d
227, 233, 273 P.2d 5; Kahn v. Kahn (1977) 68 Cal.App.3d 372, 381, 137
Cal.Rptr. 332.)
[3] The conclusion is inescapable that the granting of the statutory one-day
postponement upon proper request is mandatory, not discretionary with the
trustee.
II. “Trustor” As Used in Section 2924g Includes a Succeeding Owner.
[4] Pointing out that section 2924g gives the right to request the statutory
one-day postponement to the “trustor” and that Bernadine Wells was the
trustor of both the first and second deeds of trust, not Alvin Lee, plaintiff
contends Lee was not a person entitled under the statute to demand the
statutory one-day postponement. Plaintiff is of course correct that the
statute purports to give the right to demand the statutory one-day
postponement to *321 the “trustor,” but we do not agree that the term
“trustor” as used in subdivision (c)(1) was intended by the Legislator to
limit the right to demand such postponement solely to the original trustor.
We believe the term “trustor” as used in subdivision (c)(1) was intended to
include also the successor in interest to the original trustor who at the
time of the impending trustee’s sale is the owner of the property to be sold
at the trustee’s sale.
The manifest purpose of the statutory one-day postponement is to avoid the
loss or forfeiture of equity in the property by affording the owner of the
property scheduled to be sold a last opportunity to obtain funds with which
to pay off the indebtedness secured by the deed of trust under which the
trustee’s sale has been scheduled. At the inception of a deed of trust the
trustor is also the owner of the property. This may account for the
Legislature’s use of the word “trustor” in the statute but the Legislature
cannot have intended to limit the right to request the statutory one-day
postponement of sale to the person who was the owner at the time the trust
deed was created.
[5][6] It is common knowledge, and we take judicial notice of the fact, that
in California changes in the ownership of real property are frequent and that
in many foreclosures the original trustor no longer owns the property.
Indeed, in light of antideficiency legislation, the original trustor
frequently has no real interest in the property or the scheduled trustee’s
sale. The instant case, although perhaps not typical, is one in point.
Bernadine Wells, the original trustor, no longer has any ownership interest
in the property and in all likelihood would not have the slightest interest
in requesting a statutory one-day postponement of the sale. Alvin Lee, by
contrast, having purchased the property at the trustee’s sale under the third
deed of trust, was the owner of the property to be sold at the scheduled
trustee’s sale and was the successor in interest to Bernadine Wells as owner
of the property. His interest was the one to be served by the statutory
purpose of the prescribed one-day postponement and guided by that statutory
purpose, the term “trustor” is properly interpreted to afford him that right.
(Cf. § 2924c; Saucedo v. Mercury Sav. & Loan Assn. (1980) 111 Cal.App.3d 309,
314-315, 168 Cal.Rptr. 552 [nonassuming grantee may recover attorney fees
because of ownership of the property subject to the secured debt]; Munger v.
Moore (1970) 11 Cal.App.3d 1, 8, 89 Cal.Rptr. 323.) To limit the term
“trustor” to the original trustor would defeat the statutory purpose in many
if not most cases. The statutory purpose and objective is an important
determinant in the interpretation of a statute. ( Freedland v. Greco (1955)
45 Cal.2d 462, 467, 289 P.2d 463; Cal. Drive-In Restaurant Assn. v. Clark
(1943) 22 Cal.2d 287, 292, 140 P.2d 657.)
Our conclusion the term “trustor” as used in subdivision (c)(1) of section

2924g is not to be limited to the original trustor is confirmed by the *322
observation that the term “trustor” in subdivision (b) of the same section
would also make no sense if limited to the original trustor. The provision
is: “The trustor, if present at the sale, may also, unless the deed of trust
or mortgage **589 otherwise provides, direct the order in which property
shall be sold, when such property consists of such several known lots or
parcels which may be sold to advantage separately, and the trustee shall
follow such direction.” If the original trustor were gone from the scene,
what interest could she, he or it have in directing the order in which
various parcels of property should be sold? Only the owner of the property to
be sold, i.e., the successor in interest to the original trustor, would be
interested in doing that. (Cf. § 2924c; Saucedo v. Mercury Sav. & Loan Assn.,
supra, 111 Cal.App.3d 309, 314-315, 168 Cal.Rptr. 552; Munger v. Moore,
supra, 11 Cal.App.3d 1, 8, 89 Cal.Rptr. 323.)
We conclude that the term “trustor” as used in section 2924g includes the
successor in interest to the original trustor who owns the property to be
sold at the scheduled trustee’s sale.
III. Effect of the Denial of the Request for Postponement.
Plaintiff asserts that the trustee’s denial of Lee’s request for a statutory
one-day postponement was at most an irregularity; that a mere irregularity is
not a sufficient basis for setting aside a trustee’s sale to a bona fide
purchaser (cf. Taliaferro v. Crola (1957) 152 Cal.App.2d 448, 450, 313 P.2d
136); and that no summary judgment should have been granted Transtate in any
event because a triable issue of fact exists as to its real motive for
refusing to issue a trustee’s deed. In connection with the last point,
plaintiff observes that in proceeding to the trustee’s sale under the first
deed of trust immediately after completing the trustee’s sale under the
second deed of trust at which the Bermans purchased the property by
successfully bidding in their secured obligation, Transtate wiped out the
Bermans to whom they owed fiduciary duties under the second deed of trust.
[7] We do not agree with plaintiff that a trustee’s wrongful denial of a

properly requested one-day statutory postponement of sale is a mere
irregularity. The right to the prescribed postponement is a substantial
statutory right. We further observe that the foreclosure procedure, being
statutorily prescribed, must be strictly complied with. (See System Inv.
Corp. v. Union Bank (1971) 21 Cal.App.3d 137, 152-153, 98 Cal.Rptr. 735.) But
it is true, as plaintiff points out, that no showing was made in the trial
court that Lee could have obtained the necessary funds to pay the first and
second trust deed indebtednesses had the request for the statutory one-day
postponement been granted. Happily, **however, we are not required to decide
whether under these circumstances Transtate’s denial of the requested
postponement, standing alone, would constitute a sufficient ground for
avoiding *323 the trustee’s sales because that defect coupled with the fact
that the property was sold for only a fraction of its value affords an ample
basis for the judgment entered by the trial court.
[8][9] While mere inadequacy of price, standing alone, will not justify
setting aside a trustee’s sale, gross inadequacy of price coupled with even
slight unfairness or irregularity is a sufficient basis for setting the sale
aside. ( Winbigler v. Sherman (1917) 175 Cal. 270, 275, 165 P. 943; Lopez v.
Bell (1962) 207 Cal.App.2d 394, 398, 24 Cal.Rptr. 626; Foge v. Schmidt (1951)
101 Cal.App.2d 681, 683, 226 P.2d 73.) Here, the only evidence set forth in
the affidavits as to the value of the property is that the property had a
value of at least $65,000. **Plaintiff purchased the property for $12,690.
That gross inadequacy coupled with the trustee’s refusal to grant the
requested statutory one-day postponement constituted a more than sufficient
ground for avoiding the sales and for the summary judgment in favor of
defendants. And in the circumstances of this case, the motive of Transtate in
treating the trustee’s sales as invalid and refusing to issue a trustee’s
deed to plaintiff is irrelevant. Alvin Lee had the right to avoid the sales
and he elected to do so by seeking that relief in this action. The sales
being properly avoided as to him, Transtate’s motives are simply immaterial.
**590 Disposition
The judgment is affirmed. In the interests of justice the several parties

shall bear their own respective costs on appeal.
Angell v. Superior Court, 73 Cal.App.4th 691, 86 Cal.Rptr.2d 657, 99 Cal.
Daily Op. Serv. 5736, 1999 Daily Journal D.A.R. 7307 (Cal.App. 4 Dist. Jul
16, 1999)
Purchasers whose high bid was accepted at nonjudicial foreclosure sale

brought suit seeking determination that they were true owners of property
despite trustee’s refusal to issue trustee’s deed upon post-sale discovery of
irregularity in sale. Trustee filed cross-complaint for declaratory relief
and rescission. The Superior Court, San Bernardino County, No. SCV-
35497,Roberta McPeters, J., entered summary judgment for trustee on
complaint, and purchasers appealed. The Court of Appeal, Hollenhorst, P.J.
(acting), held that: **(1) appeal from judgment that was not appealable
because of existence of outstanding cross-complaint would be reviewed as if
it were petition for extraordinary writ, and **(2) material mistake occurring
when notices identified only one of two defaulted notes secured by deed of
trust justified trustee’s refusal to issue deed upon discovery of mistake
after sale.
Affirmed.
[8] Mortgages 266 372(3)
266 Mortgages
266k372 Title and Rights of Purchaser
266k372(3) k. Effect of Defects or Irregularities in
Proceedings. Most Cited Cases
Material mistake occurring when notices of nonjudicial foreclosure sale
identified only one of two defaulted notes secured by deed of trust was
substantial and justified trustee’s decision to abort sale upon discovery of
mistake after accepting bid from purchasers but before issuance of trustee’s
deed. West’s Ann.Cal.Civ.Code § 2924
266 Mortgages
266k376 k. Proceeds and Surplus. Most Cited Cases
Rebuttable presumption that beneficiary actually knew of all unpaid loan
payments on obligation owed to beneficiary and secured by the deed of trust
or mortgage subject to notice of default, assuming that it applied prior to
issuance of trustee’s deed, was rebutted by evidence of mistake in failing to
include one of two defaulted notes in notices of nonjudicial foreclosure
sale. West’s Ann.Cal.Civ.Code § 2924.
[11] Mortgages 266 372(3)
266 Mortgages
266k372 Title and Rights of Purchaser
266k372(3) k. Effect of Defects or Irregularities in
Proceedings. Most Cited Cases
The general rule that the property is sold at the moment of acceptance of the
bid at nonjudicial foreclosure sale was not applicable when notice defect
rendered the sale void.
p. 700
“In order to challenge the sale successfully there must be evidence of a

failure to comply with the procedural requirements for the foreclosure sale
that caused prejudice to the person attacking the sale. The mere inadequacy
of price, standing alone, does not justify setting aside the trustee’s sale,
but the sale can be set aside where there is a gross inadequacy of the price
paid at the sale, together with a slight irregularity, unfairness, or fraud.”
(4 Miller & Starr, Cal. Real Estate 2d (1989) Deeds of Trust and Mortgages, §
9:154, pp. 506-507, fns. omitted.)
Accordingly, "[a] successful challenge to the sale requires evidence of a

that caused prejudice to the person attacking the sale." (4 Miller & Starr,
supra, § 10:210, at p. 640.)
In re Worcester, 811 F.2d 1224, 16 Collier Bankr.Cas.2d 589, 7 Fed.R.Serv.3d

733, Bankr. L. Rep. P 71,637 (9th Cir.(Cal.),Feb 26, 1987)
[6] Mortgages 266 529(7)
266 Mortgages
266X(M) Sale
slight unfairness or irregularity; full description of property referred to
266 Mortgages
266X(M) Sale
Whether purchaser of debtor’s property at foreclosure sale or his transferee
knew of debtor’s action against mortgage company alleging fraud and breach of
fiduciary duty for arranging loans secured by deeds of trust that included
balloon payments was irrelevant in action **to set aside foreclosure sale on
basis that price paid was grossly inadequate and there was irregularity in
sale that contributed to inadequacy of price, under California law.
266 Mortgages
266X(M) Sale
Purchaser of debtor’s property at foreclosure sale and his transferee had
constructive notice of misdescription of property which was to be subject of
sale, where deed of trust contained accurate description of property subject
to foreclosure, but notice of trustee’s sale, trustee’s deed to purchaser,
and purchaser’s deed to his transferee incorrectly stated that property
included another parcel, which had not been subject of deed of trust, and
investigation would have disclosed property misdescription.
[10][11] Worcester seeks to set aside the sale on the grounds that the price
Rosner*1232 paid was grossly inadequate and there was an irregularity in the
sale that contributed to the inadequacy of the price. Sargent v. Shumaker,
193 Cal. at 129-30, 223 P. at 467 (1924); Whitman, 165 Cal.App.3d at 323, 211
Cal.Rptr. at 589. Whether Rosner or Little knew of Worcester’s earlier suit
is irrelevant in an action to set aside a foreclosure sale on this basis.
Rosner and Little’s claim that they had no constructive notice is disproven
by the record before us. The deed of trust contains an accurate description
of the property subject to foreclosure; the Notice of Trustee’s Sale, the
trustee’s deed to Rosner, and Rosner’s deed to Little, however, incorrectly
state that the property included the 40-acre parcel. An investigation of the
record pertaining to the 4-acre parcel would have shown that the deed of
trust under which the property was foreclosed and the deed from the trustee
did not describe the same property. Under California law, “one whose search
of the record would disclose a defective property description is charged with
the duty of further investigation and with knowledge of whatever it would
have disclosed.” Sieger v. Standard Oil Co., 115 Cal.App.2d 649, 657, 318
P.2d 479, 484 (1957) (citing Leonard v. Osburn, 169 Cal. 157, 161, 146 P.
530, 532 (1915); see alsoCal.Civ.Code §§ 18-19 (West 1982). Inquiry would
have disclosed that the Notice of Trustee’s Sale also misdescribed the
property subject to foreclosure and thereby put Rosner and Little on notice
that there was an irregularity in the sale that may have prejudiced Worcester
by discouraging buyers interested only in residential properties. In other
words, reasonable investigation would have revealed that Worcester had the
right to avoid the sale under Whitman.
[12] We therefore reverse the decision of the district court and remand the
case for entry of an appropriate order.FN13 See 28 B.R. at 916-17.
Homestead Savings v. Darmiento, 230 Cal.App.3d 424, 281 Cal.Rptr. 367 (Cal.App. 2 Dist.,May 22, 1991)
Bad outcome and involves a bona fide purchaser
**A sale is void where there is a notice defect and conclusive presumption language and recitals in the deed which
establish on its face the irregularity of the sale.
Lopez v. Bell, 207 Cal.App.2d 394, 24 Cal.Rptr. 626 (Cal.App. 2 Dist.,Sep 04, 1962)
Acceptance of late payments thereafter constitutes a waiver of time is

essence requirements, unless re-established by written notice
Proceeding to set aside trustee’s sale for default in payment under power contained in deed of trust. The Superior
Court of Los Angeles County, Frank S. Balthis, J., sustained demurrer and appeal was taken from judgment
dismissing action. The District Court of Appeal, Lillie, J., held that **complaint filed by party in whom title to
property purchased by others was placed and who executed deed of trust and gave note to secure payments thereof
stated cause of action on theory that vendors had waived right to forfeit plaintiff’s interest by acceptance of seven
successive semi-annual payments after maturity without objection or protest.
Reversed.
[2] Mortgages 266 369(2)
266 Mortgages
266k369(2) k. Grounds for Relief in General. Most Cited Cases
Gross inadequacy of bid at trustee’s sale made under power of sale contained in deed of trust coupled with some
irregularities will justify relief from sale.
[2] Nor should the sale be set aside because the final bid was assertedly inadequate. Indeed, plaintiffs concede that
mere inadequacy of price, however gross, is not alone enough ( Stafford v. Russell, 117 Cal.App.2d 326, 333, 255
P.2d 814), although they properly argue that gross inadequacy, coupled with some irregularities will justify relief. (
Winbigler v. Sherman, 175 Cal. 270, 275, 165 P. 943.) Thus, it is held in Winbigler that where the debtor-owner
belatedly learns of the sale and seeks a reasonable postponement to obtain the money needed, refusal by the trustee
may constitute unfairness which, coupled with an inadequate price, justifies setting aside of the **629 sale. Such a
situation is said to exist at bar; it will be considered in conjunction with the next and major point which is decisive
of this appeal.
[3][4][5][6][7][8] Since Boone v. Templeman, 158 Cal. 290, 110 P. 947, it has been settled law that the acceptance
by a vendor of payments which are past due under an executory contract constitutes a waiver of the right to forfeit
the purchaser’s interest by reasons of breaches which have accrued at or prior to the time when such payment was
made; accordingly he may not be again placed in default for the same delinquency until he has been allowed a
reasonable time to perform his contract. In such case, it is said, ‘the right of forfeiture is temporarily suspended until
the vendor has given notice of his intention to require strict performance in the future and the purchaser has a
reasonable time within which to perform his part of the contract.’ ( Harmon Enterprises, Inc. v. Vroman, 167
Cal.App.2d 517, 522, 334 P.2d 628, 631.) Otherwise stated, ‘Since the law looks unfavorably upon forfeitures,
waiver of the time clauseFN2 will be deemed to be a waiver of the forfeiture unless the time element is first re-
established by definite notice.’ ( Gonzalez v. Hirose, 33 Cal.2d 213, 216, 200 P.2d 793, 795.) The above principle
has been held applicable to obligations secured by deeds of trust. ( Bledsoe v. Pacific Ready Cut Homes, Inc., 92
Cal.App. 641, 645, 268 P. 697; see also Altman v. McCollum, 107 Cal.App.2d Supp. 847, 858, 236 P.2d 914.) But,
say defendants, plaintiffs’ pleading specifically alleges *399 the giving of written notice and demand for payment of
the instalment due on August 15-presumably they refer to the allegation, quoted earlier, that ‘on each of the
occasions when said semi-annual instalments fell due, the defendant wrote to the Bautistas requesting payment of
said payments * * *.’ We are satisfied, however, that the mere request for payment after the due date does not meet
the requirement mentioned in the cases above cited, namely, the giving of written notice (after acceptance of such
payment) that strict performance of the contract’s covenants will be necessary in the future. To be reasonably
definite, the notice should recite in substance that ‘unless payment was made on ‘a date fixed therefor, far enough in
the future to give the purchaser reasonable time and opportunity to comply with his contract by making the
payments, the contract will be terminated and forfeiture will take place.’ [Citations.]’ ( Lamont v. Ball, 93
Cal.App.2d 291, 293, 209 P.2d 9, 11.)
FN2. While it does not appear that the contract in the present action expressly provided that ‘time is of the essence,’
use of the precise expression is not always necessary to make it so. See Skookum Oil Co. v. Thomas, 162 Cal. 539,
545-546, 123 P. 363; Katemis v. Westerlind, 142 Cal.App.2d 799, 299 P.2d 383.
[9] This is not to say that defendants by proper pleading and proof may not ultimately establish what was expected
of them under the circumstances; but the sole question for present determination is the sufficiency of the facts to
constitute a cause of action. Although there are cases holding that the mere acceptance of one payment after its
maturity does not constitute a waiver of the right to declare a forfeiture (see citations in Boone v. Templeman, supra,
158 Cal. 290, 296, 110 P. 947), as in Boone, we have much more than this in the present case. Seven semi-annual
payments in succession, it is alleged, were accepted after maturity and without objection or protest of any kind.
Other facts are alleged which have a strong appeal to a court of equity. ‘We think from these facts a court might
infer a waiver of the conditions regarding forfeiture and time, and that they supported the general allegation of the
complaint that [defendants] had waived those conditions.’ ( Boone v. Templeman, supra, 296-297, 110 P. at page
950.) It was error, therefore, to sustain the demurrer to the complaint as last amended.
Foge v. Schmidt, 101 Cal.App.2d 681, 226 P.2d 73 (Cal.App. 1 Dist.,Jan 15, 1951)
Case cites Winbigler, and involves an underlying voidable deed, with

a tender to redeem. Not exactly on point, and not decisive and
detailed on the issues
Frank J. Foge brought action against Walter J. Schmidt and another to set aside a sale of plaintiff’s property to
defendant at a trustee’s sale to satisfy indebtedness under a third deed of trust. A judgment for plaintiff was entered
in the Superior Court in and for the City and County of San Francisco, Herbert C. Kaufman, J., and the defendants
appealed. The District Court of Appeal, Dooling, J., held that evidence failed to establish that trial court abused its
discretion in vacating the sale and ordering a new one to be held.
Judgment affirmed.
[1] Mortgages 266 369(3)
266 Mortgages
Mortgages 266 369(7)
266 Mortgages
266k369(7) k. Pleading and Proof. Most Cited Cases
Mere inadequacy of price, standing alone, will not justify setting aside a trustee’s sale to satisfy indebtedness under
deed of trust, but gross inadequacy of price coupled with even slight additional evidence of unfairness is sufficient to
authorize setting the sale aside.
[2] Mortgages 266 369(2)
266 Mortgages
Whether particular facts justify setting aside a trustee’s sale to satisfy indebtedness under deed of trust rests very
largely in trial court’s discretion.
[3] Mortgages 266 369(7)
266 Mortgages
Evidence failed to establish that trial court abused its discretion in setting aside a trustee’s sale of plaintiff’s property
to satisfy indebtedness under third deed of trust, **where evidence showed that sale price was grossly
disproportionate to the value of property, and further that plaintiff’s agent had made a higher bid for the property
which auctioneer refused because agent did not have cash in hand and that auctioneer refused to grant a continuance
of 10 or 15 minutes to permit plaintiff’s agent to secure the cash.
[5] Mortgages 266 369(7)
266 Mortgages
Where plaintiff, in his complaint seeking to set aside a trustee’s sale of plaintiff’s property to satisfy indebtedness
under third deed of trust, offered to pay indebtedness secured by the third deed of trust, and such offer was refused
by defendant’s election to stand on the sale and to contest plaintiff’s right to have it set aside, and decree merely
vacated the sale and ordered a new one to be held, defendant could not be heard to assert on appeal that plaintiff
refused to do equity.
Defendants appeal from a judgment seting aside a sale of plaintiff’s property to them at a trustee’s sale to satisfy an
indebtedness under a third deed of trust. The court found that the property was worth at least $11,000 and that the
total indebtedness secured by it did not exceed $6,600. The property was bought by the trustee for slightly under
$700 for which, on the court’s finding, he secured property having a clear equity of at least $4,400. The facts thus
support the finding that the sale price was grossly disproportionate to the value of the property. The court found that
the plaintiff’s mother and a real estate agent who, the evidence showed, was acting for **74 plaintiff, each made a
bid of $750 for the property. Neither had the cash in hand and each asked for not over 10 or 15 minutes to go to a
bank to secure it which the auctioneer refused. The agent had brought a blank check executed by his firm and the
court found that there are many banks in the vicinity of the place of sale (in downtown San Francisco) which were
then open for business and that the agent could have obtained the cash to support his bid if his request had been
granted. On these facts the court found that the sale was unfairly conducted
*683 [1] While mere inadequacy of price, standing alone, will not justify setting aside such a sale, Stevens v. Plumas
Eureka Annex Mining Co., 2 Cal.2d 493, 41 P.2d 927, **gross inadequacy of price coupled with even slight
additional evidence of unfairness is sufficient to authorize setting the sale asider, Winbigler v. Sherman, 175 Cal.
270, 275, 165 P. 943; 25 Cal.Jur. 90-91.
We need go no further than the Winbigler case to support the finding of unfairness. In that case the owner, who had
learned of the proposed sale 30 minutes before, asked the auctioneer for a reasonable continuance to procure the
cash to make a bid. The auctioneer’s refusal coupled with inadequacy of price was held to make the sale voidable.
[2][3] Defendants seek to distinguish the Winbigler case on the ground that there the owner had not known of the
proposed sale in time to procure the cash. But whether the particular facts justify setting the sale aside rests very
largely in the trial court’s discretion, Humboldt Savings & Loan Society v. March, 136 Cal. 321, 323, 68 P. 968, and
we cannot say that under the facts of this case that discretion was abused. The denial of such a short delay as one
quarter of an hour or less when the agent acting on behalf of plaintiff had a check of his firm which he would readily
cash at a bank indicates a desire to secure the property for the trustee bidder on any technicality rather than one to
obtain the highest and best bid.
[4][5] Defendants point to the rule that an offer to pay the indebtedness is a prerequisite to a judgment vacating the
sale. Py v. Pleitner, 70 Cal.App.2d 576, 582, 161 P.2d 393. In his complaint plaintiff did offer to pay the
indebtedness. This offer was refused by defendant’s election to stand on the sale and to contest plaintiff’s right to
have it set aside. The decree merely vacates the sale and orders a new one to be held. Under the circumstances
defendants cannot be heard to assert on appeal that plaintiff refused to do equity.
Judgment affirmed.
Winbigler v. Sherman, 175 Cal. 270, 165 P. 943 (Cal.,Jun 04, 1917)
positive outcome. Illustration of principle of unfairness and

irregularity, on, **inadequacy of consideration, together with refusal
of mortgagee and trustee to grant reasonable postponement, held to
warrant setting aside sale.
At p. 275, “‘Where the inadequacy is palpable and great, very slight

additional evidence of unfairness or irregularity is sufficient to authorize
the granting of the relief sought.’”
In Bank, Appeal from Superior Court of Orange County; Z. B. West, Judge.
Action by Theo. A. Winbigler, as special administrator of the estate of Karl

Wenzel, deceased, against W. H. A. Sherman. From a judgment for plaintiff and
from an order denying a motion to set aside the conclusions of law and
judgment and to amend the same and enter another and different judgment, and
from an order denying a motion for new trial, defendant appealed to the
District Court of Appeal, where an appplication for hearing in the Supreme
Court was granted. Affirmed.
West Headnotes
266 Mortgages
266k352 Notice of Sale
266k354 k. Form and Requisites. Most Cited Cases
If a trust deed specified kind and manner of notice of sale, a sale without
giving notice as required would be invalid.
[5] Mortgages 266 369(3)
266 Mortgages
**Where land is sold under a deed of trust, mere inadequacy of purchase price
will not invalidate the sale, although where inadequacy is gross very slight
additional evidence of unfairness or irregularity is sufficient to warrant
setting it aside.
Appeal and Error 30 1008.1(10)
30 Appeal and Error

30XVI Review
30XVI(I) Questions of Fact, Verdicts, and Findings
30XVI(I)3 Findings of Court
30k1008 Conclusiveness in General
30k1008.1(8) Particular Cases and Questions
30k1008.1(10) k. Contracts in General.
Most Cited Cases
In action to require purchaser at sale under a trust deed to convey property
to mortgagor on ground that sale was void, **where neither pleadings nor
findings of fact show provisions of trust deed relative to notice of sale,
finding that notice was not published as required by trust deed is conclusive
in so far as motion to vacate conclusions of law and judgment and to enter
different judgment are concerned.
Appeal and Error 30 1008.1(8.1)
30 Appeal and Error

30XVI Review
30XVI(I)3 Findings of Court
30k1008 Conclusiveness in General
30k1008.1(8) Particular Cases and Questions
30k1008.1(8.1) k. In General. Most Cited
Cases
In such action findings of fact held conclusive upon appellate court except
as to provisions of trust deed and a letter admitted in evidence.
Mortgages 266 356
266 Mortgages
266k356 k. Publication or Other Constructive Notice. Most
Cited Cases
Where trust deed provided that trustee first publish notice of sale, etc.,
twice a week for four successive weeks in newspaper in city and county named,
notice of which last publication was on January 22d, for sale February 6th,
was sufficient, since it was not necessary that four weeks be next preceding,
and date fixed was not unreasonably remote.
266 Mortgages
In action to require purchaser in a sale under a trust deed to convey
property to mortgagor on ground that sale was void, **inadequacy of
consideration, together with refusal of mortgagee and trustee to grant
reasonable postponement, held to warrant setting aside sale.
**944 *271 E. W. Forgy and John T. Jones, both of Los Angeles (Jones &
Weller, of Los Angeles, of counsel), for appellant.
H. C. Head, of Santa Ana (R. T. Walters and Ernest C. Griffith, both of Los
Angeles, of counsel), for respondent.
ANGELLOTTI, C. J.
This appeal was originally heard and decided by the District Court of Appeal
of the Second Appellate District, and an application for a hearing in this
court was subsequently granted.
The following statement as to the nature of the case, the action of the trial
court, and the appeals, is taken from the opinion of the district court of
appeal:
‘Karl Wenzel executed to Charles A. Meyer, Jr., as trustee, a trust deed to

secure the payment of certain promissory notes made by Wenzel to Fairbanks-
Morse & Co., a corporation. Default having been made by nonpayment of one of
the notes when it fell due, defendant W. H. A. Sherman, to whom the notes had
been transferred, demanded that the real property described in the trust deed
be sold by the trustee in accordance with the provisions of the trust deed.
Sale was made by the trustee in conformity with that demand, and a deed of
conveyance was executed to Sherman as purchaser at the sale. Karl Wenzel died
on the 27th day of February, 1915, and the plaintiff was appointed special
administrator of his estate. As such administrator the plaintiff instituted
this action to obtain a decree, requiring that the defendants convey the
property to the plaintiff upon payment by him of the amounts due under said
notes and deed of trust. The defendants having filed their answer, the case
went to trial, and the court made its findings and a decree ascertaining the
amount of said indebtedness, and requiring that upon payment of that amount
with interest as ascertained in the decree, the defendant Sherman should
convey the described premises to plaintiff; and it was provided that upon
failure to make such conveyance the deed be made by a commissioner appointed
for that purpose. Within ten days after the entry of judgment the defendant
Sherman gave notice of motion, and thereafter in due course made his motion
for an order to set aside and vacate the conclusions of law and the judgment
and to amend the same and enter another and a different judgment, to wit, a
judgment that the plaintiff *272 take nothing against the defendant and for
costs in favor of the defendant. This motion was made as permitted by section
663 and 663a, Code of Civil Procedure, upon the grounds that the findings of
fact do not support the conclusions of law or the judgment and that such
findings of fact do require conclusions of law and judgment in favor of the
defendant. The court having made its order denying that motion, the defendant
Sherman has appealed from the order, and also from the judgment and from an
order denying his motion for a new trial.’
[1] It cannot be held that the findings of fact do not support the
conclusions of law or the judgment. Regardless of all questions in connection
with the matter of the inadequacy of price, it is explicitly found that the
trustee’s sale of the land was not in compliance with the terms of the trust
deed and the law, in that the notices of sale ‘were not published twice a
week for four weeks next preceding the date of said sale, and in that more
than one week elapsed after the last publication of said notices before the
date of the said sale.’**Of course if the trust deed required the kind and
manner of notice so specified in the finding, a sale had without giving the
same would be invalid. **Neither pleadings nor findings of fact show the
provisions of the trust deed relative to notice of sale, and the finding to
the effect that notice was not published as required by that instrument is
conclusive in so far as the motion to vacate the conclusions of law and the
judgment and to enter another and different judgment is concerned. The
motion, therefore, was properly denied.
The finding just referred to is, however, assailed on the appeal from the
judgment and order denying a new trial as being without sufficient support in
the evidence. The deed of trust is set out in the statement on appeal, and a
reading thereof in connection with the findings of the trial court as to the
publication had shows that notice of the sale was published in all respects
as required thereby. So far as material this instrument provided:
‘Said trustee * * * shall first publish notice of the time and place of such
sale, with a description of the property to be sold, at least twice a week
for four successive weeks in some newspaper published in the city of Los
Angeles, county of Los Angeles, state of California.’
*273 The trial court found ‘that notices of said sale were published by said
trustee in the Los Angeles Daily Journal, a daily newspaper published in Los
Angeles county, Cal., twice a week for four weeks,’ specifying the date of
first and last publication. The last publication was on January 22, 1915, and
the day noted for the sale was February 6, 1915. Publication of notice in
accord with the requirements of the trust deed is thus shown. The point
appears to be that the publication **945 was not sufficient because not made
for the four weeks ‘next preceding the date’ of sale, and this appears to
have been the view of the learned trial judge. **But the trust deed, as we
have seen, contains no such requirement, calling simply for publication ‘at
least twice a week for four successive weeks.’Upon this point the District
Court of Appeal said:
‘Counsel for respondent have not referred to any decision holding that under
a trust deed in the form here presented the publications of the notice of
sale must be continued down to the very time of the sale; therefore, we may
be justified in assuming that there is no such decision. In addition to that,
however, we have examined some of the principal text-books and digests, and
we fail to find any declaration of law in support of respondent’s contention.
**The rule, of course, is that in executing a power of sale the trustee must
act in good faith and strictly follow the requirements prescribed by the
trust deed with respect to the manner of sale. The date fixed for the sale in
the present instance was not unreasonably remote from the period of
publication of the notices. The fact that it was a few days later than it
might have been after the beginning of publication of the notice was a fact
rather favorable than otherwise to the interests of the debtor.’
The finding referred to is without support in the evidence.
This result does not require a reversal, however, if the other findings
sufficiently support the judgment. The claim of respondent is substantially
that the gross inadequacy of price for which the land was sold by the
trustee, in connection with the circumstances found, sufficiently supports
the conclusion of the trial court that the sale was inequitable and
fraudulent, and that the purchaser should not be allowed to retain the
property. The findings of fact, which are conclusive upon us except as to the
provisions of the trust deed and a certain *274 letter hereinafter referred
to which are the only matters of evidence contained in the statement on
appeal, show the following facts: The notes of deceased secured by the trust
deed were given to Fairbanks-Morse & Co. for the aggregate amount of $536.65
in consideration of the agreement of the latter to furnish and install
certain pumping machinery on the land of deceased, a parcel of 15 acres in
Orange county. The deed of trust covered all of said land. The trustee under
the deed, Meyer, was at all times an employé of Fairbanks-Morse & Co. The
pumping machinery was installed, and after the first note, one for $100,
became due (October 1, 1914), **deceased made complaint that the same was
defective, and certain alterations were made therein by the vendor.
Apparently the machinery was still unsatisfactory, complaint being made as
late as the very day of sale. **In the meantime, Fairbanks-Morse & Co.
transferred the notes to defendant Sherman, who was a bill collector who had
theretofore collected bills and accounts for it. **The inference is that they
were transferred solely for purposes of collection. On or about December 21,
1914, Sherman caused the trustee to advertise the land for sale under the
trust deed. The first publication of notice was on December 31, 1914, the
sale being noticed for February 6, 1915, ‘at the west door of the courthouse
in the city of Los Angeles.’On January 6, 1915, Sherman wrote deceased as
follows, the letter being taken from the statement on appeal:
‘I have your letter of December 29th, and will say that I do not know
anything about troubles you speak of, regarding the pumping plant. That is a
matter that is between yourself and Fairbanks-Morse & Co. As to the trust
deed, I have instructed the trustee to start foreclosure proceedings, so
unless you care to pay the matter off at once, the same will be foreclosed in
due course of time.’
Deceased had no actual notice of the intended sale until about one-half hour
before the time fixed, when he went to the place of business of Fairbanks-
Morse & Co. for the purpose of negotiating with the latter about the alleged
defects in the machinery, and then and there for the first time learned of
the intended sale. **He at once went to Sherman and the trustee, and talked
with them about the matter, and requested a postponement of the sale for a
reasonable time to enable him to procure the money and pay the amount due.
The amount due, including expenses of sale, *275 was only $680.58, and the
actual value of the property was not less than $6,500, subject to a prior
mortgage for $1,500. The trust deed fully provided for and authorized
postponements of sale by the trustee. The request for a postponement was
denied, and the sale was made to Sherman, the only bidder, for $500, the
amount of his bid. Promptly after the sale deceased procured the necessary
money and offered to Sherman a sum sufficient to pay all amounts due,
including principal, interest, costs of sale and expenses, on condition that
Sherman recovery the property to him, and his offer was rejected. The trustee
executed his deed to Sherman. The price paid was not more than one-tenth the
actual value of the land, and was grossly inadequate. Another similar offer
was made by this plaintiff to Sherman before the commencement of this action,
and the same was refused. **It is further found upon these facts ‘that the
sale was inequitable and fraudulent.’
[5] Although another rule prevails in some jurisdictions, it is the settled

rule in this state that mere inadequacy of price is not a sufficient ground
for refusing to give full effect to such a sale as this. This rule was
recognized, and many authorities cited, in Odell v. Cox, 151 Cal. 73, 90 Pac.
194, where an execution sale was involved. In that case, however, a judgment
vacating an execution sale was affirmed on the theory that there were
circumstances which, considered in connection with the grossly inadequate
price paid, were sufficient to support the conclusion of the trial court that
there was such unfairness and undue advantage resulting in gross inadequacy
of price as warranted the vacating of the sale. It was said in the **946
opinion that, notwithstanding the rule that mere inadequacy of price is
insufficient to warrant setting aside the sale:
**’Where the inadequacy is palpable and great, very slight additional

evidence of unfairness or irregularity is sufficient to authorize the
granting of the relief sought.’
Several authorities were cited in support of this statement, including the

case of Schroeder v. Young, 161 U. S. 334, 16 Sup. Ct. 512, 40 L. Ed. 721, in
which the court, after saying that courts are not slow to seize upon other
circumstances impeaching the fairness of the transaction as a cause of
vacating it, especially if the inadequacy be so gross as to shock the
conscience, said:
‘If the sale has been attended by any irregularity,*276 * * * if any undue
advantage has been taken to the prejudice of the owner of the property, or he
has been lulled into a false security; or, if the sale has been collusively,
or in any other manner, conducted for the benefit of the purchaser, and the
property has been sold at a greatly inadequate price, the sale may be set
aside, and the owner permitted to redeem.’
This court said:
‘We think there can be no doubt under the authorities that where, in addition
to gross inadequacy of price, the purchaser has, in the language of the
United States Supreme Court, ‘been guilty of any unfairness or has taken any
undue advantage,’ resulting in such gross inadequacy and consequent injury to
the owner of the property, he will be deemed guilty of fraud warranting the
interposition of a court of equity in favor of the owner who is himself
without fault.’
**In the case at bar, there can be no doubt that there was gross inadequacy
of price. Property worth at least $5,000 was purchased for $500. The
purchaser was the nominal creditor, having a claim, including all expenses,
of only $680.58, secured many times over by this trust deed. Moreover, he was
apparently only an assignee of Fairbanks-Morse & Co. for purposes of
collection, its employé and representative. The trustee was an employé of the
same corporation. All parties knew that a dispute existed between deceased
and Fairbanks-Morse & Co. as to the adequacy of the pumping machinery
furnished in consideration of the giving of the notes, and that deceased was
endeavoring to obtain from the company some remedying of the alleged defects.
On the very day noted for the sale, without any actual notice that notice of
sale was being published, or that a time had been fixed therefor, he visited
the office of the company for that purpose. It was only then that he learned
of the proposed sale, only one-half hour before the time fixed. The letter
written to him on January 6, 1915, by Sherman was couched in such terms as to
convey to the mind of deceased that ‘foreclosure proceedings,’ as they were
termed therein, had not as yet been commenced, and, as substantially found by
the trial court, such proceedings would actually be commenced only ‘in due
course of time,’ and this, although a time for the sale had actually been
fixed and notice by publication actually commenced nearly a week before.
**Whether by design or otherwise it was well calculated to lead deceased *277
to believe that no proceeding for a sale, which would leave in him no right
of redemption and would effectually cut off all his rights in regard to his
property, had as yet been begun. It certainly tended to lull him into a false
security to this extent, if indeed the use of the term ‘foreclosure
proceedings’ did not convey to his mind the idea of proceedings of which
actual notice would be given him. Learning that such a sale was in fact
noticed only onehalf hour before the time fixed therefor, he requested of
both the purchaser and the trustee a postponement for a reasonable time to
enable him to procure the proportionately small amount of money to pay the
amount due. This request, perfectly reasonable under the circumstances and
one that could be granted without in the slightest degree prejudicing the
creditor in so far as the collection of the full amount due was concerned,
was refused, with the result that the whole property was sold to the creditor
for onetenth of its actual value. **We are of the opinion that under all the
circumstances the refusal of the creditor to consent to a postponement and of
the trustee to grant the same so savored of oppression and unfairness and an
apparent desire to acquire the property of deceased for a mere pittance that,
taken in connection with the gross inadequacy of price, it constitutes such
an irregularity in the proceedings as to sufficiently support the conclusion
and action of the trial court.
The judgment and the order denying a new trial and the order denying the
motion to vacate the conclusions of law and judgment and to enter another and
different judgment are affirmed.

ed., 2009 update) § 7.71 pages 585 states,
F. Burden of Proof; Nonjury Trial
A Plaintiff challenging the sale has the burden of proof on all issues
and must show injury by the alleged irregularity. See California trust
Co. v. Smead Inv. Co. (1935) 6 CA2d 432, 44 P2d 624; American Trust
Co. v. deAlbergaria (1932) 123 CA 76, 10 p2d 1016.
Scott v. Security Title Ins. & Guarantee Co. (1937) 9 C.2d 606, 72
P.2d 143 held that the trustee was not liable in damages to the
debtors where, because of failure to post notice, the first sale was
void, and later the value of the property depreciated so that a
deficiency judgment was entered against plaintiffs. The court observed
that there was no showing of fraud or failure to exercise due care.
Statutorily deficient notice in that there was no default.
The fact that the Bank of the West trust deed was void because the interspousal
transfer deed was void rendered the Bank Of The West trust deed void. And because
Soon Chey and from the date was the surviving joint tenant deprived the trustee of
the power to foreclose and rendered such sale invalid.
And at that point did not have a valid lien, deprived the trustee of power to
foreclose and rendered such sale invalid.
Mortgagee’s agreement with mortgagor to cure default on loan secured by deed

of trust and to reinstate loan prior to nonjudicial foreclosure sale deprived
trustee of power to foreclose and rendered such sale invalid.
See 3 Witkin, Summary of Cal. Law (9th ed. 1987) Security Transactions in
Real Property, § 149; 4 Miller & Starr, Cal. Real Estate (3d ed. 2001) §
10:123
Statutory presumption in favor of bona fide purchaser at nonjudicial

foreclosure sale pertained only to notice requirements for sale, and not to
purchase of property at invalid sale, and thus presumption did not apply to
purchaser at sale which was invalidated by mortgagee’s agreement with
mortgagor to cure default on loan secured by deed of trust and to reinstate
loan prior to sale. West’s Ann.Cal.Civ.Code § 2924.
See 4 Miller & Starr, Cal. Real Estate (3d ed. 2001) § 10:211
dehors: outside or beyond the bounds of, as in matters that are dehors the trial record or the
pages of a written agreement.
6 Angels, Inc. v. Stuart-Wright Mortgage, Inc., 85 Cal.App.4th 1279, 102
(Cal.App. 2 Dist.,Jan 02, 2001)
[5][6][7] "As a general rule, there is a common law rebuttable presumption

that a foreclosure sale has been conducted regularly and fairly." (4 Miller &
Starr, Cal. Real Estate (3d ed.2000) § 10:211, p. 647, fn. omitted; Brown v.
Busch (1957) 152 Cal.App.2d 200, 204, 313 P.2d 19.) **Accordingly, "[a]
successful challenge to the sale requires evidence of a failure to comply
with the procedural requirements for the foreclosure sale that caused
prejudice to the person attacking the sale." (4 Miller & Starr, supra, §
10:210, at p. 640.) Whether there is sufficient evidence to overcome this
presumption is generally a question of fact. (Wolfe v. Lipsy (1985) 163
Cal.App.3d 633, 639, 209 Cal.Rptr. 801, disapproved on another ground in
Droeger v. Friedman, Sloan & Ross (1991) 54 Cal.3d 26, 36, 283 Cal.Rptr. 584,
812 P.2d 931.) Nonetheless, the presumption must prevail when the record
lacks substantial evidence of a prejudicial procedural irregularity.
(Stevens v. Plumas Eureka Annex Min. Co. (1935) 2 Cal.2d 493, 497, 41 P.2d
927.)
2. Absence of Procedural Error
[8] On appeal, the parties do not dispute that DMI intended to set the
opening bid at $100,000, but through a clerical error it mistakenly
instructed Mortgage Default Service to open with a bid of $10,000.
**However, California courts have long held that mere inadequacy of price,
absent some procedural irregularity that contributed to the inadequacy of
price or otherwise injured the trustor, is insufficient to set aside a
nonjudicial foreclosure sale. (Crofoot v. Tarman (1957) 147 Cal.App.2d 443,
446, 305 P.2d 56; Sargent v.. Shumaker (1924) 193 Cal. 122, 129-130, 223 P.
464.)
An instructive application of this principle is found in Crofoot v. Tarman,

supra, 147 Cal.App.2d 443, 305 P.2d 56. In Crofoot, the owners of some
real property *1285 encumbered it with a trust deed to secure a note for a
corporation, and a default occurred. (Id. at p. 444, 305 P.2d 56.) The
owners entered into a contract to sell the property for approximately $78,000
to Tarman, who also bought the note secured by the property and asked for a
postponement of the impending foreclosure sale. (Id. at pp. 444-445, 305
P.2d 56.) When the corporation tried to determine the date of the
postponed sale from Tarman’s attorney, the attorney’s secretary innocently
and inadvertently provided an incorrect date, and neither the owners nor the
corporation appeared at the foreclosure sale. (Id. at pp. 445-447, 305 P.2d
56.) Tarman bought the property for $10,000 at this sale and did not make
any payment under his prior contract to purchase the property. (Id. at pp.
445- 446, 305 P.2d 56.)
The owners then sought relief from the foreclosure sale. (**715Crofoot v.
Tarman, supra, 147 Cal.App.2d at p. 446, 305 P.2d 56.) At trial, Tarman
testified that he believed the property was worth between $40,000 and $50,000
on the date of the foreclosure sale, and the trial court concluded that its
value was " ‘not in excess of $50,000.’ " (Ibid.) On appeal, the court in
Crofoot noted that Tarman obtained the property for about $20,000 (including
sums paid to discharge liens). (Ibid.) Nonetheless, it concluded that the
owners were not entitled to relief from the sale, despite the inadequacy of
the sale price, because there were no procedural irregularities in the sale,
and **the secretary’s mistake was "dehors [FN3] the sale proceedings." (Id.
at p. 447, 305 P.2d 56; see also Lancaster Security Inv. Corp. v. Kessler
(1958) 159 Cal.App.2d 649, 652-656, 324 P.2d 634 [even though property valued
at between $50,000 and $60,000 was sold at a nonjudicial foreclosure sale for
$3,000, party who bought property from original trustor prior to sale is not
entitled to set aside sale because all statutory notice requirements for sale
were satisfied].)
FN3. The term "dehors" means "[o]ut of; without; beyond; foreign to;
unconnected with." (Black’s Law Dict. (6th ed.1990) p. 424, col. 2.)
Here, the only potential procedural irregularity identified by appellants is

the clerical error that DMI allegedly made when instructing Mortgage Default
Service on the opening bid. However, this error, which was wholly under
DMI’s control and arose solely from DMI’s own negligence, falls outside the
procedural requirements for foreclosure sales described in the statutory
scheme, and, like the secretary’s error in Crofoot, is "dehors the sale
proceedings." (Crofoot v. Tarman, supra, 147 Cal.App.2d at p. 447, 305 P.2d
56.) Because there is no procedural error here independent of the
inadequacy of price, we conclude that summary adjudication was properly
granted.
Stevens v. Plumas Eureka Annex Mining Co., 2 Cal.2d 493, 41 P.2d 927 (Cal.
Feb 25, 1935)
HEADNOTES
(1) Deeds of Trust--Foreclosure--Notice of Sale--Evidence--Findings--

Recitals in Deed.
In this action to recover possession of mining property purchased at a sale
under a deed of trust, where the deed to the purchaser recited that the
trustee “did heretofore duly make and cause to be published, in the manner
and for the time required by law and the provisions of said deed of trust, a
notice of sale of said trust”, said recital, coupled with the other facts in
the record, was sufficient to show prima facie that the trustee duly gave the
required notice of sale, especially where the trust deed stated that such
recitals should be conclusive proof of the facts stated in the trustee’s
deed, and no evidence was offered to show that notice was not posted.
See 25 Cal. Jur. 81.
(2) Deeds of Trust--Notice of Sale--Waiver of Defects.
In said action, if there was any defect in the notice of sale (which was not
shown), it was waived by defendant when it had notice, attended the sale,
tendered a bid and also tendered an amount it deemed sufficient to cover the
amount due.
(3) Deeds of Trust--Foreclosure--Inadequacy of Price--Fraud.

Inadequacy of price, however gross, is not in itself a sufficient ground for
setting aside a trustee’s sale legally made, but there must be in addition
proof of some element of fraud, unfairness or oppression as accounts for and
brings about the inadequacy of price; and in said action, where no such
element appeared to exist, the sale could not be set aside on the asserted
ground that the property was worth much more than the price paid at the
trustee’s sale.
(4) Deeds of Trust--Fraud--Evidence--Presumptions--Appeal.

In said action, where there was no substantial (in fact, not any) evidence to
support defendant’s contention that the trustee making the sale was guilty of
fraud, or was so biased and prejudiced against defendant as to conduct the
sale wholly in favor of and for the sole benefit and interest of plaintiff,
the purchaser, it was to be presumed on appeal that the sale was free from
fraud.
Plumas Eureka Annex Mining Company made and executed in writing a lease
agreement by which there was leased to one Bourey mining property in Plumas
County. In and by the terms of the agreement, a sum of ten thousand dollars
was advanced, which amount defendant mining company agreed to pay. At the
same time there was executed a deed of trust made by the company as grantor,
F. J. Behneman and L. D. Byrne as trustees, and *495 J. A. Talbot as
beneficiary, to secure the performance of the terms and conditions of the
lease, which had, in the meantime, been assigned and transferred by Bourey to
said Talbot. Talbot thereafter filed a voluntary petition in bankruptcy,
listing among his assets the deed of trust executed by the mining company,
which deed of trust was sold by order of court, through the trustee in
bankruptcy, and was purchased by plaintiff, respondent here, for the sum of
$3,999.
The new owner of the deed of trust gave, filed and recorded a notice of
default in the performance of the terms and conditions of the lease and
option secured by the deed of trust, together with an election to sell the
property. The mining company thereupon commenced an action against the
respondent in the United States District Court, praying for a judgment
canceling, annulling and setting aside the deed of trust, and procured a
temporary injunction restraining the trustees from selling the property under
its terms. On the cause being brought to trial the court dismissed the case
and dissolved the injunction. By reason of the injunction, the time fixed for
the sale of the property had expired. The substituted trustee therefore again
advertised the property for sale, and the mining company commenced an action
in the Superior Court of the County of Plumas, in which county the property
was located, and obtained a restraining order enjoining the trustee from
proceeding with the sale. On return of the order to show cause, the
preliminary injunction was dissolved, and the action dismissed. The property
was then sold to the respondent. The appellant continued in possession of the
property, and this action to recover possession was thereupon brought by the
respondent. The defendant answered, seeking affirmative relief, and praying
that the sale of the property under notice of default, as provided in the
deed of trust, be set aside and canceled. Judgment was entered for the
plaintiff, from which the defendant mining company appeals.
(1) Appellant’s first contention is that the plaintiff failed to prove a

valid trustee’s sale, in that there was no proof of posting notices of the
time and place of the sale of the property, as required by the statute
prescribing and regulating such matters. It is somewhat difficult to
ascertain if this question was raised and the point relied upon *496 at the
trial. The answer of appellant admits that the trustee “caused notice of sale
of said property to be advertised and the said property was advertised for
sale”. There appear in the record in the statement of sums due, following the
sale under the deed of trust, certain items for “posting notice on the
property”. In the trustee’s deed to respondent is the declaration that the
trustee “did heretofore duly make and cause to be published, in the manner,
and for the time required by law and the provisions of said deed of trust, a
notice of sale of said trust ...” We are of the view that the recital in the
deed from trustee to purchaser at the sale, coupled with the other facts in
the record, is sufficient to show prima facie that the trustee duly gave
notice of sale as required by law and the provisions of the trust deed under
the terms of which the sale was had. This is especially so when, as here, the
trust deed states that its recitals of default, and of publication and
posting of notice of sale, shall be conclusive proof of the facts stated in
the trustee’s deed; and no evidence is offered to show that notice was not
posted. ( Jose Realty Co. v. Pavlicevich, 164 Cal. 613 [130 Pac. 15];
Mersfelder v. Spring, 139 Cal. 593 [73 Pac. 452].) **(2) Furthermore, if
there was a defect in the notice of sale (which has not been shown), we are
of the view that it was waived by appellant when it had notice, attended the
sale, and, according to the record, tendered a bid, and also tendered an
amount it deemed sufficient to cover the amount due.
(3) Appellant seeks a reversal of the judgment because of fraud claimed to

have been practiced against it in the proceedings leading to and the conduct
of the sale itself. It was claimed at the argument, and is asserted in
appellant’s brief, that the mining property “was worth at least the sum of
$180,000”. The evidence on the value of the property is contradictory, and
the evidence on which such an assertion is attempted to be based appears to
be very largely speculative. In California, it is a settled rule that
inadequacy of price, however gross, is not in itself a sufficient ground for
setting aside a trustee’s sale legally made; **there must be in addition
proof of some element of fraud, unfairness or oppression as accounts for and
brings about the inadequacy of price. ( *497David v. Frost, 122 Cal. App. 750
[ 10 Pac. (2d) 504]; Baldwin v. Brown, 193 Cal. 345 [224 Pac. 462].) We find
no such element in this case.
(4) We find no substantial (in fact, not any) evidence to support appellant’s
contention that the trustee making the sale was guilty of fraud, or was so
biased and prejudiced against appellant as to conduct the sale wholly in
favor of and for the sole benefit and interest of the plaintiff. In the
absence of such evidence, we must assume that the sale was free from fraud.
The trustee, who was substituted for the trustees first designated in the
deed of trust, was the attorney for the plaintiff. He appears to have
strictly protected the interests of his client at all stages. The whole
transaction, the proceedings leading to, and the sale, were adversary.
Appellant was no doubt badly in need of funds. It could not meet the demands
of the deed of trust, or raise the amount required to prevent the sale to
plaintiff. It must suffer the consequences.
The judgment is affirmed.
No default occurred.
The evidence presented that no amounts were due are:

No payments were due.
Under the terms of the trust agreement
At p. 9.
Foreclosure by Sale. Upon an Event of Default under this Deed of Trust,

Beneficiary may declare the entire Indebtedness secured by this Deed of Trust
immdediately due and payable by delivery to Trustee of written declaration of
default and demand for sale and of written notice of default and of election to
cause to be sold the Property, which notice Trustee shall cause to be filed for
record. Beneficiary also shall deposit with Trustee this Deed of Trust, the Note,
other documents requested by Trustee, and all documents evidencing expenditures
secured hereby. After the lapse of such time as may then be required by law
following the recordation of the notice of default, and notice of sale having been
given as then required by law, Trustee, without demand on Trustor, shall sell the
Property at the time and place fixed by it in the notice of sale, either as a whole
or in separate parcels, and
Two trustees cause confusion as to whether authority to conduct sale is valid
Irregularity must be outside statutory mandated procedure.

I made numerous attempts to call, which were never returned.
There were no itemized statements, to determine whether the beneficiary has made
any advances on default that would constitute recurring obligations
I sent a written letter to inform of the joint tenancy and also to request
information but I never received and return correspondence.
Costs are all uncertain, it does not state the date that they became due to be able
to determine if acceleration is accurate.
Ung v. Koehler, 135 Cal.App.4th 186, 37 Cal.Rptr.3d 311, 2005 Daily Journal
D.A.R. 14,883 (Cal.App. 1 Dist. Dec 28, 2005)
Good case, utilize
Defective statement of notice of default
We therefore proceed to consideration of the more general " ‘ "statutory

scheme of which the statute is a part." ‘ " (State v. Altus Finance, supra,
36 Cal.4th at p. 1296, 32 Cal.Rptr.3d 498, 116 P.3d 1175.) The exercise of
the power of sale in a deed of trust "is carefully circumscribed by statute."
(Monterey S.P. Partnership v. W.L. Bangham, Inc., supra, 49 Cal.3d at p. 460,
261 Cal.Rptr. 587, 777 P.2d 623.) Under these statutes, the beneficiary of a
deed of trust must record a notice of default prior to exercising a power of
sale. (§§ 2924, 2924b; U.S. Hertz, Inc. v. Niobrara Farms (1974) 41
Cal.App.3d 68, 86, 116 Cal.Rptr. 44.) The contents of the notice of default
are specified by section 2924. In addition to identifying the encumbered
property, the notice of default must "contain[ ] a statement that a breach of
the obligation for which the ... transfer in trust is security has occurred,
and set[ ] 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...." [FN6] (§ 2924.)
FN6. Section 2924c, subdivision (b)(1) also specifies the text of the notice
of right to cure and reinstatement that must be included in every notice of
default.
" ‘A purpose of the required statement in the notice of default is to afford

the debtor an opportunity to cure the default and obtain reinstatement of the
obligation within three months after the notice of default as provided in
section 2924c of the Civil Code. [Citation.]’ [Citation.] The debtor is to be
given enough information so the default can be cured. ‘[T]he statute is
sufficiently complied with if the notice of default contains a correct
statement of some breach or breaches sufficiently substantial in their nature
to authorize the trustee or beneficiary to declare a default and proceed with
a foreclosure.’ [Citation.]" (Little v. Harbor Pacific Mortgage Investors
(1985) 175 Cal.App.3d 717, 720, 221 Cal.Rptr. 59.) Because nonjudicial
foreclosure is a "drastic sanction" and a "draconian remedy" (Baypoint
Mortgage Corp. v. Crest Premium Real Estate etc. Trust (1985) 168 Cal.App.3d
818, 827, 830, 214 Cal.Rptr. 531), " ‘[t]he statutory requirements must be
strictly complied *203 with, and a trustee’s sale based on statutorily
deficient notice of default is invalid.’ " (Anderson v. Heart Federal Sav. &
Loan Assn. (1989) 208 Cal.App.3d 202, 211, 256 Cal.Rptr. 180, quoting Miller
v. Cote (1982) 127 Cal.App.3d 888, 894, 179 Cal.Rptr. 753.)
While section 2924 does not expressly require a beneficiary to state the
date on which the underlying obligation became due when recording a notice of
default, there are times when a beneficiary will need to state that date in
order to provide a complete description of the nature of the breach. The
beneficiary runs a clear legal risk of invalidity by omitting that date when
it is necessary for clarity. **A vague description of the breach, such as the
bare statement that "a payment was not made when due," fails to satisfy the
statutory purpose of placing the obligor on sufficient notice of the nature
of the breach to allow challenge or satisfaction. Further, unless the date on
which a required payment was due is stated in the notice, the notice might
not demonstrate that the breach is " ‘sufficiently **323 substantial in ...
nature to authorize the trustee or beneficiary to declare a default and
proceed with a foreclosure.’ " (Little v. Harbor Pacific Mortgage Investors,
supra, 175 Cal.App.3d at p. 720, 221 Cal.Rptr. 59, quoting Birkhofer v. Krumm
(1938) 27 Cal.App.2d 513, 523-524, 81 P.2d 609.)
With this background, it becomes clear that plaintiff’s argument creates a

serious dilemma for a beneficiary attempting nonjudicial foreclosure after
more than 10 years have elapsed from maturity of the underlying debt. If the
previously recorded documents do not disclose the final maturity date of the
obligation, section 882.020, subdivision (a)(2), grants the beneficiary 60
years from the date of recording of the deed of trust to seek nonjudicial
foreclosure. As a prerequisite to seeking nonjudicial foreclosure, however,
section 2924 requires such a beneficiary to record a notice of default.
Unless the beneficiary is willing to run a risk of insufficiency of notice,
the notice of default will state the final maturity date in its description
of the nature of the breach. Upon recordation of the notice of default,
plaintiff’s interpretation would instantly reduce the time for nonjudicial
foreclosure from 60 years to 10 years, since recordation of the notice would
make it possible to ascertain the final maturity date from the record.
Because, under our hypothetical, those 10 years had already elapsed,
recording the notice of default would deprive the beneficiary of nonjudicial
foreclosure.
Little v. Harbor Pacific Mortgage Investors, 175 Cal.App.3d 717, 221

Cal.Rptr. 59 (Cal.App. 4 Dist., Dec 13, 1985)
But this still does not answer the Littles’ concerns. (3)Even if Harbor had
the right to pay off the first, the Littles were still entitled to sufficient
notice of the alleged breach. "A purpose of the required statement in the
notice of default is to afford the debtor an opportunity to cure the default
and obtain reinstatement of the obligation within three months after the
notice of default as provided in section 2924c of the Civil Code.
[Citation.]" ( System Inv. Corp. v. Union Bank (1971) 21 Cal.App.3d 137, 153
[98 Cal.Rptr. 735].) The debtor is to be given enough information so the
default can be cured. "[T]he statute is sufficiently complied with if the
notice of default contains a correct statement of some breach or breaches
sufficiently substantial in their nature to authorize the trustee or
beneficiary to declare a default and proceed with a foreclosure." ( Birkhofer
v. Krumm (1938) 27 Cal.App.2d 513, 523-524 [81 P.2d 609].)
Here the notice indicated "payment[s] had not been made of: The installment
of interest which became due September 15, 1980, and all subsequent
installments of interest, and delinquent taxes, if any, plus a late charge of
*721 $25.83 for each payment delinquent more than ten days." No mention was
made of the obligation on the first or any alleged deficiency. [FN6]
FN6 We do not, however, agree with the Littles’ further contention a second
notice is always required each time a payment is made. The purpose of the
statute is to put the debtor on notice as to which breaches the lienholder
wishes cured. It would be sufficient if the original notice includes a
specific reference to the obligation. Here, for example, the notice indicates
Harbor will look to the Littles for delinquent taxes, if any. Thus the notice
would have been sufficient if it had also indicated a reference to delinquent
payments, if any, on the first.
Section 2924c requires the notice must "[set] forth the nature of such
breach." The information contained in this notice did not comply with that
mandate. We conclude, therefore, the trial court abused its discretion in
granting summary judgment. Harbor improperly refused the Littles’ tender.
Judgment reversed. Appellant to receive costs on appeal.
Satisfy arguments of court raised in Knapp v. Doherty
Brown v. Busch, 152 Cal.App.2d 200, 313 P.2d 19 (Cal.App. 3 Dist. Jul 01,
1957)
Statement by trustee that title was not insured was no unfair, because
it is not a duty under Section 2924, does not require it. As the law
provides
Case with bad result
(1a, 1b) Trust Deeds § 70--Sale--Conduct of Sale.

Notwithstanding that the trustee under a trust deed was the only title
company in the county and that its refusal to guarantee a title effectively
made it unmarketable, nevertheless a sale under the deed was not established
as unfair by the fact that the trustee announced, at the sale, that it did
not guarantee the title, nor was the sale rendered unfair by the fact that,
at such sale, the attorney for the administrator of the beneficiary’s estate
truthfully declared that an irrigation system on the land had not been
entirely paid for. *201
(6) Trust Deeds § 55--Sale.

On a sale under a trust deed, the trustee sells the title he receives; it is
not his duty to guarantee the title in any way or to assure anyone that the
title is good and marketable, and even if the title is defective, the trustee
must still, on proper demand, sell such title as he took.
See Cal.Jur.2d, Mortgages, § 453 et seq.; Am.Jur., Mortgages, § 647 et seq.

(7) Trust Deeds § 78--Sale--Grounds for Relief--Inadequacy of Price.
Inadequacy of price is not sufficient ground for setting aside a trustee’s
sale legally conducted, in the absence of proof of some element of fraud,
unfairness or oppression by which the result was brought about.
In view of the fact that the trustee was the Title Guaranty Company, it would
seem reasonable for them to inform all prospective buyers that the trustee at
this sale does not guarantee or warrant title. This is a mere statement of
the true significance of the trustee’s deed which carries no warranty of
title, but conveys only such title as the trustee received. The statement
does not appear to be untrue, unfair, fraudulent or misleading. The
disclosure by Attorney Brazier of certain indebtedness for irrigation
installations on the land, was necessary and proper in fairness to all
prospective purchasers.’ (7) The Supreme Court in Central Nat. Bank v. Bell,
5 Cal.2d 324, 328 [54 P.2d 1107], said: ‘It is no new doctrine in this state
that mere inadequacy of price is not sufficient ground for setting aside a
trustee’s sale legally conducted, in the absence of proof of some element of
fraud, unfairness or oppression by which the result is brought about.’
The judgment appealed from is affirmed.
In order to engage in the commission of the offense of penal code

section, in order to cover the fact that they had a void deed. Cover
the fact of their void deed with a layer of fraud.
Devise a false trustee sale
Conspired to engage in the criminal offense of engineering a false

trustee sale and filing a false deed in
Conspired and schemed and engaged in overt acts to engineer a false

trustee sale and the criminal offense of filing a false deed
To defraud Soon Chey of her property.
Conspired and schemed to engage
Hold an illegal sale
Block v. Tobin, 45 Cal.App.3d 214, 119 Cal.Rptr. 288 (Cal.App. 1 Dist. Feb
10, 1975)
Holding a mock sale and then secretly selling to the beneficiary
Prospective bidders at a trustee’s sale under a deed of trust sued the

beneficiary, trustee, and those who conducted the sale, for damages for
deceit and the holding of a mock auction. The complaint alleged that
defendants published notice that the property subject to the deed of trust
would be sold at public auction to satisfy the secured obligation, but that
defendants had no real intention to sell the property at auction, planning to
arrange matters so that the beneficiary could bid the property in without
competition, and that a secretly substituted trustee secretly sold the
property to the beneficiary for $26,700, whereas the fair market value was
$36,000. It was also alleged that defendants violated several statutes
applicable to sales of real estate and to the actions of auctioneers, and
that plaintiffs were entitled to maintain the action to enforce the trustee’s
fiduciary duty to the trustor. Plaintiffs claimed damages for their loss of
opportunity to purchase the property at the sale, for compensation for loss
of time and effort in preparing to bid, and also sought punitive damages. The
court entered a judgment of dismissal after sustaining defendants’ demurrer
to the complaint. (Superior Court of Santa Clara County, No. 300949, Edward
L. Brady, Judge. FN*)
The Court of Appeal reversed as to the cause of action for deceit, and
affirmed as to the other causes of action. The court held that plaintiffs
stated a cause of action for deceit under Civ. Code, § 1709, providing that
actionable deceit occurs if a material and knowingly false representation,
made with intent to induce action, causes reasonable and detrimental
reliance. The court rejected defendants’ argument that they could not have
formed an intention to defraud purchasers at the sale if, as alleged, they
had never really intended to sell the property at public auction. The court
held that the alleged deceit was the fraudulent announcement of the public
auction, not the making of false statements to induce the purchase of the
property. The court further held that plaintiffs were not entitled to recover
the difference between the fair market value and the price actually paid by
the beneficiary, since there was no allegation in the complaint that
plaintiffs would have been the successful bidders had the public auction
actually been held, and, therefore their allegations of compensatory damages
were effective only as to the amount allegedly incurred in preparing to bid.
No breach had occurred. There is no recission of the notice of sale.

It had the effect of creating two trustees and two notices of sale.
See Dimock v. Emerald.
Notice of the Substitution has to be attached to the Notice of Sale

and recorded. [not correct]
Conflicting statements in substitution of trustee in trust deed and

the performing of the notice of default by the agent for the
beneficiary.
Young Chey was the guarantor, was Bank of the West required to go
after Computer Sonics Incorporated first.
Creation of suretyship is enumerated under CC 2787 to CC 2856
Change from payment of principal to just interest.
An extension of time of payment without consent of the surety constitutes a

material alteration of the original obligation and discharges the surety, and
in such circumstances, injury to the surety is presumed and is not a matter
which the creditor may inquire into. Wise v. Clapper (App. 4 Dist. 1968) 65
Cal.Rptr. 231, 257 Cal.App.2d 770. Principal And Surety 104(1)
Where there is an extension of time by the creditor to the principal without
the consent of the surety, the question of the extent of the injury which the
surety sustains therefrom cannot be inquired into, and the creditor cannot
show that the principal debtor was then wholly or partially insolvent and
remained so; the surety being released by the mere fact that the contract is
materially altered without his consent. Braun v. Crew (1920) 183 Cal. 728,
192 P. 531. Principal And Surety 104(1)
**A creditor’s fraud, which may consist of intentional or negligent

misrepresentation or active suppression of the truth, will discharge surety
as to any subsequently incurred liability. Sumitomo Bank of Cal. v. Iwasaki
(1968) 73 Cal.Rptr. 564, 70 Cal.2d 81, 447 P.2d 956. Principal And Surety
41; Principal And Surety 42
See word file: “cc_2819_extension_of_time digest.doc”
The terms of the trust deed only authorized First Santa Clara Corp to
record the notice of Default. ???
From Miller & Starr, Deeds of Trust, Section 10:10, page 41
No lien without underlying obligation. The deed of trust must secure

some debt or obligation; the lien does not attach to prior to the
creation of an underlying debt or obligation.1
There can be no lien of a mortgage or trust deed without and

underlying and enforceable debt or obligation. 2
Alliance Mortgage v. Rothwell, 10 Cal.4th 1226, 1235; Goodfellow v.

Goodfellow, 219 Cal. 548, 554, 27 P.2d 898 (1933); Fleming v. Kagan,
189 Cal.App.2d 791, 796, 11 Cal.Rptr. 737; Turner v. Gosden, 121
Cal.App.20, 22, 8 P.2d 505
Notice of Default doesn’t state principal payment and when it was due?
Is this a failure to comply under 2924 under all the authorities.
This caused the confusion of not knowing whether the notice was given.
**Include the description of title vesting to the trustee.

Either from case law or Miller & Starr or Bernhardt Roger
Ch 11, Statutory analysis, page 180,
This is ambiguous
The statute is permits,

“Legislators cannot foresee all situations in which a statute may
apply, so many times words and phrases are drafted without specificity
that the statute will apply to a broader range of circumstances.”
mortgagee: n. the person or business making a loan that is secured by

the real property of the person (mortgagor) who owes him/her/it money.
From the plain meaning of the words in the Legislative Intent in
Miller & Starr, California Real Estate 3D, Chapter 12, Section 12:23, B. Joint
Tenancies,pp. 12-61 - 12-62, states,”
“Characteristics; creation-Right of survivorship
Death of a joint tenant. Whe one joint tenant dies, the entire estate automatically
belongs to the surviving joint tenant(s).5 This right attaches as a result of the
original grant that created the joint tenancy, and not as a result of the death of
a joint tenant.6 On the joint tenant’s death, the surviving joint tenant or tenants
continue in the ownership of the entire property, including the former title of the
deceased joint tenant.7 The interest of the deceased joint tenant passes to the
surviving joint tenant or tenants by operation of law.8
5
Grothe v. Cortlandt Corp., 11 Cal.App.4th 1313, 1317, 15 Cal.Rptr.2d 38 (4th
Dist. 1992); Estate of Blair, 199 Cal.App.3d 161, 167, 244 Cal.Rptr.627(4th Dist.
1988); Rupp v. Kahn, 246 Cal.App.2d 188, 196, 55 Cal.Rptr.108(2d Dist. 1966);
Ziegler v. Bonnell, 52 Cal.App.2d 217, 219-220, 126 P.2d 118(1st Dist. 1942).
6
In re Gurnsey’s Estate, 177 Cal. 211, 215, 170 P.402 (1918); Grothe v. Cortlandt
Corp., 11 Cal.App.4th 1313, 1317, 15 Cal.Rptr.2d 38 (4th Dist. 1992); Rupp v.
Kahn, 246 Cal.App.2d 188, 196, 55 Cal.Rptr.108(2d Dist. 1966); In re Moore’s
Estate 165 Cal.App.2d 455, 460, 332 P.2d 108 (1st Dist. 1958); Goldberg v.
Goldberg, 217 Cal.App.2d 623, 628, 32 Cal.Rptr. 93(2d Dist. 1963); In re Hobart’s
Estate, 82 Cal.App.2d 502, 507, 187 P.2d 105(1st Dist. 1947).
7
Siberell v. Siberell, 214 Cal. 767, 771, 7 P.2d 1003 (1932); De Witt v. City of
San Francisco, 2 Cal. 289, 297, 1852 WL 566 (1852); Cole v. Cole, 139 Cal.App.2d
691, 694, 294 P.2d 494 (2d Dist.1956); Plante v. Gray, 68 Cal.App.2d 582, 588, 157
P.2d 421 (2d Dist. 1945); Dando v. Dando, 37 Cal.App.2d 371, 372, 99 P.2d 561 (1st
Dist. 1940).
See also In re Moy’s Estate, 217 Cal.App.2d 24, 29, 31 Cal.Rptr. 374 (1st Dist.
1963)
8
Tenhet v. Boswell, 18 Cal.3d 150, 158, 133 Cal.Rptr. 10, 554 P.2d 330 (1976);
Estate of Gebert, 95 Cal.Ap.3d 370, 376, 157 Cal.Rptr. 46 (2d Dist. 1979); Estate
of Wilson, 64 Cal.App.3d 786, 791, 134 Cal.Rptr. 749 (5th Dist. 1976)”
And, Miller & Starr, California Real Estate 3D, Chapter 12, Section 12:31, B.
Joint Tenancies,pp. 12-80, states,”
Execution sale after death of a debtor joint tenant,

“Execution sale after death of a debtor joint tenant.
Although the execution lien is recorded before the death of the debtor joint
tenant, and the lien is only on the interest of that joint tenant, if there is no
execution sale before the debtor’s death, an attempt to sell the debtor’s interest
after death is not effective because the interests of the deceased joint tenant
have already passed by right of survivorship to the surviving joint tenant. The
10
surviving joint tenant acquires the entire title, free and clear of the lien
10
Grothe v. Cortlandt Corp. 11 Cal.App.4th 1313, 1321, 15 Cal.Rptr.2d 38 (4th Dist.
1992); Clark v. Carter, 265 Cal.App.2d 291, 294, 70 Cal.Rptr. 923 (4th Dist. 1968)
(rejected on other grounds by Riddle v. Harmon, 102 Cal.App.3d 524, 162 Cal.Rptr.
530, 7 A.L.R.4th 1261 1st Dist. 1980)); Hamel v. Gootkin, 202 Cal.App.2d 27,
28-29, 20 Cal.Rptr.372 (2d. Dist. 1962); Ziegler v. Bonnell, 52 Cal.App.2d 217,
220, 126 P.2d 118 (1st Dist.1942)”
12 U.S.C. § 1701j-3. Preemption of due-on-sale prohibitions
(a) Definitions
For the purpose of this section--
(1) the term “due-on-sale clause” means a contract provision which authorizes a
lender, at its option, to declare due and payable sums secured by the lender’s
security instrument if all or any part of the property, or an interest therein,
securing the real property loan is sold or transferred without the lender’s prior
written consent;
(2) the term “lender” means a person or government agency making a real property
loan or any assignee or transferee, in whole or in part, of such a person or
agency;
(3) the term “real property loan” means a loan, mortgage, advance, or credit sale
secured by a lien on real property, the stock allocated to a dwelling unit in a
cooperative housing corporation, or a residential manufactured home, whether real
or personal property; and
(4) the term “residential manufactured home” means a manufactured home as defined
in section 5402(6) of Title 42 which is used as a residence; and
(5) the term “State” means any State of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, the Northern
Mariana Islands, American Samoa, and the Trust Territory of the Pacific Islands.
(b) Loan contract and terms governing execution or enforcement of due-on-sale
options and rights and remedies of lenders and borrowers; assumptions of loan rates
(1) Notwithstanding any provision of the constitution or laws (including the

judicial decisions) of any State to the contrary, a lender may, subject to
subsection (c) of this section, enter into or enforce a contract containing a due-
on-sale clause with respect to a real property loan.
(2) Except as otherwise provided in subsection (d) of this section, the exercise by
the lender of its option pursuant to such a clause shall be exclusively governed by
the terms of the loan contract, and all rights and remedies of the lender and the
borrower shall be fixed and governed by the contract.
(3) In the exercise of its option under a due-on-sale clause, a lender is

encouraged to permit an assumption of a real property loan at the existing contract
rate or at a rate which is at or below the average between the contract and market
rates, and nothing in this section shall be interpreted to prohibit any such
assumption.
(c) State prohibitions applicable for prescribed period; subsection (b) provisions
applicable upon expiration of such period; loans subject to State and Federal
regulation or subsection (b) provisions when authorized by State laws or Federal
regulations
(1) In the case of a contract involving a real property loan which was made or
assumed, including a transfer of the liened property subject to the real property
loan, during the period beginning on the date a State adopted a constitutional
provision or statute prohibiting the exercise of due-on-sale clauses, or the date
on which the highest court of such State has rendered a decision (or if the highest
court has not so decided, the date on which the next highest appellate court has
rendered a decision resulting in a final judgment if such decision applies State-
wide) prohibiting such exercise, and ending on October 15, 1982, the provisions of
subsection (b) of this section shall apply only in the case of a transfer which
occurs on or after the expiration of 3 years after October 15, 1982, except that--
(A) a State, by a State law enacted by the State legislature prior to the close of
such 3-year period, with respect to real property loans originated in the State by
lenders other than national banks, Federal savings and loan associations, Federal
savings banks, and Federal credit unions, may otherwise regulate such contracts, in
which case subsection (b) of this section shall apply only if such State law so
provides; and
(B) the Comptroller of the Currency with respect to real property loans originated
by national banks or the National Credit Union Administration Board with respect to
real property loans originated by Federal credit unions may, by regulation
prescribed prior to the close of such period, otherwise regulate such contracts, in
which case subsection (b) of this section shall apply only if such regulation so
provides.
(2)(A) For any contract to which subsection (b) of this section does not apply
pursuant to this subsection, a lender may require any successor or transferee of
the borrower to meet customary credit standards applied to loans secured by similar
property, and the lender may declare the loan due and payable pursuant to the terms
of the contract upon transfer to any successor or transferee of the borrower who
fails to meet such customary credit standards.
(B) A lender may not exercise its option pursuant to a due-on-sale clause in the
case of a transfer of a real property loan which is subject to this subsection
where the transfer occurred prior to October 15, 1982.
(C) This subsection does not apply to a loan which was originated by a Federal
savings and loan association or Federal savings bank.
(d) Exemption of specified transfers or dispositions
With respect to a real property loan secured by a lien on residential real property
containing less than five dwelling units, including a lien on the stock allocated
to a dwelling unit in a cooperative housing corporation, or on a residential
manufactured home, a lender may not exercise its option pursuant to a due-on-sale
clause upon--
(1) the creation of a lien or other encumbrance subordinate to the lender’s

security instrument which does not relate to a transfer of rights of occupancy in
the property;
(2) the creation of a purchase money security interest for household appliances;
**(3) a transfer by devise, descent, or operation of law on the death of a joint

tenant or tenant by the entirety;
(4) the granting of a leasehold interest of three years or less not containing an
option to purchase;
(5) a transfer to a relative resulting from the death of a borrower;
(6) a transfer where the spouse or children of the borrower become an owner of the
property;
(7) a transfer resulting from a decree of a dissolution of marriage, legal

separation agreement, or from an incidental property settlement agreement, by which
the spouse of the borrower becomes an owner of the property;
(8) a transfer into an inter vivos trust in which the borrower is and remains a
beneficiary and which does not relate to a transfer of rights of occupancy in the
property; or
(9) any other transfer or disposition described in regulations prescribed by the

Federal Home Loan Bank Board.
(e) Rules, regulations, and interpretations; future income bearing loans subject to
due-on-sale options
(1) The Federal Home Loan Bank Board, in consultation with the Comptroller of the
Currency and the National Credit Union Administration Board, is authorized to issue
rules and regulations and to publish interpretations governing the implementation
of this section.
(2) Notwithstanding the provisions of subsection (d) of this section, the rules and
regulations prescribed under this section may permit a lender to exercise its
option pursuant to a due-on-sale clause with respect to a real property loan and
any related agreement pursuant to which a borrower obtains the right to receive
future income.
(f) Effective date for enforcement of Corporation owned loans with due-on-sale
options
The Federal Home Loan Mortgage Corporation (hereinafter referred to as the

“Corporation”) shall not, prior to July 1, 1983, implement the change in its policy
announced on July 2, 1982, with respect to enforcement of due-on-sale clauses in
real property loans which are owned in whole or in part by the Corporation.
(g) Balloon payments
Federal Home Loan Bank Board regulations restricting the use of a balloon payment
shall not apply to a loan, mortgage, advance, or credit sale to which this section
applies.
Section 2924, of the Civil Code of the State of California.
“(a) Every transfer of an interest in property, other than in trust,

made only as a security for the performance of another act, is to be
deemed a mortgage, except when in the case of personal property it is
accompanied by actual change of possession, in which case it is to be
deemed a pledge. Where, by a mortgage created after July 27, 1917, of
any estate in real property, other than an estate at will or for
years, less than two, or in any transfer in trust made after July 27,
1917, of a like estate to secure the performance of an obligation, a
power of sale is conferred upon the mortgagee, trustee, or any other
person, to be exercised after a breach of the obligation for which
that mortgage or transfer is a security, the power shall not be
exercised except where the mortgage or transfer is made pursuant to an
order, judgment, or decree of a court of record, or to secure the
payment of bonds or other evidences of indebtedness authorized or
permitted to be issued by the Commissioner of Corporations, or is made
by a public utility subject to the provisions of the Public Utilities
Act, until all of the following apply:
(1) The trustee, mortgagee, or beneficiary, or any of their

authorized agents shall first file for record, in the office of
the recorder of each county wherein the mortgaged or trust
property or some part or parcel thereof is situated, a notice
of default. That notice of default shall include all of the
following:”
Section 1858 of the Code of Civil Procedure of the State of California

provides:
In the construction of a statute or instrument, the office of the

judge is simply to ascertain and declare what is in terms or in
substance contained therein, not to insert what has been omitted, or
to omit what has been inserted; and where there are several provisions
or particulars, such a construction is, if possible, to be adopted as
will give effect to all.
Subdivision (1) is dependent on the main Section Paragraph (A) which

states, “Every transfer of an interest in property, other than in
trust, made only as a security for the performance of another act, is
to be deemed a mortgage,... to secure the performance of an
obligation, a power of sale is conferred upon the mortgagee, trustee,
or any other person, to be exercised after a breach of the obligation
for which that mortgage or transfer is a security,
Subdivision (1)is a conditional clause dependent on the paragraph (a)

being true that the power of sale being conferred upon the mortgagee,
trustee or any other person, to be exercised after a breach of the
obligation for which that mortgage or transfer is a security
In Section 2924(a) is the main clause which restricts Subdivision 1

which is its dependent clause. Since the powers within a trust deed
are contractual powers, they must be conferred by contract. Section
2924-2924h are restrictive statutes (and are not enabling statutes)
Are to be first authorized by the terms of the contract,
Who is given the power of sale is authorized under the terms of the
trust deed. And the Civil Code Section 2924 et seq. are restrictive
statutes. Under the terms of the trust deed (and as what the law
permits) (and as what the law mandatorily requires)
restrict and regulate, are restrictive and regulative statutes
Who is given the power of sale is authorized under the terms of the
trust deed. And C.C. 2924 are statutes which restrict and regulate,
under the terms of the trust deed.
Is a conditional statement where a mortgage exists conferring the

power of sale to a mortgagee, trustee, or any other person
The Civil Code Section 2924 and exercise the power of sale has been defined by
decisional law.
In Garfinkle v. Superior Court (1978) 21 Cal.3d 268, 578 P.2d 925, 146
Cal.Rptr.208. the court stated as,
“In 1917, the Legislature impliedly recognized the validity of this contractual
remedy when, acting under its police power, it established certain minimum
standards for conducting nonjudicial foreclosures, by placing various restrictions
on the creditors’ exercise of the power of sale in order to protect the
trustor/debtor against forfeiture...
Since that time these statutory protections have been **932 expanded into a
comprehensive statutory scheme regulating in detail all aspects of the nonjudicial
foreclosure process. (See Smith v. Allen, supra, 68 Cal.2d 93, 96, 65 Cal.Rptr.
153, 436 P.2d 65.)
In Smith v. Allen (1968) 68 Cal.2d 93, 96 436 P.2d 65, 65 Cal.Rptr. 153 the court
stated, “On the other hand, the rights of a borrower and a lender upon a default
under a deed of trust are the subject of a comprehensive legislative scheme
designed to provide adequate protection to the borrower against forfeitures.
Thus, in order for a lender to realize upon his security through the exercise of a
power of sale contained in his deed of trust, he must record a notice of default,
and three months must elapse after the recording before a notice of sale is
published or posted. (Civ. Code, s 2924.)… and at least 20 days’ notice of the sale
must be given. (Civ.Code, s 2924;
In Garfinkle v. Superior Court (1978) 21 Cal.3d 268, 279 578 P.2d 925, 146
Cal.Rptr.208. the court stated,
“The nonjudicial foreclosure statutes do not authorize or compel inclusion of a

power of sale in a deed of trust or provide for such a power of sale when one has
not been included by the parties. Nor do these statutes compel exercise of the
power of sale. The decision whether to exercise the power of sale is a
determination to be made by the *279 creditor. The statutes merely restrict and
regulate the exercise of the power of sale”
And,
“these statutory regulations were enacted primarily for the benefit of the trustor
and for the greatest part limit the creditors’ otherwise unrestricted exercise of
the contractual power of sale upon default by the trustor.” (Garfinkle v. Superior
Court, supra, 21 Cal.3d at p. 279)
And,
“the power of sale exercised by the trustee on behalf of the lender/creditor in

nonjudicial foreclosures is a right authorized solely by the contract between the
lender and trustor as embodied in the deed of trust. (Davidow v. Corporation of
America, supra, 16 Cal.App.2d 6, 13, 60 P.2d 132;U. S. Hertz, Inc. v. Niobrara
Farms, supra, 41 Cal.App.3d 68, 87, 116 Cal.Rptr. 44.)” (Garfinkle v. Superior
Court, supra, 21 Cal.3d at p. 277)
And,
“the power of sale exercised by the trustee in nonjudicial foreclosure is created

by contract, not by statute.” (Garfinkle v. Superior Court, supra, 21 Cal.3d at
p. 277)
And
This is also clear from a reading of ample case law on trust deeds
Must first be authorized by contract
If the legislature wanted to make this clause apply independently it
[and then it provides the procedures for the exercise of the power of
sale]
(1) The trustee, mortgagee, or beneficiary, or any of their

authorized agents shall first file for record, in the office of
the recorder of each county wherein the mortgaged or trust
property or some part or parcel thereof is situated, a notice
of default. That notice of default shall include all of the
following:”
If the state law enabled certain provisions then the decision of

Garfinkle v. Superior Court would be inapplicable.
Prescribe the minimum restrictions to the power of sale
Miller & Starr, California Real Estate 3D, Chapter 10, Deeds of Trust,
Section 10:2, page 16 states,
“title passes to the trustee under the deed of trust, 19 the trustee
only has title to the extent necessary for the execution of the trust,
20
”
And,
“Legal title passes to the trustee solely for the purpose of securing
the performance of the obligation, and the trustee receives only such
title as is necessary for the execution of its trust. 23 Until the
default occurs or the obligation is satisfied by the trustor, the
trustee’s title remains inactive. 24 (Id. at p. 16)
19
Bryant v. Hobart, 44 Cal.App.315, 317, 186 P.379 (1st Dist. 1919)
§20:3 (parties).
20
§10:4 (capacity and authority of trustee).
23
“[S]uch a [trust] deed, though in form a grant, is really only a
mortgage and does not convey the fee...[;] while the legal title
passes thereunder, and the trustees cannot be held to hold a mere
‘lien’ on the property, it is practically and substantially only a
mortgage with power of sale ... Except as to the trustees and those
holding under them, the trustor or his successor is treated by our law
as the holder of the legal title... The estate of the trustees
absolutely ceases upon the payment of the debt, [citation omitted]
leaving the whole title in the grantor in whom it was vested at the
execution of the trust deed, or his successors, and leaving nothing in
the trustees except the bare legal title of record, which can be
compelled to reconvey to the owner simply to make the record title
clear.” Bank of Italy Nat. Trust & Sav. Ass’n v. Bentley, 217 Cal.
644, 656-657, 20 P.2d 940 (1933)
24
§10:3 (parties), §10:4 (capacity and authority of trustee).
In Dimock v. Emerald Properties LLC (2000) 81 Cal.App.4th 868, 874, 97

Cal.Rptr.2d 255, the court stated,
“California Appellate “courts have adopted a title theory of deeds of

trust, (Bank of Italy etc. Assn. v. Bentley (1933) 217 Cal. 644, 655
[20 P.2d 940.])(4) ‘[A] deed of trust differs from a mortgage in that
title passes to the trustee in the case of a deed of trust, while, in
the case of a mortgage, the mortgagor retains title; that the statute
of limitations never runs against the power of sale in a deed of
trust”
In Dimock v. Emerald Properties LLC, (2000) 81 Cal.App.4th
868, 871 97 Cal.Rptr.2d 255
“(Civ. Code, [FN1] § 2934a, subd. (a).) By its terms the statute provides
that after such a substitution has been recorded, ‘the new trustee shall succeed
to all the powers, duties, authority, and title granted and delegated
to the trustee named in the deed of trust.’ (§ 2934a, subd. (a)(4).)”
And
“On August 15, 1996, Bankers recorded a substitution of trustee which
substituted defendant and respondent Calmco Trustee Services, Inc. (Calmco), as
the trustee of record in the place and stead of Commonwealth. The substitution
was prepared by TD acting on Bankers’s behalf.
Also on August 15, 1996, TD, acting on behalf of Calmco, recorded a notice
of default and election to sell. Consistent with statutory requirements, the
notice of default stated: ‘No sale date may be set until three months from the
date this notice of default may be recorded.’
According to an employee of TD, the recording of the Calmco substitution
and the recording of the Calmco notice of default were mistakes. According to the
TD employee, at the time these documents were recorded TD did not know that it
had previously recorded a notice of default on Commonwealth’s behalf and that a
foreclosure file already existed with respect to Dimock’s home. When a title
company advised TD about the earlier Commonwealth notice of default, TD
‘abandoned’ the Calmco file it had created to process the Dimock foreclosure and
instead proceeded with the foreclosure using its earlier Commonwealth file.
Because it discovered the error shortly after recording the documents, TD

did not send Dimock copies of either the Calmco substitution or the Calmco notice
of default. However, other than abandoning its own file on the matter, TD did not
record any document which expressly abandoned or otherwise vacated the Calmco
substitution or Calmco notice of default.” (Dimock v. Emerald Properties
LLC, supra, 81 Cal.App.4th 872)
“On August 27, 1996, TD, acting on behalf of Commonwealth, recorded a
notice of trustee’s sale which set September 18, 1996, as the date for a *873
trustee’s sale.” (Dimock v. Emerald Properties LLC, supra, 81
Cal.App.4th pp. 872-873)
“A. Calmco Had the Sole Power to Convey the Property
Under the unambiguous terms of section 2934a, [FN2] subdivision (a)(4),
the recording of the substitution of trustee transferred to Calmco the exclusive
*875 power to conduct a trustee’s sale. This plain reading of the statute is
consistent with the law as it existed before the predecessor statute was enacted
in 1935 and the power to substitute a trustee depended solely on the express
provisions of a deed of trust. (See Witter v. Bank of Milpitas (1928) 204 Cal.
570, 577-578 [269 P. 614]; Pacific S. & L. Co. v. N. American etc. Co. (1940) 37
Cal.App.2d 307, 309-310 [99 P.2d 355 ].) " ‘ "Upon the appointment being made
under the power, the new trustee becomes vested, ipso facto, with the title to
the trust premises and is clothed with the same power as if he had been
originally named ...." ‘ " (Witter v. Bank of Milpitas, supra, 204 Cal. at p.
578.) *876” (Dimock v. Emerald Properties LLC, supra, 81 Cal.App.4th pp. 874-876)
And the court held,
“there simply cannot be at any given time more than one person with the power to
conduct a sale under a deed of trust. We would create inestimable levels of
confusion, chaos and litigation were we to permit a beneficiary to appoint multiple

trustees, each one retaining the power to sell a borrower’s property.
The defendants’ suggestion that TD, by simply ‘abandoning’ its internal
Calmco foreclosure file, could thereby effectively reinstate Commonwealth as
trustee is similarly unsupported by any authority and is almost as impractical as
the notion there could be multiple trustees with the power to convey.” ((Dimock v.
Emerald Properties LLC, supra, 81 Cal.App.4th at p. 876)
And the court held,
“Where such recitals appear on the face of a deed but the deed also sets forth
facts which are inconsistent with the recital of irregularity, the deed has been
found void on the basis that the deed showed that the recitals were not valid.
(Ibid., citing Holland v. Pendleton Mtge. Co. (1943) 61 Cal.App.2d 570, 576-577
[143 P.2d 493]” (Dimock v. Emerald Properties L.L.C. 81 Cal.App.4th at p. 877)
In Little v. Cfs Servic Corp. (1987) 188 Cal.App.3d 1354, 1359, 233
Cal.Rptr. 923, the court held,”
“Where there has been a notice defect and conclusive presumption language in a deed
along with recitals as to the various postponements of a sale, the court has held
the sale void on the basis that the deed showed that proper notice could not have
been given. It has been held that the recitals of the postponement dates were
controlling rather than the recitals as to the regularity of the notice. (Holland
v. Pendleton Mtge. Co., supra., 61 Cal.App.2d 570, 576-577.) (Little v. Cfs Service
Corp., 188 Cal.App.3d at p. 1359)
I refer to and incorporate the Bank Of The West, Deed Of Trust, a true and
correct copy is attached hereto as Exhibit “14,” in the Opposition To Relief From
Stay Of Movant and incorporated herein by this reference. And I request the
court to take judicial notice under the authorization of rule 201 of the Federal
Rules of Evidence.
I refer to and incorporate the Alliance Title Company, Notice Of Default,
a true and correct copy is attached hereto as Exhibit “15,” in the Opposition
I refer to and incorporate the Financial Title Company, Notice Of Trustee
Sale, a true and correct copy is attached hereto as Exhibit “Numbered Last,” in the
Opposition To Relief From Stay Of Movant and incorporated herein by this reference.
And I request the court to take judicial notice under the authorization of rule 201
of the Federal Rules of Evidence.
I refer to and incorporate the Financial Title Company, Substitition Of
Trustee, a true and correct copy is attached hereto as Exhibit “Numbered Last,” in
the Movant’s Opposition To Debtors Request For Stay Pending Appeal and Request To
Take Judicial Notice, and incorporated herein by this reference. And I request
the court to take judicial notice under the authorization of rule 201 of the
Federal Rules of Evidence.
Under the terms of the deed of trust only the trustee is authorized to
record a notice of default on a default of the trust deed
The Bank Of The West Deed Of Trust states at pages 9-10,
“Foreclosure by Sale. Upon an Event of Default under this Deed of

Trust, Beneficiary may declare the entire Indebtedness secured by this
Deed of Trust immediately due and payable by delivery to Trustee of
written declaration of default and demand for sale and of written
notice of default and of election to cause to be sold the Property,
which notice Trustee shall cause to be filed for record. Beneficiary
also shall deposit with Trustee this Deed of Trust, the Note, other
documents requested by Trustee, and all documents evidencing
expenditures secured hereby. After the lapse of such time as may
then be required by law following the recordation of the notice of
default, and notice of sale having been given as then required by law,
Trustee, without demand on Trustor, shall sell the Property at the
time and place fixed by it in the notice of sale, either as a whole or
in separate parcels, and in such order as it may determine, at public
auction to the highest bidder for cash in lawful money of the United
States, payable at the time of sale. Trustee may postpone sale of
all or any portion of the Property by public announcement at such time
and fixed by the preceding postponement in accordance with applicable
law. Trustee shall deliver to such purchaser its deed conveying the
Property so sold, but without any covenant or warranty, express or
implied. The recitals in such deed of any matters of facts shall be
conclusive proof of the truthfulness therof. Any person, including
Trustor, Trustee or Beneficiary may purchase at such sale. After
deducting all costs, fees and expenses of Trustee and of this Trust,
including cost of evidence of title in connection with sale, Trustee
shall apply the proceeds of sale to payment of: all sums expended
under the terms hereof, not then repaid, with accrued interest at the
amount allowed by law in effect at the date hereof; all other sums
then secured hereby; and the remainder, if any, to the person or
persons legally entitled thereto.”
And the Deed Of Trust states at page 10,
“Judicial Foreclosure. With respect to all or any part of the Real Property, Lender
shall have the right in lieu of foreclosure by power of sale to foreclose by
judicial foreclosure in accordance with and to the full extent provided by
California law.”
And, the Deed of Trust states at page 11,
“POWER AND OBLIGATIONS OF TRUSTEE. The following provisions relating to the powers
and obligations of Trustee are part of this Deed of Trust:
Trustee. Trustee shall meet all qualifications required for Trustee under
applicable law. In addition to the rights and remedies set forth above, with
respect to all or any part of the Property, the Trustee shall have the right to
foreclose by notice of sale, and Lender shall have the right to foreclose by
judicial foreclosure, in either case in accordance with and to the full extent
provided by applicable law.
Successor Trustee. Lender, at the Lender’s option, may from time to time appoint a
successor Trustee to any Trustee appointed under this Deed of Trust by an
instrument executed and acknowledged by Lender and recorded in the office of the
recorder of Orange County, State of California. The instrument shall contain, in
addition to all other matters required by state law, the names of the original
Lender, Trustee, and Trustor, the book and page where this Deed of Trust is
recorded, and the name and address of the successor trustee, and the instrument
shall be executed and acknowledged by Lender or its successors in interest. The
successor trustee, without conveyance of the Property, shall succeed to all the
title, power, and duties conferred upon the Trustee in this Deed of Trust and by
applicable law. This procedure for substitution of Trustee shall govern to the
exclusion of all other provisions for substitution.
And, the Deed of Trust states at page 12,
“MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of

this Deed of Trust:
Amendments. This Deed of Trust, together with any Related Documents, constitutes
the entire understanding and agreement of the parties as to the matters set forth
in this Deed of Trust. No alteration of or amendment to this Deed of Trust shall be
effective unless given in writing and signed by the party or parties sought to be
charged or bound by the alteration or amendment.”
Section 2953. Validity of waiver by borrower of statutory rights; Liens not

affected by section, of the Civil Code of the State of California, provides,
Any express agreement made or entered into by a borrower at the time of or in

connection with the making of or renewing of any loan secured by a deed of trust,
mortgage or other instrument creating a lien on real property, whereby the borrower
agrees to waive the rights, or privileges conferred upon him by Sections 2924,
2924b, 2924c of the Civil Code or by Sections 580a or 726 of the Code of Civil
Procedure, shall be void and of no effect. The provisions of this section shall not
apply to any deed of trust, mortgage or other liens given to secure the payment of
bonds or other evidences of indebtedness authorized or permitted to be issued by
the Commissioner of Corporations, or is made by a public utility subject to the
provisions of the Public Utilities Act.
And in absence of the terms of the Deed of Trust, waiving the rights or privileges
that section 2953 does not allow to be waived. Or there being some specific statute
that would prohibit the term Or there being and amendment to these terms of the
Deed of Trust, given in writing and signed by the party or parties sought to be
charged or bound by the alteration or amendment which authorizes the Lender to
record a notice of default.
In Mutual Building & Loan Ass’n of Pasadena v. Wiborg, (1943) 59 Cal.App.2d 325,
327-329, 139 P.2d 73, the Appellate Court of the State of California heard
an appeal where the question for determination was “whether the superior
court had jurisdiction to appoint a substitute trustee under a deed of
trust which reserves a joint power in **74 the trustor and the cestui que
trust to make a substitution, where they have not agreed upon a
substitution after the corporate trustee has merged with a kindred
corporation which inherited all the assets, powers and trusts of the
designated trustee.”
Title Guarantee & Trust Co., hereafter referred to as Title Guarantee, was named as
trustee in a deed of trust by respondent Wiborg, which instrument was given to
secure payment of a promissory note payable to appellant. [In its petition to the
superior court under sections 2287 and 2289, Civil Code, appellant recited the
present circumstances of the indebtedness and that on December 19, 1942, pursuant
to section 31b of the Bank Act, Gen.Laws 1937, Act 652, as well as under the
provisions of section 361 of the Civil Code, Title Guarantee became and is now
merged in respondent Title Insurance & Trust Company hereinafter designated Title
Insurance; that the separate, corporate existence of Title Guarantee then and there
ceased; that it surrendered its license to do a bank or trust business or any other
business, that Title Insurance claims that by operation of law as a result of the
merger, it became the trustee. The petition recited further that pursuant to the
provision of paragraph B-7 of the deed of trust it had demanded respondent Wiborg
to join with petitioner in the nomination and appointment of a substitute trustee
in the place of the Title Guarantee; that she had refused to do so; that by reason
of the foregoing facts, there is a vacancy as to the trusteeship under the deed of
trust; that the deed of trust does not provide a practical method of appointment of
a substitute trustee; that by reason of a merger of Title Guarantee with respondent
Title Insurance, by operation of law, Title Insurance became and now is the trustee
under the deed of trust.
The respondents demurred to the petition on the ground *328 that the court has no
jurisdiction or power to grant the relief prayed. Following an order sustaining the
demurrer, petitioner having declined to amend, a judgment of dismissal followed.
The deed of trust contains the following provision:
‘B. It is mutually agreed that:
‘7. Trustor, or if said property shall have been transferred, the then record
owner, together with Beneficiary, may from time to time, by instrument in writing,
substitute a successor or successors to any Trustee named herein or acting
hereunder, which instrument, executed and acknowledged by each and recorded in the
office of the recorder of the county or counties where said property is situated,
shall be conclusive proof of proper substitution of such successor Trustee. * * *
The procedure herein provided for substitution of Trustees shall be exclusive of
all other provisions for substitution, statutory or otherwise.’
[1] Appellant insists that by virtue of the quoted paragraph that Title Insurance
is not substituted as trustee; that despite section 31b of the Bank Act the court
has the power, under sections 2287, 2289 of the Civil Code to act solely upon the
request of the beneficiary under the deed of trust and substitute a new trustee
under the doctrine that one who creates a trust may provide a method for filling
vacancies and for the appointment of substitute trustees. 26 Ruling Case Law 1278;
65 C.J. 575. It then proceeds to attempt to show that paragraph B-7 is the
exclusive procedure for effecting the appointment of a substitute trustee. Since
the deed of trust provides that a substitute trustee may be named by the trustor
‘together with beneficiary’ by a writing recorded in the office of the County
Recorder, it follows that if the trustor declines to join with the beneficiary, in
making a substitution there is no method by which to effect a substitution upon the
petition of the beneficiary alone or otherwise.”
The court stated,” There is no vacancy of the trusteeship. By virtue of the merger,
the separate corporate existence of Title Guarantee suffered the fate of all merged
corporations, to wit, they become a part of the muscle and the blood stream of the
mergee corporation, transfusing into the mergee all its rights and privileges. By
such act all rights and interests in and to all property are without further action
or deed vested in *329 the mergee which shall hold, enjoy and enforce the same in
its own right ‘as fully as the same was possessed, enjoyed and held’ by the
substituted trustee.” (Mutual Building & Loan Ass’n of Pasadena v. Wiborg, supra,
59 Cal.App.2d at pages 328-329)
And,
The court held, “Neither the reserved power of appointment by the parties nor
appellant’s wish to have the court exercise its power of appointment created a
vacancy. Nothing could have created a vacancy except the resignation or removal of
the trustee in the absence of an agreement on the part of the trustor and the
beneficiary to agree upon a substitution. Upon their failure so to agree the
present trustee remains in office and the superior court has no jurisdiction under
Sections 2287 and 2289, Civil Code, to make a substitution.
While paragraph B-7 makes its own procedure for substitution exclusive of all
others, such is not available in the absence of a concord of the cestui que trust
and the trustor. The necessity of their joinder in order to make a substitution
renders in-applicable section 2934a.”
In applying the rule of law to the facts of the case, under the terms of the Bank
Of The West Deed Of Trust, , First Santa Clara Corporation was conferred with the
sole authority to exercise the Foreclosure By Sale, power of sale in absence of
substitution.
sole authority to exercise the Foreclosure By Sale, power of sale in absence of
substitution.
sole authority to record the notice of default
was conferred with the sole authority to exercise the Foreclosure by

Sale, in absence of a substitution
Under the terms of the agreement, powers and obligation of trustee, only the
trustee shall cause to be filed for record a notice of default. And the trustee
under the terms of the Deed of Trust is First Santa Clara Corporation. Or unless
the Lender substituted in as the Trustee would the Lender be authorized under the
terms of the Deed of Trust to record a notice of default.
There can only be one trustee, since the trustee under the terms of the trust was
the only one that was authorized to record a notice of default
Under the plain wording of the statute only one entity can exercise the powers of
the trustee.
The trustee was only authorized under the terms of the trust. This caused the
requirement of or caused the requirement terms of the trust to be modified to
authorize the beneficiary to be able to record the notice of default substitution
of the agent for the trustee.
Miller & Starr, California Real Estate 3D, Chapter 10,
Section 10:8, Substitution of trustee – statutory procedure, p. 38, states,”
When effective. A substitution that is recorded prior to the recordation of
a notice of default is effective on recordation, and it is not necessary to mail
copies to anyone. A failure to record the substitution invalidates the notice of

default. 13
A substitution that is recorded after the notice of default is recorded
but prior to the notice of sale must be mailed prior to recordation to all persons
to whom the notice of default must be mailed. A copy must be mailed to the former
trustee of record and an affidavit must be attached to the recorded document of
substitution that it has been mailed as required. The requirements for mailing
are the same as for the mailing of the notice of default. 14
13 . Civ. Code, § 2934a, subd. (b)

13 . Civ. Code, § 2934a, subd. (b)
Bernhardt, Cal. Mortgage and Deed of Trust Practice (Cont.Ed.Bar 3d ed.,
2009 update) § 2.23, p77., states,
“2.23 2. Effect of Substitution on Validity of Notices
Provisions requiring service of a copy of the substitution on all persons
entitled to receive notice of default are in CC § 2934a(b)-(c). Effective January
1, 2005, these were amended to (1) allow the substituted trustee to act before
recordation of the substitution (CC § 2934a(d) and (2) modify the required timing
for service of the substitution so that recipients of notices of default or sale
are aware of the substitution (CC § 2934a(b), (c). See Stats 2004, ch 177, §5;
Senate Judiciary Committee Analysis of SB 1277 (Apr. 13, 2004). If the substitution
is executed (but not recorded) before or concurrently with the recordation of the
notice of default, then a copy of the substitution must be mailed before or
concurrently with the recordation of the notice of default. CC §2934a(c). In
either event the substituted trustee is authorized to act as the trustee under the
mortgage or deed of trust from the date the substitution is executed. CC §
2934a(d).”
Miller & Starr, California Real Estate 3D, Section 10:181,
Notice of default-in general, p. 552, states,”

Purpose of the notice of default. The purpose of the notice of default is to
provide notice to the trustor, the trustor’s successors, to junior lienors, other
interested persons, and notice to the world that there has been a default and of
the nature of the default. Its objective is also to inform the trust of the
default and the nature of the default so that the trustor has an opportunity
to reinstate the secured obligation.10
In addition, it establishes the minimum period within which the default can
be cured before the property can be sold by the trustee.11
Because of the importance of the notice to the protection of the rights and
property of the trustor, a valid foreclosure by private power of sale requires
strict compliance with the requirements of the statute. A trustee’s sale which is
12
based upon a defective notice of default is invalid.
Bernhardt, Cal. Mortgage and Deed of Trust Practice (Cont.Ed.Bar 3d ed.,
2009 update) § 12.144, p. 1257., states,
“4. Manner of Sale
The required manner of a trustee sale is that the sale must be conducted by
a properly appointed and serving trustee under the deed of trust at the time
of:
the recordation of the notice of default;
the trustee sale; and
the issuance of the trustee deed.
Former trustees and all others who are not properly appointed and serving
trustee (see §§2.21-2.26) at the time of the step taken will be unable to convey
title and the sale will be ‘void’ and not just ‘voidable.’ See Dimock v. Emerald
Props. (2000) 81 CA4th 868, 97 CR2d 255. In Dimock, the trustee service agent
abandoned the notice of default recorded by a substituted-in trustee when it
discovered an earlier notice of default recorded by the predecessor trustee.

Without nullifying documents installing the new trustee, the service agent
conducted a trustee sale and had the former trustee sign the trustee’s deed. The
court of appeal held that the sale was ‘void’ and not just ‘voidable,’ because the
former trustee had no power to convey title at the time of sale.”
I refer to and incorporate the Uniform Resdential Appraisal Report of the
Single Family Residential Property, 3741 Avenida Sausalito, Irvine, California
927606 dated July, 11, 2008, And the Real Estate Appraiser Qualifications of Kevin
Danson, a true and correct copy is attached hereto as Exhibit “Last” in the
Opposition To Relief From Stay Of Movant and incorporated herein by this reference.
I refer to and incorporate the Trustee’s Deed Upon Sale, dated July 11, 2008
a true and correct copy is attached hereto as Exhibit “1,” in the Notice Of Motion
For Relief From The Automatic Stay and incorporated herein by this reference.
I refer to and incorporate the Declaration of Felix Lo Iacono, custodian of
the document, California Residential Purchase Agreement And Joint Escrow
Instructions for Soon Wha Chey and Abderraham Boukour, dated January 12, 2009.
I refer to and incorporate the California Residential Purchase Agreement And
Joint Escrow Instructions for Soon Wha Chey and Abderrahman Boukour on the date of
July 10, 2008 attached as Exhibit “Last” and incorporated herein by this reference.
And I request the court to take judicial notice under the authorization of Rule 201
On the grounds for setting aside a nonjudicial foreclosure sale courts have
held that opinions from execution sales also apply.

In Bank of America Nat. Trust & Savings Ass’n v. Reidy, (1940) 15 Cal.2d
243, 248, 101 P.2d 77, the court stated that,
“*248 [1][2] It is the general rule that courts have power to vacate a foreclosure
sale where there has been fraud in the procurement of the foreclosure decree or
where the sale has been improperly, unfairly or unlawfully conducted, or is tainted
by fraud, or where there has been such a mistake that to allow it to stand would be
inequitable to purchaser and parties. Sham bidding and the restriction of
competition are condemned, and inadequacy of price when coupled with other
circumstances of fraud may also constitute ground for setting aside the sale.”
In Lo v. Jensen, (2001) 88 Cal.App.4th 1093, 1097-1098, 106 Cal.Rptr.2d 443,
the court stated,
“‘It is the general rule that courts have power to vacate a foreclosure sale where
there has been fraud in the procurement of the foreclosure decree or where the sale
has been improperly, unfairly or unlawfully conducted, or is tainted by fraud, or
*1098 where there has been such a mistake that to allow it to stand would be
inequitable to purchaser and parties.’ (Bank of America etc. Assn. v. Reidy,

supra,
15 Cal.2d at p. 248, 101 P.2d 77.) A debtor may apply to a court of equity to set
aside a trust deed foreclosure on allegations of unfairness or irregularity that,
coupled with the inadequacy of price obtained at the sale, mean that it is
appropriate to invalidate the sale. (Sierra-Bay Fed. Land Bank Assn. v. Superior
Court (1991) 227 Cal.App.3d 318, 337; , 277 Cal.Rptr. 753 3 Witkin, Summary of
Cal. Law (9th ed.1987) Security Transactions in Real Property, § 149.) Here, there
was both unfairness and an inadequate price. The court had the power to vacate the
sale and properly made that order.”
In Whitman v. Transtate Title Co. (1985) 165 Cal.App.3d 312, 322, 211
Cal.Rptr. 582, the court stated, In “a trustee sale gross inadequacy of price
coupled with even slight unfairness or irregularity is sufficient basis for setting
the sale aside.”
In Sargent v. Shumaker, (1924) 193 Cal. 122, 129, 223 P. 464, the court
stated,“ It is well settled in this state that mere inadequacy of price, however
gross, is not in itself a sufficient ground for setting aside a sale legally made.
There must in addition be proof of some element of fraud, unfairness or oppression
before the court will be justified in depriving the purchaser of his legal
advantage. Where, however, the price obtained is greatly disproportionate to the
actual value, very slight evidence of unfairness or irregularity will suffice to
authorize the granting of the relief. (Rauer v. Hertweck, 175 Cal.278, 165 Pac.
946; Winbigler v. Sherman, 175 Cal. 270, 165 Pac. 943;Back v. Losekamp, 179 Cal.
674, 179 Pac. 516; Odell v. Cox, 151 Cal. 70, 90 Pac. 194;
“where the inadequacy of price is palpable and great, slight irregularities in
conjunction therewith will authorize a court to set aside the sale, we are of the
opinion that such irregularities, to have this effect, must have conduced to the
inadequacy of the price, or in some other way have contributed to the injury of the
plaintiff.”
In the Bank of Seoul & Trust Co. v, Marcione (1988) 198 Cal.App.3d 113, 119,
244 Cal.Rptr. 1, the court stated, “As Justice Kaufman has written, ‘While mere
inadequacy of price, standing alone, will not justify setting aside a trustee’s
sale, gross inadequacy of price coupled with even slight unfairness or irregularity
is a sufficient basis for setting the sale aside.’ (Whitman v. Transtate Title Co.
(1985) 165 Cal.App.3d 312, 323, 211Cal.Rptr. 582:”
In Darden v. Reese 88 Cal.App.2d 904, 909, 200 P.2d 81, the court defined,
“Acts of oppression and unfairness which will justify vacating an execution sale
need not amount to legal fraud. ‘Unfairness,’ as it relates to conduct in

connection with execution sales, embraces all types of dishonesty, *910 deception
and oppression which operate to the prejudice of the judgment debtor or others
interested in the sale.”
In applying this rule of law to the facts of the case, I refer to the date
of the signed Substitution of Trustee April 22, 2008 in which the trustee was
authorized to act. From April 22, 2008 to July 11, 2008 which is the date of
the Trustee Sale, is 80 days. This is not three months plus twenty days.
The error caused prejudice because it shortened the time to which to
exercise all available rights including the right to sell the property before.
And the property of which at all relevant times, Plaintiff held a joint tenancy
interest with the right of survivorship with her spouse, Young Chey Ph.D., now
deceased. And now holds the surviving joint tenant interest in the Property from
the date of May 17, 2007, the date of the death of Young Chey, and from right of
survivorship, was sold the day before the trustee sale. [I refer to and
incorporate again the Opposition To Relief From Stay, filed on June 16, 2009,
Points And Authorities, Exhibits, And Declarations Of David Chey and Of Soon Chey
and also WELLS FARGO had actual, constructive, imputed notice.]
notice] I refer to and incorporate the California Residential Purchase Agreement
And Joint Escrow Instructions for Soon Wha Chey and Abderrahman Boukour on the date
of July 10, 2008 attached as Exhibit “Last” and incorporated herein by this
reference. And I request the court to take judicial notice under the authorization
of Rule 201 of the Federal Rules of Evidence.
In Harker v. Rickershauser (1928) 94 Cal.App. 755, 757, 271 P.
912, the court stated ,
“It appears from the record that in the month of January, 1922, plaintiff was the
owner of certain real property in Los Angeles, which she agreed to trade with
defendants for the 350 acres of land in Yolo county, above referred to. Pursuant to
said agreement, plaintiff executed and delivered to defendants a deed to her said
property, and defendants conveyed said Yolo county property to plaintiff. The whole
transaction appears to have been consummated by March 1, 1922, on which date the
deed to plaintiff was recorded. During the negotiations between said parties, it
*758 developed that there was outstanding a judgment against J. B. Harker, husband
of plaintiff, in the sum of $7,200 or thereabouts, and that execution had
theretofore been levied against the interest of said Harker in the Los Angeles
property involved in said trade, said property standing on the records at the time
of said levy in the name of plaintiff. For the purpose of protecting defendants
from the levy of said execution, a trust deed was executed by plaintiff and her
said husband, covering said Yolo county property, and containing the following
provision:
‘In the execution, delivery and acceptance of this trust deed it is expressly
understood and agreed between all parties hereto, that if the parties of the
first part pay said judgment or cause the said execution to be released from said
property first herein described, then the said note and this trust deed to become
null and void and of no effect.’
And,
“Plaintiff introduced in evidence her deed from defendant, testified that
defendants were in possession of the premises described therein, and rested.
Defendants thereupon introduced in evidence the said trust deed and a deed from the
trustee named therein, and given pursuant to a sale had under the provisions
thereof, and rested. Plaintiff, in rebuttal, then introduced in evidence a
certified copy of the release of the levy of execution above referred to, dated
February 27, 1922. There is also testimony to the effect that the judgment under
which said execution was levied was satisfied September 30, 1922. The facts above
recited with reference to the release of the levy of the execution were found by
the court to be true. The court also found that said sale under the trust deed was
made after defendants knew that said execution had been released and the judgment
under which the same was levied had been satisfied.” (Harker v. Rickershauser,
supra, 94 Cal.App. at p.758)
And the court stated,”
The trustee’s deed does not refer in any manner or particular to the last-
mentioned provisions. It recites that ‘there has been a default in the payment of
money advanced in accordance with the provisions of said trust deed.’” (Harker v.
Rickershauser, supra, 94 Cal.App. at p.761)
“In the instant case the trust deed was given as security for the performance of
either of two acts upon the part of the trustor. It is admitted by both parties
that one of said acts, to wit, the release of the levy of execution, was performed
sixteen days from the date of the said trust deed, and the court found, upon
sufficient evidence, that the beneficiary knew of the *762 performance at or about
the date it took place. If, notwithstanding such knowledge, defendant proceeded to
have a sale made of the premises under such trust deed, this was palpable fraud
upon the trustor” (Harker v. Rickershauser, supra, 94 Cal.App. at pp.761-
762)
And the court held,
“[7] In the instant case, plaintiff, in making out her case, rightly ignored the
trust deed, and simply proved the deed *765 to her from defendants. The trust deed
was void, and had been from and after February 27, 1922, and a trustee’s deed
thereunder passed no title whatever.” ((Harker v. Rickershauser, supra, 94
Cal.App. at pp.764-765)
In applying the rule of law to the facts of the case BANK OF THE WEST, and
WELLS FARGO, caused me to be subjected to the injury of an illegal, oppressive,
fraudulent sale.
§ 2934a. Substitution of trustee under trust deed
Section 2934a, Subdivision 4., of the Civil Code of the State of

California provides:
From the time the substitution is filed for record, the new trustee
shall succeed to all the powers, duties, authority, and title granted
and delegated to the trustee named in the deed of trust.
Confer: to give something such as authority, a legal right, or hounour

to someone
Coughlin, Christine, A Lawyer Writes, A Practical Guide to Legal

Analysis, Carolina Academic Press 2008, Chapter 3 Reading For
Comprehension, page 40, states,”
Skimming will also allow you to seed the relationship among

subsections within a section. For instance, think about the question
you need to answer: Can a father be charged with kidnapping his step-
childk, or is he a ‘partent,’ and thereby exempt? You may initially
examine only subsection 1201(a), which explains that ‘any’ person may
be guilty of kidnapping: however sub-section 1201(a) cannot be read
alone. To correctly answer your client’s question, you will need to
note that sub-section 1201(h) defines the term ‘parent’ and states
parents who take their minor children cannot be prosecuted.”
And: Requires all elements that it joins to be present for a standard

to be met, or requires all factors that it joins to be considered.
Or: Only one of the elements it joins must be present for a standard
to be met
Either: Only one of the facts that it joins must be considered
Shall not: Prohibit conduct.

May not:
Must not:
Statutory Construction: Civil Code 13, CCP 1858
People v. Murphy 25 Cal.4th 136, 142 [105 Cal.Rptr.2d 387, 19 P.3d

1129], the court stated, “we look to ‘the entire substance of the
statute...in order to determine the scope and purpose of the
provision...[Citation.]’ (West Pico Furniture Co. v. Pacific Finance
Loans (1970) 2 Cal.3d 594, 608 [86 Cal.Rptr. 793, 469 P.2d 665].) That
is we construe the words in question ‘‘in context, keeping in mind the
nature and obvious purpose of the statute...’[Citation.]’(Ibid.) We
must harmonize ‘the various parts of the statutory enactment ... by
considering the particular clause or section in the context of the
statutory framework as a whole.”) (Moyer v. Workmen’s Comp. Appeals
Bd. (1973) 10 Cal.3d 222, 230 [110 Cal.Rptr. 144, 514 P.2d 1224];”
Provided that**: Creates a condition, an exception, or adds an

additional requirement.
For kidnapping to occur, each of the three elements of the crime must
be met. Thus carrying someone from one location to another at the
person’s request would not be kidnapping because the first element,m
that the carrying be unlawful, would not be satisfied.
Reading the statute carefully will require you to pay close attention
to the words of the statute itself and the context of the subsection
in the overall statutory scheme. Only be reading carefully can you
properly interpret an apply it to your client’s case.
[Now describe the principle of the vesting of title to the person

authorized with the power of sale.]
From Dimock, “Our courts have adopted a title theory of deeds of

trust. (Bank of Italy etc. v. Bentley (1933) 217 Cal. 644, 655 [20
P.2d 940].) (4)”[A] deed of trust differs from a mortgage in that
title passes to the trustee in the case of a deed of trust.”
For all the previous evidence in the Opposition to Relief From Stay,
and then and are not first of all Bona Fide Encumbrancers only
applying to notice under BofA v. La Jolla, and actual, constructive,
imputed notice, Bona Fid Encumbrancers
stated as part of its holding
The court stated as decisional law interpreting notices under CC 2924

that,
[From D. What Other Characteristics May Affect The Persuasive Value?

At p. 59,”courts often interpret statutes, they tell us what the
statute means. If the subsequent opinion interpreted the statute a
particular way, the opinion’s interpretation of the statute takes
precedence. In that sense the opinion controls the statute.”]
I refer to and incorporate the Bank of the West, Deed Of Trust, a true
and correct copy is attached hereto as Exhibit “14,” in the
Opposition To Relief From Stay Of Movant, filed on June 16, 2009 and
incorporated herein by this reference. And I reqest the court to
take judicial notice under the authorization of rule 201 of the
Federal Rules of Evidence.
At p.
Waiver of those rights which are unwaivable, which cannot be waived

under section 2953 of the Civil Code. Or there being an amendment to
these terms of the Deed of Trust, given in writing and signed by the
party or parties sought to be charged or bound by the alteration or
amendment which authorizes the Lender to record a notice of default
was conferred with the sole authority
was conferred with the sole authority to exercise the power of sale,
in absence of a substitution
powers, duties, authority, and title granted and delegated to the

trustee under the authorization of the terms of the deed of trust
under the terms of the Bank of the West, Deed of Trust, and the
powers, duties, authority, and title,
had the sole authorization, under the terms of the deed of the trust,
had the sole authority
Terms of who was to file the Notice of Default
Under the terms of the trust to record the Notice Of Default
Under the powers, duties, authority, title granted and delegated to

the trustee under the authorization of the terms of the trust
Under the powers and obligations, title granted
Under the powers, duties, title granted and delegated to the trustee
under the authorization of the terms of the trust, the
Was conferred with the sole authority to exercise the Foreclosure by

Sale
Haas v. Palace Hotel Co. of San Francisco, 101 Cal.App.2d 108, 224 P.2d 783
(Cal.App. 1 Dist.,Dec 12, 1950)
bond indenture
Definition
A written agreement between the issuer of a bond and his/her
bondholders, usually specifying interest rate, maturity date,
convertibility, and other terms. also called indenture.
Action to foreclose mortgage by A. Haas against Palace Hotel Company of San

Francisco, a corporation, American Trust Company, a corporation, and others.
The Bank of California, National Association, a national banking association,
and others, intervened in opposition to the plaintiff. The Superior Court of
the State of California in and for the City and County of San Francisco,
Daniel R. Shoemaker, J., rendered a judgment of dismissal, and the plaintiff
appealed. The District Court of Appeal, Peters, P. J., held that provision in
bond indenture under reorganization plan cancelling provision in original
indenture requiring bondholder to obtain permission of holders of one-fourth
of bonds before bringing foreclosure action did not give bondholder not
consenting to reorganization plan the right to foreclose original indenture
without having obtained such permission, where purpose of bond indenture
under reorganiation plan was to put non-consenting bondholders on a parity
with the consenting bondholders so far as possible, and indenture under
reorganization plan contained a provision substantially identical to
cancelled provision.
Judgment affirmed.
West Headnotes
266 Mortgages
266X(B) Right to Foreclose and Defenses
266k414 k. Conditions Precedent. Most Cited Cases
Provision in bond indenture requiring bondholder to obtain permission of
holders of one-fourth of bonds before bringing foreclosure action is valid
**unless prohibited by some specific statute and unless fraud or collusion is
present, and constitutes a complete bar to foreclosure unless such permission
is given.
[2] Corporations 101 579(4)
101 Corporations
101XIII Reincorporation and Reorganization
101k579 Liabilities for Debts and Acts of Original Corporation
101k579(4) k. Bonds, Mortgages, and Liens. Most Cited Cases
Provision in bond indenture under reorganization plan cancelling provision in
original indenture requiring bondholder to obtain permission of holders of
one-fourth of bonds before bringing foreclosure action did not give
bondholder not consenting to reorganization plan the right to foreclose
original indenture without having obtained such permission, where purpose of
bond indenture under reorganization plan was to put non-consenting
bondholders on a parity with the consenting bondholders so far as possible,
and indenture under reorganization plan contained a provision substantially
identical to cancelled provision.
101 Corporations
Where bondholder does not consent to reorganization plan, and as to such
bondholder the provision in original bond indenture barring bondholder from
bringing foreclosure action without first having secured permission of
holders of one-fourth of bonds is not annulled by elimination of provision
from indenture under reorganization plan, or if annulled a similar provision
in indenture under reorganization plan is applicable, the Trust Indenture Act
does not require abolition of restriction on forfeiture. Trust indenture Act
of 1939, § 316(b), 15 U.S.C.A. § 77ppp(b); Civ.Code, § 1589.
266 Mortgages
266X(K) Judgment or Decree
266k485 Scope and Extent of Relief
Under statute providing that there can be but one form of action for recovery
of any debt or for enforcement of any right secured by mortgage on real or
personal property, a bondholder who was not entitled to foreclosure in her
suit to foreclose mortgage securing bonds could not obtain money judgment for
principal and interest due on bonds under prayer for other and further relief
contained in her complaint, in absence of allegation that security had become
valueless. Code Civ.Proc. § 726.
101 Corporations
**The provision in bond indenture under reorganization plan that right of
bondholder to receive payment of principal and interest on bond after due
dates or to institute suit for enforcement of payment should not be impaired
without consent of bondholder was not a waiver of statute providing that
there can be but one form of action for recovery of debt or enforcement of
any right secured by mortgage on real or personal property. Trust Indenture
Act of 1939, § 316(b), 15 U.S.C.A. § 77ppp(b); Code Civ.Proc. § 726; Civ.Code
§ 2953.
**784 *110 Crimmins, Kent, Draper, & Bradley, Martin Lalor Crimmins, Jr., and
Robert G. Taylor, all of San Francisco, for appellant.
Hall, Henry & Oliver, Chafee E. Hall, and Stephen McReavy, all of San
Francisco, for respondent.
McCutchen, Thomas, Matthew, Griffiths & Greene, Farnham P. Griffiths, and
Morris M. Doyle, all of San Francisco, for interveners-respondents.
PETERS, Presiding Justice.
Plaintiff, as the holder of overdue and unpaid bonds issued by the Palace
Hotel Company of San Francisco, brought this action to foreclose the mortgage
securing those bonds and for such other relief as the court might deem
proper. The holders of other bonds issued by the defendant company intervened
in opposition to plaintiff. The defendants and interveners interposed general
and special demurrers to the complaint. The demurrers were sustained with
leave to amend. Plaintiff declined to amend and stipulated that a judgment of
dimissal should be entered, subject to her right to appeal. Judgment of
dismissal was entered and plaintiff appeals.
The problems involved on this appeal arise out of the following facts:
In 1925 the defendant, Palace Hotel Company, issued bonds in the total amount
of $2,500,000. These bonds were in $1,000 denominations and had semi-annual
five per cent interest coupons attached. They were payable to bearer, or, if
registered, to the registered owner, and matured February 1, 1945. They are
referred to by the parties as the ‘1945 bonds.’ They were secured by a first
mortgage to defendant American Trust Company,*111 as trustee. This mortgage
is referred to as the ‘original mortgage.’ By its terms the Palace Hotel, and
the real property upon which it is located, were hypothecated to secure the
interest and principal of the bonds.
Plaintiff is the owner and holder of 63 of these 1945 bonds together with
certain interest coupons attached thereto. This constitutes about 2 1/2 per
cent of the 1945 issue. On February 1, 1945, the principal amount of
plaintiff’s bonds, together with the interest coupons attached, became or
**785 had become payable, but no part of the principal or interest
represented by the coupons had been paid.
After the default on the bonds, a plan of reorganization was submitted to the
holders of the 1945 bonds in June of that year. Under this plan of
reorganization the Palace Hotel Company and the trustee entered into a
mortgage of chattels and trust indenture, referred to as the ‘1945
indenture,’ and the 1945 bonds and original mortgage were amended as to the
bondholders who consented to the plan, to provide for a reduction of interest
to 4 per cent, and an extension of maturity to February 1, 1965.
The complaint alleges that ‘in excess of seventy-six (76) per cent of the
owners and holders of the then outstanding 1945 bonds did consent and agree’
to the reorganization. The 1945 indenture, attached to the complaint as an
exhibit, **recites that ‘the owners and holders of more than 84% in principal
amount of the 1945 Bonds outstanding’ have consented to the plan. The
interveners claim in their briefs, and appellant does not claim to the
contrary, that more than 93% of the holders of the outstanding bonds
consented, Neither the plaintiff, nor her predecessors, consented to this
plan of reorganization.
On January 3, 1949, the plaintiff requested the trustee to institute suit to

enforce payment of her bonds and coupons, and for the appointment of a
receiver. Prior to this date plaintiff had presented her bonds and coupons
for payment, but payment was refused. The trustee refused to bring an action
to enforce payment of plaintiff’s bonds, whereupon this action was instituted
on February 18, 1949.
Although the complaint does not set forth as an exhibit the terms of the
original mortgage, it does attach a copy of one of the 1945 bonds. It appears
on the face of the bonds that they incorporated by reference the terms of the
original mortgage. In the trial court and on this appeal it was and is
admitted and conceded by all the parties involved that the *112 original
mortgage **in Article VII contained the following provision: ‘No holder of
any bond or coupon hereby secured shall have the right to institute any suit
or proceeding for the sale of the property subject to the lien hereof, or for
the foreclosure hereof, or for the appointment of a Receiver, or for any
other remedy hereunder, unless such holder previously shall have given to the
said Trustee written notice of the default of which he complains, nor unless
the holders of one-fourth ( 1/4 ) of the bonds hereby secured and then
outstanding shall have made written request to the said Trustee for such
action, or for action hereunder, and shall have given to the said Trustee a
reasonable opportunity to take such action, and the said Trustee shall have
neglected to take appropriate action thereon, nor unless they shall have
offered to the said Trustee adequate security and indemnity against all loss,
costs and liabilities to be incurred in the premises.’
In the trial court it was conceded that such provision was properly before
that court, and, it is conceded, that the legal effect of this provision
presents one of the key points on this appeal.
It is obvious that since plaintiff owns but 2 1/2 per cent of the unpaid
bonds, and since at least 84 per cent of the holders of such bonds consented
to the reorganization plan, Article VII, above quoted, is a complete bar to
this proceeding, if valid and if still effective. Plaintiff does not directly
challenge the validity of this provision, but contends that such provision is
no longer effective because it was expressly rescinded by the 1945 indenture.
In this connection plaintiff points out that the 1945 indenture, among other
things, purports to amend, cancel and annul several provisions of the
original mortgage, and contends, in particular, that the 1945 indenture
expressly cancelled, annulled and rescinded Article VII of the original
mortgage. Part I of the 1945 indenture is entitled ‘Amendment of Original
Mortgage.’ Subdivision 5 of Part I reads as follows: ‘Articles III to XVII,
inclusive, of the Original Mortgage shall be and are hereby cancelled,
annulled and rescinded and there shall be and are hereby substituted in lieu
thereof the following Articles III to XVIII, inclusive.’
**786 Respondents and interveners rely on two other provisions of the 1945
indenture expressly substituted for those cancelled, or purportedly
cancelled, by the above-quoted clause-Article X, section 10.19, and a portion
of Article XVIII, Part III.
*113 Article X, section 10.19, of the 1945 indenture reads as follows:
‘Limitations on Bondholders’ Rights to Sue. No holder of any Bond or coupon

issued hereunder shall have the right to institute any suit, action or
proceeding in equity or at law for the foreclosure of this Indenture, or for
the execution of any trust or power hereof, or for the appointment of a
receiver, or for the enforcement of any other remedy under or upon this
Indenture, unless
**’(1) such holder shall previously have given to the Trustee written notice
of some existing default, as hereinbefore provided; and
**’(2) the holders of not less than twenty-five per cent (25%) in principal
amount of the Bonds at the time outstanding shall, after the right to
exercise such powers, or right of action, as the case may be, shall have
accrued, have requested the Trustee in writing to act; and
**’(3) such holder or holders shall have offered to the Trustee security and
indemnity satisfactory to them against the costs, expenses and liabilities to
be incurred therein or thereby; and
**’(4) the trustee shall have refused or neglected to comply with such
request for a period of sixty (60) days.
‘Notwithstanding any other provision of this Indenture, the right of the

holder of any Bond to receive payment of the principal of and interest on
such Bond, on or after the respective due dates expressed in such Bond, or to
institute suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of
such holder, except that no Bondholder may institute any such suit, action or
proceeding if and to the extent that the institution or prosecution thereof
or the entry of a judgment or a decree therein would, under applicable law,
result in the surrender, impairment, waiver or loss of the lien of this
Indenture upon any property subject to such lien.’
The portion of Article XVIII, Part III, relied upon by interveners and
respondents reads as follows: ‘* * * This Mortgage of Chattels and Trust
Indenture is not intended to, does not, and shall not be construed to affect,
impair, change or modify, in any manner or to any extent whatsoever, any of
the rights, powers or privileges of the holders of the 1945 Bonds; nor to
relieve the Company or **the Trustee from any duty or obligation to any
holder of the 1945 Bonds under the terms and provisions thereof or of the
Original Mortgage or said Chattel Mortgage dated December 7, 1933; nor to *114
grant to or confer upon **the Trustee or the holders of 1965 Bonds any rights
or powers as against any holder of 1945 Bonds not granted or conferred under
the provisions of the Original Mortgage or said Chattel Mortgage dated
December 7, 1933; provided, however, that, to the extent permitted by law,
all of the rights, provisions, benefits and remedies provided in this
Mortgage of Chattels and Trust Indenture in favor of the holders of any of
the outstanding bonds, including, but not limited to, the security and
benefits of the sinking fund provided for in the amended Article VI, the
benefits of the redemption provisions provided for in the amended Article V
and the waiver of the statute of limitations provided for in Section 7.17,
shall be available to and inure to the benefit of the holders of 1945 Bonds.’
It is quite apparent that, if either Article VII of the original mortgage or

Article X, section 10.19 of the 1945 indenture is applicable (assuming their
validity) to plaintiff, the trial court properly sustained the demurrer.
Plaintiff does not aver that the holders of 25 per cent of the outstanding
bonds have joined in the action, but, in fact, alleges that she owns but 2
1/2 per cent of the bonds, and that over 76 per cent of the holders of such
bonds consented to the reorganization.
[1] There can be no doubt that provisions such as those contained in Article
VII of the original mortgage, and Article **787 X, section 10.19 of the 1945
indenture, are valid **(unless prohibited by some specific statute and unless
fraud or collusion is present) and constitute a complete bar to the legal
enforcement of payment of the bonds or foreclosure of the security unless the
requisite percentage of bondholders join in the action. The Supreme Court in
Dietzel v. Anger, 8 Cal.2d 373, at page 375, 65 P.2d 803, at page 804, after
quoting a clause somewhat similar to those here involved, stated: ‘In so far
as these provisions relate to the trust indenture and deal with actions
involving the security, there is no doubt either as to their applicability or
their validity.’ In Lauinger v. Carrillo Building Co., 41 Cal.App.2d 660, 107
P.2d 287, less than 10 per cent of the bondholders attempted to foreclose a
bond indenture containing a 25 per cent clause similar to that contained in
Article VII. The bonds were in default and over 90 per cent of the
bondholders had consented to a deferment contract. A demurrer to the
complaint was sustained without leave to amend. In affirming the trial court,
the appellate court stated, 41 Cal.App.2d at page 662, 107 P.2d at page 289:
‘The validity of such provisions in a bond indenture can no longer be
questioned. We had occasion to so hold regarding *115 similar provisions in
Pacific States Savings & Loan Co. v. Hollywood Knickerbocker, Inc., 11
Cal.App.2d 56, 52 P.2d 1014. We there cited Rodman v. Richfield Oil Co. of
California, et al., 9 Cir., 66 F.2d 244, 249. * * * As to the validity of
these terms of the contract the Circuit Court quoted from Chicago D. &
Vincennes Railroad Co. v. Fosdick, 106 U.S. 47, 77, 1 S.Ct. 10, 27 L.Ed. 47,
as follows: ‘It is an agreement which the parties were at liberty to make.
**There is nothing in it illegal or contrary to public policy. And while it
is in the nature of a forfeiture, it is one against which, when it has taken
place according to the fair meaning of the parties, courts of equity will not
relieve. * * *’ As to the propriety of such a limitation upon the rights of
the minority the Circuit Court in the Rodman case, supra, 66 F.2d at page 250,
said: ‘We have already quoted Supreme Court decisions on the injustice of
permitting one or a few bondholders from circumventing the wishes of the
majority, by instituting proceedings for foreclosure when the majority are in
favor of deferring such suit. If the indenture gives a minority a right thus
to act-as does the indenture in the instant case-the provisions of that
document must be strictly adhered to; for, as we have seen, a stipulation for
foreclosure proceedings, even at the will of the majority, are ‘in the nature
of a penalty.’ A fortiori, a stipulation giving a minority the right to
authorize foreclosure may, in the language of the Vincennes case, be regarded
as ‘stricti juris.”‘
[5] Even if the 1945 indenture did cancel Article VII of the original
mortgage in favor of the non-consenters, then such non-consenters would be
subject to the substantially identical provision in the 1945 indenture
contained in Article XVIII and above quoted. Consenters could only foreclose
upon securing the consent of 25 per cent of the bondholders. Appellant cannot
accept the clause cancelling Article VII (Subdivision 5 of Part I of the 1945
indenture) as a contract between the Palace Hotel Company and consenters and
the trustee for the benefit of non-consenters, without accepting the
eliminating clause in toto. The eliminating clause, above quoted, after
cancelling certain provisions of the original mortgage (including Article
VII), replaces the eliminated articles with other sections. One of the
substituted provisions is section 10.19, which provides the same limitation
of foreclosures as was contained in the original mortgage. While a person may
accept the benefits of a contract made for his benefit, such acceptance
implies an acceptance of the obligations necessarily connected with the
contract. This fundamental principle is stated as follows in section 1589 of
the Civil Code: ‘A voluntary acceptance of the benefit of a transaction is
equivalent to a consent to all the obligations arising from it, so far as the
facts are known, or ought to be known, to the person accepting.’
Thus, appellant is faced with this dilemma-if Article VII of the original
mortgage is still effective, she is barred from bringing the action under
that section. If that Article was cancelled by the 1945 indenture as to non-
consenters, then section 10.19 of that indenture is applicable, and she may
not maintain the action under that section. Any other construction would
defeat the intent of the parties, and would result in putting non-consenters
not only in a more advantageous position than consenters, but would give the
holder of one bond who did not consent the right of **789 foreclosure, which
would defeat the entire purpose of the 1945 indenture.
The next major contention of appellant is that the 1945 indenture had to
qualify under the Trust Indenture Act of 1939, 15 U.S.C.A. § 77aaa et seq.,
which is admitted by respondent and interveners, and that under that statute
*118 the 1945 indenture was required to remove the restriction on foreclosure.
This contention is predicated upon section 316(b), 15 U.S.C.A. § 77ppp(b),

which requires that ‘The indenture to be qualified shall provide that,
notwithstanding any other provision thereof, the right of any holder of any
indenture security to receive payment of the principal of and interest on
such indenture security, on or after the respective due dates expressed in
such indenture security, or to institute suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of such holder, except as to a postponement of an
interest payment consented to as provided in paragraph (2) of subsection (a),
and except that such indenture may contain provisions limiting or denying the
right of any such holder to institute any such suit, if and to the extent
that the institution or prosecution thereof or the entry of judgment therein
would, under applicable law, result in the surrender, impairment, waiver, or
loss of the lien of such indenture upon any property subject to such lien.’
There is another section of the 1939 act which makes section 316(b)
inapplicable to any securities issued prior to 1939, and that is, section
304(a), 15 U.S.C.A. § 77ddd(a), which provides:
‘The provisions of this subchapter shall not apply to any of the following
securities: * * *
‘(3) any security which, prior to or within six months after the enactment of
this subchapter, has been sold or disposed of by the issuer or bona fide
offered to the public, but this exemption shall not apply to any new offering
of any such security by an issuer subsequent to such six months’.
[6] The bonds held by appellant were issued in 1925, so that they come within
the express exemption contained in section 304(a). The new 1965 bonds are,
admittedly, subject to the terms of the 1939 statute. That is undoubtedly the
reason why the 1945 trust indenture was executed, and why that indenture
amends the original mortgage, as to consenters, by including the consent
contained in Article XVIII above quoted. This is a complete answer to
appellant’s contentions in reference to section 316(b) of the Trust Indenture
Act of 1939. That section, whatever its proper interpretation, just has no
application to bonds issued in 1925.
The argument of appellant on this issue is somewhat difficult to follow. She

argues that section 316(b) of the Trust *119 Indenture Act of 1939 is
embodied in section 10.19 of the 1945 indenture; that ‘the purpose of this
provision was to remove any restrictions such as those contained in Article
VII of the original mortgage. Thus, the express annulment of Article VII * *
* was absolutely necessary in order to comply with the Trust Indenture Act.’
(App.Op.Br. p. 13.) According to appellant it was because of the 1939 Act
that ‘the defendant and the 1965 bondholders were required to put themselves
in the vulnerable position where any non-consenting bondholder might
immediately institute suit to enforce payment of their bonds and coupons,
although the 1965 bondholders could not realize on their bonds until February
1, 1965 or the sooner default of defendant Palace Hotel Company under the
1945 Indenture. However, * * * such 1965 bondholders are protected by the
provision that in the event of final judgment of foreclosure, that all the
1965 bonds would forthwith become due and be entitled to the benefits of the
foreclosure decree.’ (App.Op.Br. p. 14.)
This is the heart of appellant’s argument on this issue. If we understand it

correctly, it means that appellant believes that after the 1945 trust
indenture was executed, non-consenters were released from the restrictive
provisions of Article VII of the original mortgage, and were not subject to
the limitations contained in the 1945 indenture. Thus, according to
appellant, after the 1945 indenture was executed, the **790 holder of one
non-consenting bond could foreclose and thus accelerate the due date of the
entire indebtedness. According to this interpretation, the execution of the
1945 indenture was a totally useless gesture unless 100 per cent of the
holders of the 1945 bonds consented. Such an interpretation is compelled,
says appellant, by section 316(b) of the Trust Indenture Act of 1939 and
section 10.19 of the 1945 indenture.
[7] This argument of appellant is fundamentally predicated upon her argument

that Article VII of the original mortgage was annulled by the 1945 indenture.
This argument has already been considered and, as already held, Article VII
was not annulled as to non-consenters, and, if it were, section 10.19 of the
1945 indenture was substituted. If Article VII was annulled by Subdivision 5,
Part I, of the 1945 indenture as to non-consenters, and if plaintiff wants to
accept such annulment, she must consent by virtue of section 1589 of the
Civil Code to the obligation contained in section 10.19 of the 1945
indenture. Thus, whether Article VII was or was not cancelled by the 1945
indenture, section 316(b) of the Trust *120 Indenture Act of 1939 does not
require the abolition of the restriction on foreclosure.
Moreover, appellant’s construction is not sound. Section 10.19 of the 1945

indenture does not provide that regardless of any provision of the original
mortgage she may institute suit on the bonds. The precise language is
‘Notwithstanding any other provision of this Indenture’-i, e., the 1945
indenture-the rights of any holder of a bond shall be, etc. The purpose of
this provision, and of section 316(b) of the Trust Indenture Act of 1939, was
to assure the 1965 bondholders that the restrictive provisions of the 1945
indenture immediately preceding the language under discussion, should not be
construed as impairing their rights to enforce the 1965 bonds after they
matured. The clause has nothing to do with the rights of non-consenters.
Respondents and interveners trace the legislative history of section 316(b)

and contend that the background of the section demonstrates that it has
nothing to do with a suit by a bondholder to foreclose. Respondents and
interveners seek to show by this analysis that section 316(b) is aimed at
protecting such right of the individual bondholder to sue on his bond as he
may have by applicable state law, and has nothing to do with his right to
foreclose the security. This argument tends to support the position of
respondents and interveners, but its correctness need not be considered now
because of the other conclusive answers already given to appellant’s
arguments on this issue.
[8] The last major contention of appellant is that if she is not entitled to
foreclosure of the original mortgage, she is at least entitled, in this
action, to a money judgment for the principal and interest due on her bonds,
under her prayer for ‘other and further’ relief contained in her complaint.
Assuming that under a prayer for ‘further relief’ in a foreclosure action a
trial court must grant a money judgment at law in such an equity action, if
such remedy is available, the present argument runs directly afoul of section
726 of the Code of Civil Procedure. That section provides: ‘There can be but
one form of action for the recovery of any debt, or the enforcement of any
right secured by mortgage upon real or personal property, which action must
be in accordance with the provisions of this chapter.’
The complaint shows on its face that it is secured by a mortgage. There is no

allegation that the security has become valueless. Thus, it appears that an
action on the bonds is *121 premature. Salazar v. Steelman, 4 Cal.App.2d 637,
638, 41 P.2d 571.
[9][10] The purpose of section 726 is to prevent a multiplicity of actions

and to require a secured creditor to exhaust his security before obtaining a
personal judgment against the debtor. Toby v. Oregon Pac. R. R. Co., 98 Cal.
490, 494, 33 P. 550. The security is made the primary fund for the discharge
of the indebtedness, Bank of Italy Nat. Trust & Sav. Ass’n v. Bentley, 217
Cal. 641, 653, 20 P.2d 940; the cause **791 of action on the bonds does not
accrue until the security has been exhausted, Commercial Centre Realty Co. v.
Superior Ct., 7 Cal.2d 121, 128, 59 P.2d 978, 107 A.L.R. 714, and appellant
cannot waive her right to exhaust the security by suing on the debt prior to
foreclosure, without the consent of the mortgagor. Barbieri v. Ramelli, 84
Cal. 154, 23 P. 1086; Gnarini v. Swiss American Bank, 162 Cal. 181, 121 P.
726.
Appellant recognizes that section 726 is a bar to an action on the bonds if

that section is applicable to this transaction. She contends, however, that
if section 316(b) of the Trust Indenture Act of 1939 does not provide a right
of foreclosure (and we have held that it does not), it at least results in a
statutory waiver of section 726, and such waiver is expressly made in section
10.19 of the 1945 indenture. That section of the indenture, in compliance
with the 1939 statute, provides: ‘Notwithstanding any other provision of this
Indenture, the right of the holder of any Bond to receive payment of the
principal of and interest on such Bond, on or after the respective due dates
expressed in such Bond, or to institute suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of such holder, * * *’
Appellant argues that the 1939 statute was designed to require security
transactions, such as the 1945 indenture, to protect nonconsenting as well as
consenting bondholders. Therefore, the protection of section 10.19 extends to
both classes, and that section ‘constitutes a waiver of the effect of C.C.P.
726 by the expression of an inconsistent result. Indeed, in the absence of a
right in individual bondholders to foreclose, the provision must be construed
as authorizing a suit at law in order to effectuate the plain intent of
Congress.’ (App. Reply Br. p. 23.)
Appellant points out that a contractual waiver of section 726 is permissible

under section 2953 of the Civil Code which *122 allows such a waiver when the
state corporation department is required to approve the issuance of the
mortgage. The bonds here involved were issued under a permit from the state
corporation department.
[11] These arguments are unsound. If section 10.19 amounts to a waiver of

section 726, it would have to be a waiver by implication, because there is
certainly no express waiver. Yet an examination of the 1945 indenture
demonstrates that where the parties desired to enter into statutory waivers,
they expressly so provided. Thus, there is an express waiver of the statute
of limitations, of stay or extension laws, and of other statutory provisions.
As a matter of interpretation, these express waivers exclude the likelihood
that the parties intended any waivers by implication.
Moreover, the language of section 10.19 indicates that no waiver was

intended. It provides that whatever right a bondholder might have to sue for
payment ‘shall not be impaired or affected’ by the 1945 indenture. Non-
consenters, because of section 726, had no right to sue on their bonds
secured by the original mortgage, and therefore there could be nothing in the
1945 indenture that impairs or affects this non-existent right. Since section
10.19 does not purport to grant a right to sue before exhausting the
security, the prohibition of section 726 still is a bar to an action on the
bonds.
Respondents and interveners also contend, with some merit, that the complaint
was subject to several grounds of special demurrer, and that, since appellant
was given leave to amend and elected not to do so, the judgment entered on
the sustaining of the demurrer must be sustained. The disposition we have
made of the other points involved makes it unnecessary to consider these
points.
The judgment appealed from is affirmed.

Pierson v. Fischer, 131 Cal.App.2d 208, 280 P.2d 491 (Cal.App. 3 Dist. Mar
02, 1955)
Bad case
Special proceeding by vendee under trustee’s deed sounding in unlawful
detainer and action by debtor to set aside and declare void trustee’s sale
and deed issued to vendee thereunder. From judgments of Superior Court,
Humboldt County, Delos A. Mace, J., denying debtor’s motions to set aside
default judgment entered against him and sustaining demurrer to his action to
set aside and declare the trustee’s sale and deed void, the debtor appealed.
The two appeals were presented upon a single record. The District Court of
Appeal, Van Dyke, P. J., held that order for service of summons and complaint
upon debtor by publication was valid and that trustee’s sale and deed were
valid.
Motions to dismiss denied and judgment affirmed.
West Headnotes
[1] Judgment 228 138(2)
228 Judgment
228IV By Default
228IV(B) Opening or Setting Aside Default
228k138 Right to Relief in General
228k138(2) k. Negligence in Suffering Default. Most
Cited Cases
Where defendant was not at home when summons and complaint were left at his
residence but he was advised 29 days before entry of default judgment that
such documents had been received at his residence, court did not abuse its
discretion in denying application, made within one year, to set aside default
judgment. West’s Ann.Code Civ.Proc. §§ 473, 473a.
[2] Forcible Entry and Detainer 179 19(2)
179 Forcible Entry and Detainer

179I Civil Liability
179k19 Process and Appearance
179k19(2) k. Service and Return. Most Cited Cases
Forcible Entry and Detainer 179 38(4)
179 Forcible Entry and Detainer

179I Civil Liability
179k38 Judgment
179k38(4) k. Default Judgment. Most Cited Cases
In unlawful detainer action, order for service of summons and process by
publication for one day in newspaper in city in which property was located
was valid and denial of motion to set aside default judgment based on such
service of process was not an abuse of discretion, notwithstanding fact that
owner was not living in city where property was located and newspaper was
published. West’s Ann.Code Civ.Proc. §§ 473, 473a.
[3] Appeal and Error 30 920(1)
30 Appeal and Error

30XVI Review
30XVI(G) Presumptions
30k920 Interlocutory Orders and Proceedings
All presumptions must be indulged in by reviewing court in support of orders
made by trial court.
[4] Judgment 228 143(10)
228 Judgment
228IV By Default
228IV(B) Opening or Setting Aside Default
228k143 Excuses for Default
228k143(10) k. Mistake or Negligence of Counsel, in
General. Most Cited Cases
Where defendant in unlawful detainer action was advised 29 days before entry
of default judgment that copies of summons and complaint had been left at his
residence and defendant’s affidavit to vacate default judgment stated that
when he received documents he mailed them to his attorney who erroneously
believed that default had already been taken, court properly denied
defendant’s motion to vacate default judgment on ground of mistake,
inadvertence, surprise, and excusable neglect. West’s Ann.Code Civ.Proc. §
1161a; West’s Ann.Code Civ.Proc. §§ 473, 473a.
266 Mortgages
266k333 k. Power as Authority for Sale in General. Most Cited
Cases
Mortgages 266 349
266 Mortgages
266k349 k. Mode of Sale. Most Cited Cases
Power of sale under deed of trust will be strictly construed and trustee must
act in good faith in exercising power and must follow requirements of deed
with respect to manner of sale.
[6] Pleading 302 225(1)
302 Pleading
302V Demurrer or Exception
302k219 Operation and Effect of Decision on Demurrer
302k225 Amendment or Further Pleading After Demurrer Sustained
Trial court should not sustain demurrer without leave to amend where pleading
is merely defective for uncertainty.
[7] Mortgages 266 369(3)
266 Mortgages
Fraudulent nonperformance of a trustee’s duties under deed of trust
participated in or known by a buyer at sale may afford grounds in equity for
setting aside transaction so procured.
[8] Pleading 302 225(1)
302 Pleading
302V Demurrer or Exception
302k219 Operation and Effect of Decision on Demurrer
302k225 Amendment or Further Pleading After Demurrer Sustained
Where deed of trust provided recital in any deed conveying property should be
conclusive proof of truthfulness thereof, and trustee’s deed stated that
trustee complied with law in giving notice of time and place of sale and in
mailing copies of notices of default, etc., complaint, which alleged that
trustee’s sale and deed given pursuant thereto were not made according to law
nor according to provisions of deed of trust could not be amended to state a
cause of action, and court did not err in sustaining a demurrer to complaint
without leave to amend. West’s Ann.Civ.Code, § 2953.
266 Mortgages
266k374 k. Conveyance to Purchaser. Most Cited Cases
Deed of trust providing that recital in trustee’s deed of any matters or
facts shall be conclusive proof of the truthfulness thereof did not result in
waiver of rights or privileges conferred upon debtor by statutes establishing
procedures in exercise of powers of sale conferred by deeds of trust and did
not render trustee’s deed invalid. West’s Ann.Civ.Code, § 2953.
[10] Evidence 157 383(7)
157 Evidence
157X Documentary Evidence
157X(D) Production, Authentication, and Effect
157k383 Conclusiveness and Effect
157k383(7) k. Private Contracts and Other Writings.
Most Cited Cases
By execution of deed of trust declaring that recital in trustee’s deed of any
fact or matter should be conclusive proof of truthfulness thereof, debtor
made trustee his agent with such powers that trustee could bind him,
notwithstanding he had not carried out provisions of trust, and as against
purchaser, who did not participate in or know of failure of trustee to
perform his duties, recital that trustee had been true to his trust was
binding upon debtor. West’s Ann.Civ.Code, § 2953.
**492 *209 Sefton & Gartland, San Francisco, for appellant.
Erskine, Erskine & Tulley, San Francisco, for respondent Pierson.
Samuel B. Stewart, Jr., and Christopher M. Jenks, San Francisco, for

respondent Corp. of America, Bank of America, etc.
VAN DYKE, Presiding Justice.

Herein two appeals are presented upon a single record. In the case of Pierson
v. Fischer, the plaintiffs and respondents brought a special proceeding
against the defendants and appellant Fischer sounding in unlawful detainer
under the provisions of Section 1161a of the Code of Civil Procedure.
Respondents claimed to be the owners of the real property involved in the
action, which is *210 located in Eureka, California, by virtue of having
purchased the same at a trustee’s sale under a deed of trust executed to
secure a loan. They made the statutory demand for possession and upon
possession being refused brought suit. Personal service was not made upon
appellant Fischer nor upon several other defendants. Respondents caused an
affidavit to be filed, charging that Fischer and other defendants were
concealing themselves to avoid the service of summons, and respondents upon
that ground asked for an order for the publication of summons. This order was
given and there is no claim made in this appeal that a proper foundation had
not been laid for the issuance of an order for such constructive service. It
is claimed, however, that the order made was invalid because not ordering
publication to be made in a newspaper most likely to give notice to those
being so served and because the trial court unduly limited the time of
publication. A default judgment was obtained and appellant Fischer twice
moved to set the same aside. Both motions were denied and he herein appeals
from both denial orders.
**493 In Fischer v. Corporation of America and others appellant Fischer filed

an action asking for a judgment setting aside and declaring void the same
trustee’s sale and the deed issued to the Piersons thereunder. Therein
Fischer alleged that he had purchased the property involved in the unlawful
detainer action from Merchants National Realty Corporation and had given a
deed of trust to secure a part of the purchase price; that the trustee had
sold the property to the Piersons and that this sale had not been made
according to law nor according to the provisions of the deed of trust. The
trial court sustained a general demurrer without leave to amend and from the
ensuing judgment Fischer appeals.
[1] We shall treat, first, of the appeal in Pierson v. Fischer. The pertinent
facts therein, appearing in the record of proceedings to vacate the default
judgment, in addition to those given above, are these: Fischer defaulted in
meeting the obligations of his note and deed of trust, and notice of such
default was recorded. Three months thereafter demand was made upon the
trustee to sell the property. Notice of sale was published, posted and
mailed, the sale date being first set for October 9, 1951. The sale was
postponed seven times at Fischer’s request and during this period the
building inspector at Eureka was threatening to condemn the buildings on the
property by reason of their condition. February 13, 1952 the property was
sold to the Piersons for $72,300 and they were given the *211 trustee’s deed.
Six days thereafter Fischer filed for record an affidavit charging invalidity
in the sale for want of proper notice to him, stating therein that he
intended to bring an action to set aside the sale and was recording the
document to prevent resale to bona fide purchasers. About one month after the
sale, the Piersons served Fischer with a three-day notice to quit and five
days thereafter filed a complaint in unlawful detainer. This complaint named
Fischer’s former wife as a defendant, she having been a party to the deed of
trust, and in addition joined a Mr. and Mrs. Strong, who were related to
Fischer and to whom he had once conveyed the property. Efforts to serve
Fischer and the Strongs were successfully evaded. The former Mrs. Fischer
resided in Oregon. The trial court ordered the summons and complaint
constructively served upon each defendant ‘by publication in the Humboldt
Standard, a newspaper printed and published in Eureka, the publication to run
for one day.’No complaint is made, save as noted above, that, procedurally,
the requirements of constructive service were not complied with. Fischer
received a copy of the complaint and of the summons which required his
appearance in three days. Although when the documents were received at his
residence he was not there, yet he received notice of their arrival on April
20, 1952. On April 23rd he consulted an attorney, and on April 25th delivered
to him copies of summons and complaint. On April 22d the attorney for the
Piersons wrote the court clerk, returning the original process with proof of
service and requesting the entry of default. April 28th Fischer’s attorney
contacted the Piersons’ attorney and was told that the entry of default had
been requested, that no stipulation extending time would be made because of
the many indulgences already given to Fischer and that during the following
week application would be made for judgment. On April 30th Fischer received a
letter from his attorney stating he would not proceed without a retainer. No
appearance was made. Fischer employed other counsel. Judgment was entered May
19th, twenty-nine days after Fischer was first advised that summons and
complaint had been received at his residence.
Fischer contends that his first motion to set aside the default judgment
should have been granted, asserting that it was based upon Section 473a of
the Code of Civil Procedure, which provides that if from any cause a summons
in an action has not been personally served upon a defendant the court, upon
terms that are just, may allow such defendant to answer on the merits *212 if
application by made within one year. He says that when the application is
made under that section the court is without discretion to refuse relief. The
contention is untenable. Neither Section 473 nor Section 473a of the Code of
Civil **494 Procedure was designed to afford relief from judgments validly
entered upon constructive notice to those ‘who with full knowledge of such
service upon them, by reason of receipt of a copy of the summons and
complaint through the mail, remain inactive.’ Palmer v. Lantz, 215 Cal. 320,
324, 9 P.2d 821, 823; Gardner v. Gardner, 72 Cal.App.2d 270, 274, 164 P.2d
500; Boland v. All Persons, 160 Cal. 486, 490, 117 P. 547. The application
for relief addressed itself to the judicial discretion of the trial court and
upon the facts recited we hold that the court did not abuse its discretion in
denying Fischer’s request.
[2][3] Appellant contends further that his motion should have been granted
upon the ground that the order for publication was void, so that no service
whatever had been made upon him. In support of this contention he points out
that he was not residing in Eureka where the property was located and where
the publication was made and that more than one publication should have been
made. But the statutes have clearly recognized the necessity of prompt
judicial action in cases such as these. They give a defendant only three days
in which to appear. They give the action precedence over other civil actions.
And they commit to the trial court broad discretionary powers in selecting
the medium of publication and fixing the number of publications to be made.
Of course all presumptions must here be indulged in support of the orders
made by the trial court and we hold that the record here discloses no abuse
of discretion and must be upheld against the attacks here made.
[4] After the denial of his first motion for relief appellant filed a second
motion therefor. This motion was made on the ground that the entry of default
and of the default judgment constituted proceedings taken against appellant
through mistake, inadvertence, surprise and excusable neglect. The supporting
affidavit sets forth that the property involved was of such worth that
appellant’s equity therein was of the value of $75,000 and that he alone of
all the defendants was interested therein; that the mailed copy of summons
and complaint arrived at his house in Los Gatos on April 20, 1952, when he
was at Lakeport, that he thereafter mailed the documents to his attorney and
was by him on April 30th told that he already *213 was in default and that
proceedings would have to be taken to set that default aside; that he then
procured another attorney who, on June 24th, made such application. He
further avers, in effect, that his attorney had been misinformed by the
Piersons’ attorney and led to believe a default had already been entered,
which was not true (we note here that this conflicts with the opposing
affidavit of the Piersons’ attorney); that because of this misinformation,
he, appellant, was mistaken as to the status of the case, believing that the
default had already been entered when, in fact, it was not entered until May
5th; that he believed he had thirty days to answer, in which he was further
mistaken, but therein he relied upon his previous experience in lawsuits
which led him to believe that he did have such thirty days’ time. Here again
the second motion was addressed to the sound discretion of the trial court.
The showing, robbed of the claim of misinformation, presented a factual issue
which the trial court determined. The memorandum opinion of that court,
addressed to this second motion, shows that the court carefully considered
the entire situation and arrived at the conclusion that justice required the
judgment be permitted to stand. We hold upon the facts presented that the
trial court’s ruling must be upheld upon appeal.
Turning, now, to the second appeal in the action brought by Fischer against
the Piersons and others to set aside the trustee’s sale and declare void the
trustee’s deed, the following situation is presented: It was alleged in the
complaint that plaintiff had purchased the subject property and had given a
note secured by a deed of trust for a part of the purchase price. A copy of
that deed of trust was attached to the complaint and made a part thereof by
reference. It was alleged that the trustee had sold the property to the
Piersons and a copy of the trustee’s deed was likewise attached to the
complaint and made a part thereof by reference. It was then alleged **495
that said sale was not made according to law nor according to the provisions
of said deed of trust in this, that ‘no notice of said sale was either posted
or published, nor was said sale postponed to said date by public announcement
from any previous time fixed for sale; that the omission of said trustee to
post or publish the notice of sale or to publicly announce any postponement
thereof was calculated to and did prevent competitive bidding at the sale of
said property, and by reason of no competitive bids, the sum for which said
property was sold was far below the real and true value thereof.’*214 To this
complaint respondents demurred generally. Their claim that the pleading did
not state a cause of action against them rests upon certain provisions in the
deed of trust and in the trustee’s deed.
The deed of trust contains the following: ‘Trustee shall deliver to the
purchaser its deed conveying the property so sold, * * * The recital in any
such deed of any matters or facts, stated either specifically or in general
terms, or as conclusions of law or fact, shall be conclusive proof of the
truthfulness thereof.’The trustee’s deed contains the following language:
‘Said Trustee gave notice of the time and place of the sale of said property
in accordance with the laws of the State of California and the terms of said
Deed of Trust. Said Trustee complied with all of the provisions of law
regarding the mailing of copies of notices of default and of sale and with
all applicable provisions of law regarding the service and publication of the
notices of default. Said property was sold by said Trustee at public auction
on February 13, 1952, in the City of Eureka, County of Humboldt, in full
accordance with the laws of the State of California, and the terms of said
Deed of Trust. Said Grantees, being the highest bidders at such sale, became
the purchasers of said property and paid therefor to said Trustee the amount
bid, being Seventy Two Thousand Three Hundred and No/100 Dollars in lawful
money of the United States.’
[5] It is obvious that the complaint, without reference to the provisions of

the deed of trust and of the trustee’s deed above recited, stated a cause of
action or at least could have been amended to so state. Generally, the rule
is that:
‘The power of sale under a deed of trust will be strictly construed, and in
its execution the trustee must act in good faith and strictly follow the
requirements of the deed with respect to the manner of sale. The sale will be
scrutinized by courts with great care and will not be sustained unless
conducted with all fairness, regularity and scrupulous integrity. * * *’ (25
Cal.Jur., sec. 67, page 83.)
[6][7] As to sustaining demurrers without leave to amend, the rule has been
broadly stated as follows: ‘As a matter of sound public policy litigation
should be disposed of upon substantial rather than upon technical grounds,
and that the trial judge should not sustain a demurrer without leave to amend
where it is merely defective for uncertainty.’ Davis v. Wood, 61 Cal.App.2d
788, 789, 143 P.2d 740, 745; see, also, *215Wennerholm v. Stanford University
School of Medicine, 20 Cal.2d 713, 718, 720, 128 P.2d 522, 141 A.L.R. 1358.
However, if the recitals in the trustee’s deed are in fact conclusive as
between the parties to the deed of trust, then the complaint cannot be
amended to state a cause of action based upon any claimed failure of the
trustee to properly couduct the sale proceedings and the court did not err in
sustaining the demurrer without leave to amend. We are not unmindful of the
fact that fraudulent nonperformance of a trustee’s duties participated in or
known of by a buyer at the sale may afford grounds in equity for setting
aside a transaction so procured. But in this whole record there is no
suggestion that any fraud was practiced, nor, if fraud existed, that the
Piersons had any knowledge thereof. The case, therefore, turns upon the
conclusive character of these recitals. Such recitals have often received the
attention of appellate courts. In Bank of America, Nat. Trust & Savings Ass’n
v. McLaughlin etc. Co., 40 Cal.App.2d 620, 633, 105 P.2d 607, 614, recitals
which were to all intents and purposes identical with those we have here, and
which were based upon provisions **496 in a deed of trust that likewise, for
all practical purposes, was identical with the deed of trust here, the
appellate court upheld the ruling of the trial court directing a verdict for
the plaintiff therein after refusing to permit the defendant to offer
evidence tending to refute the recitals. The court said:
‘The appellant assigns error in the refusal of the trial court to receive
evidence tending to refute the recitals in the trustees’ deed on the ground
that appellant was concluded by those recitals. The deed of trust provided:
‘The recitals contained in any deed or deeds made pursuant to any sale of the
property hereunder setting forth matters or facts with reference to the
regularity or validity of said sale shall be conclusive proof of the
truthfulness thereof, and such deed or deeds shall be conclusive against the
Trustor and all other persons. The said matters or facts need not be stated
specifically but may be stated in general terms and in conclusions.’The
trustees’ deed contained a recital that the property was sold to the grantee
at the time, place, terms and conditions provided in the deed of trust ‘and
in all respects as provided by the law of the State of California’. The
appellant argues that though the deed of trust makes the recitals of
everything leading up to the sale conclusive, it does not make the recital
that a sale was actually held conclusive. For this reason the appellant
offered to prove that no sale was had. The language of the deed of trust is
not ambiguous. A matter or fact with *216 reference to the regularity or
validity of the sale would clearly embrace the fact of sale, and the recital
in the trustees’ deed that the property was ‘sold’ at the time and place
noticed will estop the claim that no sale was in fact made.’
In Central National Bank of Oakland v. Bell, 5 Cal.2d 324, 327, 54 P.2d 1107,
1109, the Supreme Court said:
‘The defendants on the trial endeavored to show that the notices required by
section 692, subd. 3, Code Civ.Proc., did not remain posted for twenty days
prior to the date of sale. The evidence was held inadmissible and excluded by
the court. The court did not err in its ruling. It is sufficient in this
respect to note that the trust deeds provided that, in event of sale
thereunder, the recitals in the trustees’ deeds, of default, request to sell,
publication, and posting of notice, postponements of sale, etc., should be
conclusive evidence of all such facts recited. In this action and on the
record before us the defendants were concluded by the recitals in the
trustees deeds.’
[8] The same ruling was made in Cobb v. California Bank, 6 Cal.2d 389, 57
P.2d 924. We hold that the trial court did not err in sustaining respondents’
demurrer without leave to amend.
Appellant contends that to hold the recitals in the trustee’s deed to be

conclusive against him is to violate the provisions of Section 2953 of the
Civil Code which declares:
‘Any express agreement made or entered into by a borrower at the time of or

in connection with the making of or renewing of any loan secured by a deed of
trust, mortgage or other instrument creating a lien on real property, whereby
the borrower agrees to waive the rights, or privileges conferred upon him by
Sections 2924, 2924b, 2924c of the Civil Code or by Sections 580a or 726 of
the Code of Civil Procedure, shall be void and of no effect.’
[9][10] The argument is not sound, for the reason that the provisions in the
deed of trust here in question do not result in a waiver of the rights or
privileges conferred by the Civil Code sections referred to. Those sections,
speaking generally, establish certain procedures in the exercise of powers of
sale conferred by deeds of trust and in the remedies of the beneficiary. And
concerning all of them, appellant, by the instrument he executed, declared
that the recitals in a deed made by his trustee that all of the duties of the
trust respecting the sale had been complied with should bind him. In short,
he thereby made the **497 trustee his agent with such powers that *217 the
trustee could bind him, notwithstanding he had not carried out the provisions
of his trust. As the Supreme Court said in Mersfelder v. Spring, 139 Cal.
593, 595, 73 P. 452, 453: Such stipulations ‘in express terms to give the
trustee the authority to bind his principal by the mere execution of a deed
containing the prescribed recitals.’As against a purchaser who does not
participate in or know of the failure of the trustee to perform his duties,
the recital that he has been true to his trust binds the trustee’s principal
and such purchaser may rely upon those provisions in purchasing at the sale.
We think it unnecessary to rule upon the legal issues presented by the

motions to dismiss these appeals. We prefer to dispose of the motions by
denial but in conjunction with our disposition of the appeals on the merits.
The motions to dismiss are denied; the judgments appealed from are affirmed.
California Trust Co. v. Smead Inv. Co., 6 Cal.App.2d 432, 44 P.2d 624
(Cal.App. 2 Dist. Apr 25, 1935)
Necessity of causing injury, distinction between claim and proof of

injury, compare Sargent v. Shumaker, must establish with proof.
In said action, where no claim of mistake, misapprehension or inadvertence

was made by defendant, nor was any claim made that the sale was attended with
any unfairness or that it was made under conditions which would be
inequitable or oppressive, and nothing appeared in the record which would
amount to an abuse of discretion on the part of the trial court in entering
judgment for plaintiff as prayed, there was no merit in defendant’s
contention on appeal that the court has inherent equitable power to refuse to
allow a deficiency judgment based on the forced sale price when the sale is
attended with any unfairness or is made under conditions which would be
inequitable or oppressive.
(3) Deeds of Trust--Procedure--Symbolic Delivery--Irregularities-- Prejudice.

An irregularity, even if one has occurred, is not sufficient to invalidate a
trustee’s sale in the absence of a claim **that the irregularity operated to
the injury of the owner; and in said action, notwithstanding the trust deed
required that when written declaration of default and demand for sale was
made to the trustee, the beneficiary should at the same time deliver to the
trustee the trust deed and the note, manual delivery of the note and deed of
trust was not necessary, but symbolic delivery was sufficient, there being no
claim by defendant that harm or prejudice resulted to him therefrom.
(2) The defendant next contends that the court has inherent equitable power
to refuse to allow a deficiency judgment based on the forced sale price when
the sale is attended with any unfairness or is made under conditions which
would be inequitable or oppressive. The defendant cites no California cases
in this behalf. He cites cases of other jurisdictions in which the courts
have refused to approve sales under foreclosure judgments and executions
because of inadequacy of sale price where the inadequacy resulted from
mistake, misapprehension or inadvertence on the part of the interested
parties or of intending bidders. It is obvious, however, the refusal to
approve a sale and thus requiring a new or resale is quite another matter
from refusing a judgment after the sale has been completed. **Furthermore, in
the instant case no claim of mistake, misapprehension or inadvertence is made
by the defendant, nor is any claim made that the sale was attended with any
unfairness or that it was made under conditions which would be inequitable or
oppressive. We see nothing in the record which would amount to an abuse of
discretion on the part of the trial court.
(3) The defendant contends that the sale was accompanied with certain
irregularities. In this regard he claims that paragraph G.1. of the trust
deed required that when written declaration of default and demand for sale
was made to the trustee, the beneficiary should at the same time deliver to
the trustee the trust deed and the note. A second irregularity claimed by the
defendant was that the plaintiff, being the trustee as well as the owner, was
unauthorized to charge and collect, as it did, a trustee’s fee for conducting
the sale. As to the first alleged irregularity, it is our conclusion *435
that manual delivery of the note and deed of trust was not necessary-symbolic
delivery was sufficient. **There is no claim by the defendant that harm or
prejudice resulted to him from the symbolic delivery. **An irregularity, even
if one has occurred, is not sufficient to invalidate a trustee’s sale in the
absence of a claim that the irregularity operated to the injury of the owner.
(25 Cal. Jur. 91, and cases cited.) (4) With regard to the fees of the
trustee, the courts of this state have repeatedly held that there is no
impropriety in the payee of the note being also the trustee in the deed of
trust. (25 Cal. Jur. 19, and cases cited.) No claim is made by the defendant
that the fee charged was other than the customary fee in the community for
like services and the court found that the charge was a reasonable one. The
defendant’s contention is that the plaintiff could not collect a fee for
itself because it had become the owner of the note, but the plaintiff was the
trustee from the beginning of the transaction and it was one of the
agreements of the trust deed that in case of foreclosure sale the plaintiff
would be entitled to a trustee’s fee.
Finally the defendant contends that certain findings of the trial court were
unsupported by the evidence. We have examined into these conditions and find
that in each case the findings were supported by substantial evidence.
Judgment affirmed.
I had attempted multiple times to call Bank of the West and was never
returned any calls. Confusion as to who to communicate to. The
trustor and other third persons need to know the identity of the
trustee for obtaining information and tendering a reinstatement or
redemption. 8
Miller & Starr Substitution of Trustee, page 39

See Hayward v. Corbett

Dist. Jun 21, 2000)
(2) Deeds of Trust § 35--Sale Under Power--Who May Convey--Following

Substitution of New Trustee.
Where the beneficiary of a deed of trust recorded a document that substituted
a new trustee for the former trustee, and the substitution of the new trustee
was never subject to any further recorded substitution by the beneficiary,
**the new trustee had sole power to convey the property. Under the
unambiguous terms of Civ. Code, § 2934a, subd. (a)(4), the recording of the
substitution of trustee transferred to the new trustee the exclusive power to
conduct a trustee’s sale. Upon the appointment being made under the power,
the new trustee became vested, ipso facto, with the title to the trust
premises and was clothed with the same power as if the new trustee had been
originally named. Such a reading of the statute is consistent with practical
necessity: **To avoid confusion and litigation, there cannot be at any given
time more than one person with the power to conduct a sale under a deed of
trust. **The beneficiary’s agent was not able to effectively reinstate the
former trustee by simply abandoning the internal foreclosure file it had
created upon the substitution. Civ. Code, § 2934a, permits a substitution
only by way of a recorded document, **and the terms of the deed of trust
itself did not provide any alternative means of making a substitution. **As a
practical matter, if the validity of a recorded substitution was subject to
the undisclosed, undocumented, and subjective decisions of agents of the
beneficiary, the successor trustee’s ability to provide marketable title
would be severely hampered.
(3a, 3b) Deeds of Trust § 35--Sale Under Power--Who May Convey-- Following
Substitution of New Trustee--Void Conveyance by *870 Former Trustee.
**Where the beneficiary of a deed of trust recorded a document that
substituted a new trustee for the former trustee, the new trustee had sole
power to convey the property, and therefore the former trustee’s conveyance
of the property to a new buyer after a foreclosure sale was void. **The
transaction was not merely voidable. The former trustee, who no longer had
title to the property, could not convey effective title. **Moreover, although
the deed of trust that the homeowner executed stated that a recital in a
trustee’s deed of any matters of fact shall be conclusive proof of the
truthfulness thereof, the deed that the former trustee gave to the new buyer
after the foreclosure sale contained no statement that the former trustee’s
power to act as trustee had survived any recorded substitution. Rather, the
deed merely conveyed to the new buyer "such interest as Trustee has in" the
homeowner’s property. The only factual recitals in the deed related to the
notice given to the homeowner and the conduct of the sale; there was no
representation as to whether a conflicting substitution of trustee had been
recorded. **Because there was no recital in the former trustee’s deed to the
new buyer that undermined the new trustee’s substitution, the deed to the new
buyer did not create any conclusive presumption that the former trustee
continued to act as trustee. Thus, in attacking the former trustee’s deed,
the homeowner was not required to rely upon equity in setting aside a merely
voidable deed. Rather, he could rely on the face of the record to show that
the former trustee’s deed was void.
Jones v. First American Title Ins. Co., 107 Cal.App.4th 381, 131
(Cal.App. 2 Dist.,Mar 25, 2003)
Does lender need to substitute itself in as trustee before it can

exercise the powers of the trustee. This appears so in Jones.
[4] Of course failure to have a recorded trustee conduct a foreclosure sale

will not justify reformation in every case. Each case must be judged on its
own facts. **865 This case involves a complex set of transactions that
included multiple forbearances and a partial release of the trust deed.
Merkle involved a mistake in the description of property in a deed. Here the
mistake concerned only who was to perform a ministerial act. **There was no
showing the borrowers were prejudiced by the former trustee’s conduct of the
foreclosure sale.
Tomczak v. Ortega, 240 Cal.App.2d 902, 50 Cal.Rptr. 20 (Cal.App. 1

Dist.,Mar 21, 1966)
266 Mortgages
266k335 k. Right to Foreclose. Most Cited Cases
Mortgagors were not precluded from relying upon statute authorizing
mortgagors within three months of recording of notice of default under deed
of trust to pay entire amount due and thereby cure the default by provision
in deed of trust that factual recitals in trustee’s deed executed following
foreclosure sale “shall be conclusive proof of the truthfulness thereof”
**where trustee’s deed referred to recordation of notice of default and then
recited that “such default still existed at the time of sale” but there was
no substantial evidence to support such recital. West’s Ann.Civ.Code, § 2924c.
[3] Respondents make the contention that appellants are precluded from
relying upon section 2924c by the provision in the deed of trust that the
factual recitals in a trustee’s deed executed following a foreclosure sale
‘shall be conclusive proof of the truthfulness thereof.’
The trustee’s deed here refers to the recordation of the notice of default
and then recites that ‘Such default Still existed at the time of sale.’
(Emphasis added.) There is no substantial evidence to support this recital
and it cannot be upheld in this instance.
To accept this recital as being binding upon appellants would, under the
circumstances herein, be contrary to the public policy purpose behind Civil
Code, section 2953, which provides in pertinent part as follows: ‘Any express
agreement made or entered into by a borrower at the time of or in connection
with the making of or renewing of any loan secured by a deed of trust, * * *
whereby the borrower agrees to waive the rights, or privileges conferred upon
him by Section 2924, 2924b, (or) 2924c of the Civil Code * * * shall be void
and of no effect.’
Witter v. Bank of Milpitas, 204 Cal. 570, 269 P. 614 (Cal. Jul 18, 1928)
Case involving two trustees. Listed as an old case in cc 2934a lexis
Hill v. Gibraltar Sav. & Loan Ass’n of Beverly Hills, 254 Cal.App.2d 241,
62 Cal.Rptr. 188 (Cal.App. 2 Dist. Sep 08, 1967)
Old case
No real dispute exists as to the material facts. On March 22, 1962,

Gibraltar, as beneficiary under the first deed of trust, caused to be
recorded a notice of default and election to sell the subject property. As
trustee, Security duly published this notice. On March 30, 1962, plaintiffs
received a copy of the *243 notice and, on July 17, 1962, they received
written notice that the trustee’s sale was to be held on August 10, 1962.
Stated in the notice was the fact that, as provided in the deed of trust, the
property was to be sold ‘to the highest bidder for cash payable at the time
of sale.’
The sale was held as scheduled at 11 a.m. on August 10, 1962. Plaintiff David
Hill and his attorney were present. The auctioneer, an officer of Security,
commenced the sale. Gibraltar, through its representatives, made an opening
bid of $20,955.38, which was the amount due under its note secured by the
first trust deed, including costs. At this point, Mr. Siegal, a third party
previously unknown to either plaintiffs or defendants, bid $21,000 and
qualified the bid by showing a cashier’s check in his hands in excess of the
amount bid. Thereafter, plaintiff bid the sum of $22,000, but when the
auctioneer asked him to show cash or a cashier’s check in that amount, he
produced a cashier’s check in the amount of only $20,955.38. The auctioneer
refused to accept the bid stating that he had not properly qualified it.
Plaintiff then informed the auctioneer that he held a second trust deed on
the property and asked that the sale be postponed for a ‘couple of hours’ in
order to give him time to secure the additional amount required to qualify
his bid. Siegal demanded that Security go ahead with the sale. No other
bidders were present. After consulting with a representative of Gibraltar,
who asked that the auctioneer proceed with the sale, the auctioneer refused
plaintiff’s request for a postponement and sold the property to Siegal for
the sum of $21,000.
The trial court concluded that under the circumstances Security had no duty
to postpone the sale.
[1][2] The questioned conduct of the trustee should be viewed keeping in mind
these principles: A sale under a deed of trust must be conducted in strict
compliance with the terms of the instrument containing the power of sale. (
**190Kleckner v. Bank of America, 97 Cal.App.2d 30, 33, 217 P.2d 28; 34
Cal.Jur.2d 130; 59 C.J.S. Mortgages s 572, p. 959.) The sale must be
conducted fairly, openly, with due diligence and with the exercise of sound
discretion on the part of the trustee, in order to protect the rights of all
interested persons and to obtain a reasonable price. ( *244Brown v. Busch,
152 Cal.App.2d 200, 204, 313 P.2d 19; Kleckner v. Bank of America, supra, 97
Cal.App.2d 30, 33, 217 P.2d 28; 34 Cal.Jur.2d 130-131; 59 C.J.S. Mortgages s
572, pp. 959-960; 90 A.L.R.2d 564.) The court in Kleckner, supra, stated (97
Cal.App.2d at pp. 33-34, 217 P.2d at p. 31): ‘It is the duty of a trustee,
once it has started, to continue with reasonable dispatch with a sale under a
trust deed; the terms being cash, the trustee is not required to hold up the
sale while sundry bidders leave the place to go to banks or elsewhere to get
cash. Such conduct of a sale could well result in confusion, in the dispersal
of bidders present, and in loss to persons represented by the trustee.’
The contract terms resulted in waivers that in absence of their being

forbidden by statute were operative over the statute.
Pacific States Savings & Loan Co. v. North American Bond & Mortg. Co., 37
Cal.App.2d 307, 99 P.2d 355 (Cal.App. 1 Dist.,Feb 15, 1940)
Action by the Pacific States Savings & Loan Company against the North
American Bond & Mortgage Company to quiet title, wherein defendant cross-
complained, asserting an interest as original trustee under a deed of trust.
From judgment denying any relief to plaintiff and adjudging that title was
vested in defendant, plaintiff appeals.
Reversed with directions.
266 Mortgages
266I Requisites and Validity
266I(A) Nature and Essentials of Conveyances as Security
266k22 Parties
The trustor in a deed of trust and the lender may, by appropriate joint
action, substitute a new trustee in place of the original trustee named in
deed of trust.
266 Mortgages
266k339 Persons Entitled to Execute Power
266k342 k. Appointment of New Trustee. Most Cited Cases
A “substitution of trustee” jointly executed and recorded by successor of
trustor and successor of lender was valid and effectively revoked powers of
original trustee and terminated any interest of original trustee in the
property, so that purchaser at sale conducted by substituted trustee acquired
title as against original trustee.
**355 *307 John L. Mace, of Los Angeles, for appellant.
Alvin W. Wendt, of Hollywood, for respondent.
SPENCE, Justice.
Plaintiff purchased certain real property at a sale conducted by Pacific
Auxiliary Corporation as the *308 substituted trustee under a deed of trust.
It brought this action to quiet title against the defendant corporation,
which was the original trustee under said deed of trust. The claim of the
defendant was based solely upon its alleged interest as such trustee. The
trial court entered judgment denying any relief to plaintiff and adjudging
that title to said real property was vested in defendant as such trustee.
Plaintiff appeals from said judgment.
The cause was tried upon stipulated facts. The plaintiff corporation and Olga
Rupp were respectively the successor in interest of the original lender and
the successor in interest of the original trustor. Said deed of trust did not
contain the provision frequently found in such deeds of trust permitting the
lender alone to substitute a new trustee. After the enactment in 1935 of
section 2934a of the Civil Code, plaintiff and said Olga Rupp jointly
executed and recorded a document entitled “Substitution of Trustee” and
complied with all the requirements of that section for the purpose of
substituting Pacific States Auxiliary Corporation as trustee under said deed
of trust. Said substituted trustee conducted the sale thereunder and
plaintiff became the purchaser. Thereafter said substituted trustee executed
and delivered to plaintiff a trustee’s deed to the property.
The sole question presented is that of the validity of said substitution. It

will be noted that the above-mentioned “Substitution of Trustee” was not
executed solely by the successor of the lender but was executed by both the
successor of the trustor and the successor of the lender. It will be further
noted that the original trustee is the only one challenging the validity of
said substitution.
The trial court stated in its findings of fact and conclusions of law that it
found said substitution invalid first, because said section 2934a applied
only to deeds of trust “conferring no other duties upon the trustee than
those which are incidental to the *** power of sale therein conferred”,
whereas the deed of trust here “conferred another duty, to-wit: the duty of
reconveying the property when the note was paid”; and second, because said
section**356 became effective after the execution of said deed of trust and
was intended only to affect deeds of trust subsequently executed; and third,
because if given retroactive effect, it “would *309 amount to an interference
with the right of contract and the taking of property without due process of
law”.
Plaintiff contends that the trial court erred in declaring said substitution
invalid and in entering judgment in favor of defendant. **In our opinion this
contention must be sustained.
Plaintiff’s claim that the substitution was valid is based upon two grounds.
**The first ground is that said section 2934a is applicable to all deeds of
trust similar to the one under consideration regardless of the time of
execution of said deeds of trust and that the application thereof to deeds of
trust previously executed violates no constitutional rights. **The second
ground is that the substitution was made here by the joint action of the
successor of the trustor and the successor of the lender and that it was not
dependent upon said section 2934a for its validity. **We are of the opinion
that we may base our conclusion that the substitution was valid upon the
second ground above stated and that it is therefore unnecessary to discuss
the first ground.
The nature of the instruments called deeds of trust and the legal
consequences of the execution of such instruments have been frequently
discussed and the authorities were extensively reviewed in Bank of Italy Nat.
Trust & Sav. Ass’n v. Bentley, 217 Cal. 644, 20 P.2d 940.It has been said
that such deeds of trust are “an anomaly in our system” and that “in effect
they are mortgages with power to sell”. Hodgkins v. Wright, 127 Cal. 688,
692, 60 P. 431, 432.It further appears that the status of a trustee under
such a deed of trust is an anomalous one. While such a deed of trust takes
the form of a grant of title to the trustee, it is not always treated as a
“grant” but it is frequently treated as a mere “encumbrance”. Burns v.
Peters, 5 Cal.2d 619, 55 P.2d 1182.Such a deed of trust “carries none of the
incidents of ownership of the property, other than the right to convey upon
default on the part of the debtor in the payment of his debt”. MacLeod v.
Moran, 153 Cal. 97, 99, 94 P. 604, 605.Neither delivery to the trustee nor
the consent of the trustee is essential to the validity of such a deed of
trust (Burns v. Peters, supra; Smith v. Davis, 90 Cal. 25, 27 P. 26, 25
Am.St.Rep. 92; Huntoon v. Southern T. & C. Bank, 107 Cal.App. 121, 290 P. 86),
and doubt has been cast upon whether the trustee*310 is a trustee in the
strict sense of the word or is merely an agent appointed by the parties to
exercise the limited powers conferred upon him as such agent. In Ainsa v.
Mercantile Trust Co., 174 Cal. 504, at page 510, 163 P. 898, at page 900, the
court said, “A trustee under a deed of trust does not assume the important
obligations which are in some instances cast upon a trustee by operation of
law. An ordinary trust deed is little more than a mortgage with power to
convey.*** A trustee under an ordinary deed of trust is the common agent of
both parties and is required to act impartially.*** Some authorities hold
that he is not a trustee at all in a technical sense.”With respect to
foreclosure, it has been held that no constitutional right of the parties is
violated by the application of a statute, subsequently enacted, giving to the
lender the additional remedy of a judicial foreclosure ( Lincoln v. Superior
Court, 2 Cal.2d 127, 39 P.2d 405) and that the trustee “has no right to
complain if the beneficiary takes advantage of a statute allowing a judicial
foreclosure of the deed of trust”. Field v. Acres, 9 Cal.2d 110, 113, 69 P.2d
422, 424.
[1][2][3][4] While the courts of this state may be said to have adhered quite
generally to the so-called “title” theory rather than to the so-called “lien”
theory with respect to deeds of trust (see Bank of Italy Nat. Trust & Sav.
Ass’n v. Bentley, supra), it has never been held that the powers granted to
the trustee may not be revoked or that the interest, if any, of the trustee
in the property may not be terminated by the joint action of the trustor and
the lender. If we regard substance rather than form, it would seem that the
anomalous role of the so-called trustee under a deed of trust is more nearly
the role of a “common agent of both parties” and not that of a “trustee at
all in a technical sense”. If he be treated as a mere agent, his powers are
clearly revocable under familiar rules of agency (Civ.Code, sec. 2356), but
whether he be treated as a mere agent or as a trustee with the limited powers
conferred by the deed of trust, we are of the opinion that he possesses no
powers and no interest which are beyond the reach of the parties creating the
same, or of the successors in interest of such parties. In other words, we
are of **357 the view that the principal parties to the transaction, to-wit,
the trustor and the lender, or the successors of said parties, may by
appropriate joint action revoke *311 the trust entirely leaving the title to
the property in the trustor or his successor free of any trust or
encumbrance; that they may by appropriate joint action convey title to a
third person free of any trust or encumbrance; and that they may by
appropriate joint action substitute a new trustee in the place of the
original trustee named in the deed of trust. This view merely accords to said
principal parties the same measure of control over the transaction as have
the principal parties under a mortgage containing a power of sale. There
seems to be no sound reason, as between the principal parties and the
trustee, to deny to the principal parties that same measure of control. We
conclude that the substitution jointly executed and recorded by the successor
of the trustor and the successor of the lender was valid and that it
effectively revoked the powers of the defendant trustee and terminated any
interest of the defendant trustee in the property. It follows that judgment
should have been entered in favor of the plaintiff upon the stipulated facts.
The judgment is reversed with directions to the trial court to enter judgment
in favor of the plaintiff.
Bank of America Nat. Trust & Savings Ass’n v. Century Land & Water Co., 19 Cal.App.2d 194, 65 P.2d
109 (Cal.App. 2 Dist.,Feb 10, 1937)
[3] Mortgages 266 369(3)
266 Mortgages
Inadequacy of foreclosure sale price is not in itself sufficient ground for setting aside a sale legally made, but, if
price is palpably inadequate, slight irregularities in conjunction with sale authorize court to set it aside if such
irregularities have conduced to the inadequacy of price or in some other way contributed to injury of debtor.
266 Mortgages
266k375 k. Deficiency and Personal Liability. Most Cited Cases
In absence of irregularities or oppression, fraud or unfairness, holder of note secured by trust deed was entitled to
deficiency judgment of difference between foreclosure sale price and indebtedness without deduction for difference
between reasonable market value of property and amount for which holder purchased property at foreclosure sale,
where note was executed prior to enactment of statute limiting amount of deficiency judgment.
Plaintiff held the promissory note of Century Land & Water Company, a duck hunting club, in the sum of $27,500,
executed August 25, 1930, and secured by a trust deed on real estate of the club. A number of the members of the
club indorsed the note and are joined as defendants with the maker of the note. Default was made in the payments on
the note, the trust deed was foreclosed, and the property which was made security was sold at public auction under
the terms of the trust deed for the sum of $8,500. Plaintiff bank was the owner and holder of the note, the trustee for
the property, and the only bidder at the sale. The purchase price was applied upon the amount due and the bank
thereupon sued for a deficiency. The court found that the land was of the reasonable market value of $16,000. The
trial court concluded that “the trustee made a profit **110 for itself in the sum of seven thousand five hundred
dollars ($7,500), for which profit it is accountable to the trustor and maker of the note, and said profit in the amount
of seven thousand five hundred dollars ($7,500) should be credited toward the principal amount of said deed of trust
and said promissory note described in the findings of fact herein as of the 14th day of January, 1935.” Plaintiff
appeals upon the *196 judgment roll, claiming that it is entitled to judgment for the additional sum of $7,500.
[1][2][3][4] Section 580a of the Code of Civil Procedure (as added by St.1933, p. 1672) is not applicable to the
present action, since the note was executed prior to the enactment of the section. California Trust Company v.
Smead Investment Co., 6 Cal.App.(2d) 432, 44 P.(2d) 624; Brown v. Ferdon, 5 Cal.(2d) 226, 54 P.(2d) 712.
Defendants attempt to uphold the judgment with a discussion of the general duties and obligations of a trustee. It has
been held that the trustee may also be the beneficiary and may become a purchaser at the sale. California Trust
Company v. Smead Investment Co., supra; 25 Cal.Jur. 19, and cases there cited. In this state inadequacy of price is
not in itself sufficient ground for setting aside a sale legally made. **If the price is palpably inadequate, slight
irregularities in conjunction with the sale might authorize the court to set it aside; but such irregularities to have this
effect “must have conduced to the inadequacy of the price, or in some other way have contributed to the injury of
the plaintiff.” Sargent v. Shumaker, 193 Cal. 122, 223 P. 464, 468. Since the appeal is upon the judgment roll, we
must look to the findings to determine if any irregularities exist. Nothing is contained therein which can be classified
as an irregularity or which indicates that there was any oppression, fraud, or unfairness. In the absence of such
findings plaintiff is entitled to judgment for the additional sum of $7,500.
None of the defendants, with the possible exception of defendant Merrill, have presented issues in the pleadings
which call for findings by the trial court on the subject of irregularities connected with the sale. Defendant Merrill
prosecutes a separate appeal from the judgment, and on that appeal we are this day filing an opinion reversing the
judgment as to defendant Merrill on a point having no bearing upon the issues raised by plaintiff’s appeal.
The judgment is modified, and the superior court is directed to enter judgment in favor of appellant and against
respondents other than respondent Merrill in accordance with the prayer of the complaint.
I. E. Associates v. Safeco Title Ins. Co., 39 Cal.3d 281, 702 P.2d 596, 216
Cal.Rptr. 438 (Cal.,Aug 01, 1985)
Case about mailing notice if actually known CC 2924 b
The rights and powers of trustees in nonjudicial foreclosure proceedings have

long been regarded as strictly limited and defined by the contract of the
parties and the statutes. (See Sargent v. Shumaker (1924) 193 Cal. 122, 130,
223 P. 464; Witter v. Bank of Milpitas (1928) 204 Cal. 570, 572-573, 269 P.
614; Billings v. Farm Development Co. (1925) 74 Cal.App. 254, 264, 240 P. 298;
Meyer v. Zuber (1928) 92 Cal.App. 767, 772, 268 P. 954; Ley v. Babcock (1931)
118 Cal.App. 525, 528-529, 5 P.2d 620; McClatchey v. Rudd (1966) 239
Cal.App.2d 605, 608-609, 48 Cal.Rptr. 783; Lupertino v. Carbahal (1973) 35
Cal.App.3d 742, 747, 111 Cal.Rptr. 112.)
Substitution of trustee – contractual procedure,
p. 40, states,”
Effectiveness of substitution contrary to statutory procedures. As a

general rule, when substitution is made prior to the recordation of a
notice of default and the deed of trust provides a procedure for
substitution that is different from the statutory procedure, either
method of substitution is acceptable. The statutory method can be
followed, and the substitution is effective even though it does not
comply with contractual requirements. 6 On the other hand, the
substitution can be accomplished by following the procedure set forth
in the deed of trust, and it will be valid even though there has not
been a compliance with the statutory requisites. 7
7 Bennett v. Ukiah Fair Ass’n 7 Cal.2d 43, 59 P.2d 805 (1936) (deed of
trust provided that contractual procedure was conclusive)...
Mutual Building & Loan Ass’n of Pasadena v. Wiborg, 59 Cal.App.2d 325,

330, 139 P.2d 73 (2d Dist. 1943) (deed of trust provided that contract
procedure was “exclusive”).
Bennett v. Ukiah Fair Ass’n, 7 Cal.2d 43, 44-45, 59 P.2d 805 (1936)
Action by E. C. Bennett against the Ukiah Fair Association, and others as

trustees, wherein the Ukiah Fair Association filed a cross-claim naming the
trustees as cross-defendants. From a judgment against it, cross-complainant
Ukiah Fair Association appeals.
Affirmed.
West Headnotes
[1] Trusts 390 169(2)
390 Trusts
390III Appointment, Qualification, and Tenure of Trustee
390k169 Appointment and Succession of New Trustee
390k169(2) k. Provisions of Instrument Creating Trust. Most
Cited Cases
Where power is conferred by trust deed upon beneficiary, successor, assigns,
or other legal representatives, to appoint new trustees, the power may be
exercised by any holder or owner of deed of trust.
266 Mortgages
266k339 Persons Entitled to Execute Power
266k342 k. Appointment of New Trustee. Most Cited Cases
Where trust deed provided that beneficiary could appoint new trustees,
assignee of beneficiary was entitled to appoint new trustees, and trustees
appointed by assignee were legal trustees.
266 Mortgages
Under trust deed conveying realty as security for note, advertisement of
notice of sale 2 months and 11 days after recordation of notice of default,
and foreclosure 3 months and 3 days after recordation, were valid under
statute, since 90 days need not elapse between recordation of notice of
default and advertisement of sale, but only 90 days between notice of default
and sale. Civ.Code, § 692, and § 2924, as amended by St.1917, p. 300.
This is an appeal by the cross-complainant, Ukiah Fair Association, from a

judgment entered against it after demurrer sustained and refusal to amend.
Plaintiff E. C. Bennett was the owner and holder of a mortgage on certain

real property owned by the Ukiah Fair Association, which property was also
subject to a prior *44 deed of trust which had been assigned to Herma
Bennett. Bennett, as mortgagee, commenced this action to require the
trustees, who were then proceeding to sell under the deed of trust, to
impound and hold for his benefit any and all funds received in excess of the
amount required to discharge the deed of trust. The Fair Association, as
owner of the property, filed a cross-complaint, naming as cross-defendants
the trustees, respondents herein, wherein it requested a declaration of
rights under the deed of trust and a decree restraining any sale of the
property by such trustees upon the grounds they had not been properly
substituted as trustees, and that they had improperly instituted proceedings
to sell within ninety days after the publication of the notice of default and
election to sell, and that any sale by such trustees would therefore be
invalid and place a cloud upon its title. The trustees interposed a general
demurrer to the cross-complaint which was sustained. Upon refusal of the
cross-complainant to amend, judgment of default was entered against it on the
cross-complaint. Thereafter the trustees proceeded with the sale under the
trust deed, and plaintiff became the purchaser of the property at the
trustees’ sale.
The questions involved upon this appeal, as stated by appellant, are:
‘1. Under a deed of trust conveying real estate as security for a promissory
note, may advertisement of notice of sale begin two months and eleven days
after recordation of notice of default, and valid foreclosure sale thus be
made three months and three days after such recordation?
‘2. Where a deed of trust purports to authorize the beneficiary therein

named, but no one else, to substitute trustees just once; and an assignee of
said beneficiary has assumed to make yet another substitution of trustees and
thus give authority to the last attempted substitutes to make a valid sale?’
Turning our attention, first, to the contention that the cross-defendants

and respondents are not legally the trustees under the deed of trust, we find
that by assignment, Herma Bennett became the beneficiary under said deed of
trust. The trust deed, in its seventh paragraph, provides:
‘Said beneficiary may at any time by instrument in writing appoint a

successor or successors to, or discharge and *45 appoint a new trustee in the
place of any trustee named herein or acting hereunder, which instrument
executed and acknowledged by said beneficiary, and recorded in the office of
the County Recorder of the county or counties where said land is situated,
shall be conclusive proof of the proper substitution of such successor or
successors or new trustee, who shall have all the estate, powers, duties,
rights and privileges of said trustee predecessor.
‘All the provisions of this instrument shall apply to and bind the legal
representatives, successors and assigns of each party hereto, respectively.’
[1] The general rule as to the right of a beneficiary to substitute a trustee

is well expressed in 41 Corpus Juris, at page 379: ‘* * * However, where the
power is conferred upon the beneficiary, his successor or assigns, or other
legal representatives, no personal discretion is confided in any particular
person, but the power may be exercised by any holder or owner of the deed of
trust.’
[2] It is apparent that Herma Bennett, the beneficiary under the deed of
trust, was by its terms qualified to appoint the trustee, and the cross-
defendants herein named, having been duly appointed by the beneficiary, were
the legal trustees under the deed of trust.
Mutual Building & Loan Ass’n of Pasadena v. Wiborg, 59 Cal.App.2d 325, 139
P.2d 73
In Mutual Building & Loan Ass’n of Pasadena v. Wiborg (1943) 59

Cal.App.2d 325, 327, 139 P.2d 73
“Title Guarantee & Trust Co., hereafter referred to as Title

Guarantee, was named as trustee in a deed of trust by respondent
Wiborg, which instrument was given to secure payment of a promissory
note payable to appellant. In its petition to the superior court under
sections 2287 and 2289, Civil Code, appellant recited the present
circumstances of the indebtedness and that on December 19, 1942,
pursuant to section 31b of the Bank Act, Gen.Laws 1937, Act 652, as
well as under the provisions of section 361 of the Civil Code, Title
Guarantee became and is now merged in respondent Title Insurance &
Trust Company hereinafter designated Title Insurance; that the
separate, corporate existence of Title Guarantee then and there
ceased; that it surrendered its license to do a bank or trust business
or any other business, that Title Insurance claims that by operation
of law as a result of the merger, it became the trustee. The petition
recited further that pursuant to the provision of paragraph B-7 of the
deed of trust it had demanded respondent Wiborg to join with
petitioner in the nomination and appointment of a substitute trustee
in the place of the Title Guarantee; that she had refused to do so;
that by reason of the foregoing facts, there is a vacancy as to the
trusteeship under the deed of trust; that the deed of trust does not
provide a practical method of appointment of a substitute trustee;
that by reason of a merger of Title Guarantee with respondent Title
Insurance, by operation of law, Title Insurance became and now is the
trustee under the deed of trust.”
And the court stated,”
The question for determination is whether the superior court has

jurisdiction to appoint a substitute trustee under a deed of trust
which reserves a joint power in **74 the trustor and the cestui que
trust to make a substitution, where they have not agreed upon a
substitution after the corporate trustee has merged with a kindred
corporation which inherited all the assets, powers and trusts of the
designated trustee.” (Mutual Building & Loan Ass’n of Pasadena v.
Wiborg, supra, 59 Cal.App.2d at p. 327)

“The deed of trust contains the following provision:
‘B. It is mutually agreed that:
‘7. Trustor, or if said property shall have been transferred, the then
record owner, together with Beneficiary, may from time to time, by
instrument in writing, substitute a successor or successors to any
Trustee named herein or acting hereunder, which instrument, executed
and acknowledged by each and recorded in the office of the recorder of
the county or counties where said property is situated, shall be
conclusive proof of proper substitution of such successor Trustee. * *
* The procedure herein provided for substitution of Trustees shall be
exclusive of all other provisions for substitution, statutory or
otherwise.’
[1] Appellant insists that by virtue of the quoted paragraph that

Title Insurance is not substituted as trustee; that despite section
31b of the Bank Act the court has the power, under sections 2287, 2289
of the Civil Code to act solely upon the request of the beneficiary
under the deed of trust and substitute a new trustee under the
doctrine that one who creates a trust may provide a method for filling
vacancies and for the appointment of substitute trustees. 26 Ruling
Case Law 1278; 65 C.J. 575. It then proceeds to attempt to show that
paragraph B-7 is the exclusive procedure for effecting the appointment
of a substitute trustee. Since the deed of trust provides that a
substitute trustee may be named by the trustor ‘together with
beneficiary’ by a writing recorded in the office of the County
Recorder, it follows that if the trustor declines to join with the
beneficiary, in making a substitution there is no method by which to
effect a substitution upon the petition of the beneficiary alone or
otherwise.
There is no vacancy of the trusteeship. By virtue of the merger, the

separate corporate existence of Title Guarantee suffered the fate of
all merged corporations, to wit, they become a part of the muscle and
the blood stream of the mergee corporation, transfusing into the
mergee all its rights and privileges. By such act all rights and
interests in and to all property are without further action or deed
vested in *329 the mergee which shall hold, enjoy and enforce the same
in its own right ‘as fully as the same was possessed, enjoyed and
held’ by the substituted trustee. The mergee corporation, by operation
of law and without further transfer, shall ‘in all courts and places
be deemed and held to have, and shall become subrogated and shall
succeed, to all such rights * * * agreements, court and private trusts
* * * and shall execute and perform all such * * * trusts in the same
manner as though it had itself originally assumed the relation of
trust or incurred the obligation**75 or liability * * *.’ Subd. 5,
section 31b of the Bank Act.
[2][3] By virtue of such provision, there was an automatic succession

of the trusteeship to Title Insurance. All rights of Title Guarantee
in the property held in trust passed without interruption to Title
Insurance. Language could not be more emphatic than that used by the
legislature in continuing the trusteeship of a trustee in the event of
a merger of the named corporate trustee with another corporation. n re
Estate of Barreiro, 125 Cal.App. 153, 167, 13 P.2d 1017; In re Estate
of Barnett, 97 Cal.App. 138, 275 P. 453; Mercantile Trust Co. v. San
Joaquin Agricultural Corp., 89 Cal.App. 558, 265 P. 583.It follows
that there could have been no vacancy merely because of the
consolidation. And without a vacancy, there would be no power in the
court to appoint a substitute trustee. (Mutual Building & Loan Ass’n
of Pasadena v. Wiborg, supra, 59 Cal.App.2d at pp. 328-329)
“*330 Neither the reserved power of appointment by the parties nor

appellant’s wish to have the court exercise its power of appointment
created a vacancy. Nothing could have created a vacancy except the
resignation or removal of the trustee in the absence of an agreement
on the part of the trustor and the beneficiary to agree upon a
substitution. Upon their failure so to agree the present trustee
remains in office and the superior court has no jurisdiction under
Sections 2287 and 2289, Civil Code, to make a substitution.
While paragraph B-7 makes its own procedure for substitution exclusive
of all others, such is not available in the absence of a concord of
the cestui que trust and the trustor. The necessity of their joinder
in order to make a substitution renders in-applicable section 2934a.
That section authorizes a substitution by the beneficiaries only. But
where by automatic succession resulting from a merger, the designated
trustee is absorbed by the corporate mergee, there is no power in the
court to divest the successor-trustee of its office and asset at the
caprice of the cestui que trust. There is nothing in the deed of trust
that would imply a desire on the part of the beneficiary and the
trustor either to declare a vacancy in event of a merger or to
supplant the mergee following the consolidation. An intention to do so
would have been declared as emphatically as was the reservation in the
deed of trust of the joint power to substitute. This was not done.
However, a power was reserved and it is not inconsistent with the
scheme provided by Sec. 31a of the Bank Act, Statutes 1913, page 152,
Deering’s General Laws of 1937, Act 652. Such power remains unimpaired
for the parties to appoint a substitute trustee after the merger of
the Title Guarantee with the Title Insurance. Mercantile Trust Co. v.
San Joaquin Agricultural Corp., supra. The provision of Section 31a
making the succession to the trusteeship automatic distinctly denies
to the superior court the power to make an appointment until the
dissolution or merger of the Title Insurance or until its resignation
or removal. Before or after such occurrence a substitution can be made
only by the joint act of the cestui que trust and the trustor.”
(Mutual Building & Loan Ass’n of Pasadena v. Wiborg, supra, 59
Cal.App.2d at pp. 330)
Miller & Starr, California Real Estate 3D, Chapter 12, Section 12:23, B. Joint
Tenancies,pp. 12-61 - 12-62, states,”
“Characteristics; creation-Right of survivorship

Death of a joint tenant. Whe one joint tenant dies, the entire estate automatically
belongs to the surviving joint tenant(s).5 This right attaches as a result of the
original grant that created the joint tenancy, and not as a result of the death of
a joint tenant.6 On the joint tenant’s death, the surviving joint tenant or tenants
continue in the ownership of the entire property, including the former title of the
deceased joint tenant.7 The interest of the deceased joint tenant passes to the
surviving joint tenant or tenants by operation of law.8
5
Grothe v. Cortlandt Corp., 11 Cal.App.4th 1313, 1317, 15 Cal.Rptr.2d 38 (4th
Dist. 1992); Estate of Blair, 199 Cal.App.3d 161, 167, 244 Cal.Rptr.627(4th Dist.
1988); Rupp v. Kahn, 246 Cal.App.2d 188, 196, 55 Cal.Rptr.108(2d Dist. 1966);
Ziegler v. Bonnell, 52 Cal.App.2d 217, 219-220, 126 P.2d 118(1st Dist. 1942).
6
In re Gurnsey’s Estate, 177 Cal. 211, 215, 170 P.402 (1918); Grothe v. Cortlandt
Corp., 11 Cal.App.4th 1313, 1317, 15 Cal.Rptr.2d 38 (4th Dist. 1992); Rupp v.
Kahn, 246 Cal.App.2d 188, 196, 55 Cal.Rptr.108(2d Dist. 1966); In re Moore’s
Estate 165 Cal.App.2d 455, 460, 332 P.2d 108 (1st Dist. 1958); Goldberg v.
Goldberg, 217 Cal.App.2d 623, 628, 32 Cal.Rptr. 93(2d Dist. 1963); In re Hobart’s
Estate, 82 Cal.App.2d 502, 507, 187 P.2d 105(1st Dist. 1947).
7
Siberell v. Siberell, 214 Cal. 767, 771, 7 P.2d 1003 (1932); De Witt v. City of
San Francisco, 2 Cal. 289, 297, 1852 WL 566 (1852); Cole v. Cole, 139 Cal.App.2d
691, 694, 294 P.2d 494 (2d Dist.1956); Plante v. Gray, 68 Cal.App.2d 582, 588, 157
P.2d 421 (2d Dist. 1945); Dando v. Dando, 37 Cal.App.2d 371, 372, 99 P.2d 561 (1st
Dist. 1940).
See also In re Moy’s Estate, 217 Cal.App.2d 24, 29, 31 Cal.Rptr. 374 (1st Dist.
1963)
8
Tenhet v. Boswell, 18 Cal.3d 150, 158, 133 Cal.Rptr. 10, 554 P.2d 330 (1976);
Estate of Gebert, 95 Cal.Ap.3d 370, 376, 157 Cal.Rptr. 46 (2d Dist. 1979); Estate
of Wilson, 64 Cal.App.3d 786, 791, 134 Cal.Rptr. 749 (5th Dist. 1976)”
And, Miller & Starr, California Real Estate 3D, Chapter 12, Section 12:31, B.
Joint Tenancies,pp. 12-80, states,”
Execution sale after death of a debtor joint tenant
page 553
Effect of a recorded notice when trustor is not in default. The notice

of default cannot be recorded prior to the trustor’s default. If it is
recorded prematurely, it is of no legal effect because it would
wrongfully shorten the trustor’s period for redemption. 13
13
Glavinich v. Commonwealth Land Title Ins. Co., 163 Cal.App.3d 263,
269, 209 Cal.Rptr. 266 (4th Dist. 1984); Hayward Lumber & Investment
Co. v, Corbett, 138 Cal.App. 644, 650-651, 33 P.2d 41 (1st Dist.
1934).
At p. 552
Garn act
12 U.S.C. § 1701j-3. Preemption of due-on-sale prohibitions
(a) Definitions
For the purpose of this section--
(1) the term “due-on-sale clause” means a contract provision which authorizes
a lender, at its option, to declare due and payable sums secured by the
lender’s security instrument if all or any part of the property, or an
interest therein, securing the real property loan is sold or transferred
without the lender’s prior written consent;
(2) the term “lender” means a person or government agency making a real
property loan or any assignee or transferee, in whole or in part, of such a
person or agency;
(3) the term “real property loan” means a loan, mortgage, advance, or credit
sale secured by a lien on real property, the stock allocated to a dwelling
unit in a cooperative housing corporation, or a residential manufactured
home, whether real or personal property; and
(4) the term “residential manufactured home” means a manufactured home as

defined in section 5402(6) of Title 42 which is used as a residence; and
(5) the term “State” means any State of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, the
Northern Mariana Islands, American Samoa, and the Trust Territory of the
Pacific Islands.
(b) Loan contract and terms governing execution or enforcement of due-on-sale

options and rights and remedies of lenders and borrowers; assumptions of loan
rates
(1) Notwithstanding any provision of the constitution or laws (including the

judicial decisions) of any State to the contrary, a lender may, subject to
subsection (c) of this section, enter into or enforce a contract containing a
due-on-sale clause with respect to a real property loan.
(2) Except as otherwise provided in subsection (d) of this section, the

exercise by the lender of its option pursuant to such a clause shall be
exclusively governed by the terms of the loan contract, and all rights and
remedies of the lender and the borrower shall be fixed and governed by the
contract.
(3) In the exercise of its option under a due-on-sale clause, a lender is

encouraged to permit an assumption of a real property loan at the existing
contract rate or at a rate which is at or below the average between the
contract and market rates, and nothing in this section shall be interpreted
to prohibit any such assumption.
(c) State prohibitions applicable for prescribed period; subsection (b)

provisions applicable upon expiration of such period; loans subject to State
and Federal regulation or subsection (b) provisions when authorized by State
laws or Federal regulations
(1) In the case of a contract involving a real property loan which was made
or assumed, including a transfer of the liened property subject to the real
property loan, during the period beginning on the date a State adopted a
constitutional provision or statute prohibiting the exercise of due-on-sale
clauses, or the date on which the highest court of such State has rendered a
decision (or if the highest court has not so decided, the date on which the
next highest appellate court has rendered a decision resulting in a final
judgment if such decision applies State-wide) prohibiting such exercise, and
ending on October 15, 1982, the provisions of subsection (b) of this section
shall apply only in the case of a transfer which occurs on or after the
expiration of 3 years after October 15, 1982, except that--
(A) a State, by a State law enacted by the State legislature prior to the
close of such 3-year period, with respect to real property loans originated
in the State by lenders other than national banks, Federal savings and loan
associations, Federal savings banks, and Federal credit unions, may otherwise
regulate such contracts, in which case subsection (b) of this section shall
apply only if such State law so provides; and
(B) the Comptroller of the Currency with respect to real property loans
originated by national banks or the National Credit Union Administration
Board with respect to real property loans originated by Federal credit unions
may, by regulation prescribed prior to the close of such period, otherwise
regulate such contracts, in which case subsection (b) of this section shall
apply only if such regulation so provides.
(2)(A) For any contract to which subsection (b) of this section does not
apply pursuant to this subsection, a lender may require any successor or
transferee of the borrower to meet customary credit standards applied to
loans secured by similar property, and the lender may declare the loan due
and payable pursuant to the terms of the contract upon transfer to any
successor or transferee of the borrower who fails to meet such customary
credit standards.
(B) A lender may not exercise its option pursuant to a due-on-sale clause in
the case of a transfer of a real property loan which is subject to this
subsection where the transfer occurred prior to October 15, 1982.
(C) This subsection does not apply to a loan which was originated by a
Federal savings and loan association or Federal savings bank.
(d) Exemption of specified transfers or dispositions
With respect to a real property loan secured by a lien on residential real

property containing less than five dwelling units, including a lien on the
stock allocated to a dwelling unit in a cooperative housing corporation, or
on a residential manufactured home, a lender may not exercise its option
pursuant to a due-on-sale clause upon--
(1) the creation of a lien or other encumbrance subordinate to the lender’s

security instrument which does not relate to a transfer of rights of
occupancy in the property;
(2) the creation of a purchase money security interest for household

appliances;
**(3) a transfer by devise, descent, or operation of law on the death of a

joint tenant or tenant by the entirety;
(4) the granting of a leasehold interest of three years or less not

containing an option to purchase;
(5) a transfer to a relative resulting from the death of a borrower;
(6) a transfer where the spouse or children of the borrower become an owner
of the property;
(7) a transfer resulting from a decree of a dissolution of marriage, legal

separation agreement, or from an incidental property settlement agreement, by
which the spouse of the borrower becomes an owner of the property;
(8) a transfer into an inter vivos trust in which the borrower is and remains
a beneficiary and which does not relate to a transfer of rights of occupancy
in the property; or
(9) any other transfer or disposition described in regulations prescribed by

the Federal Home Loan Bank Board.
(e) Rules, regulations, and interpretations; future income bearing loans

subject to due-on-sale options
(1) The Federal Home Loan Bank Board, in consultation with the Comptroller of
the Currency and the National Credit Union Administration Board, is
authorized to issue rules and regulations and to publish interpretations
governing the implementation of this section.
(2) Notwithstanding the provisions of subsection (d) of this section, the

rules and regulations prescribed under this section may permit a lender to
exercise its option pursuant to a due-on-sale clause with respect to a real
property loan and any related agreement pursuant to which a borrower obtains
the right to receive future income.
(f) Effective date for enforcement of Corporation owned loans with due-on-
sale options
The Federal Home Loan Mortgage Corporation (hereinafter referred to as the

“Corporation”) shall not, prior to July 1, 1983, implement the change in its
policy announced on July 2, 1982, with respect to enforcement of due-on-sale
clauses in real property loans which are owned in whole or in part by the
Corporation.
(g) Balloon payments
Federal Home Loan Bank Board regulations restricting the use of a balloon
payment shall not apply to a loan, mortgage, advance, or credit sale to which
this section applies.
Does failure t
151,000.00/590,000.00 = .25
On hundred fifty one thousand dollars and a fair market value of five
hundred ninety thousand dollars is twenty five percent.
Miller & Starr, California Real Estate 3D, Chapter 10, Deeds of Trust,
Section 10:210, page 670
Courts will set aside a foreclosure sale when there has been fraud,
when the sale has been improperly, unfairly, or unlawfully conducted,
or when there has been such a mistake that it would be inequitable to
let it stand. 10
10
Bank of America Nat. Trust & Savings Ass’n v. Reidy, 15 Cal.2d 243,
248 101 P.2d 77 (1940); Whitman v. Transtate Title Co., 165 Cal.App.3d
312, 322-323, 211 Cal.Rptr. 582 (4th Dist. 1985); In re Worcester, 811
F.2d 1224, 1228, 16 Collier Bankr. Cas. 2d (MB) 589, Bankr. L. Rep.
(CCH) Paragraph 71637, 7 Fed R. Serv. 3d 733 (9th Cir. 1987)
See also Smith v. Williams, 55 Cal.2d 617, 621, 12 Cal.Rptr. 665, 361
P.2d 241 (1961); Stirton v. Pastor, 177 Cal.App.2d 232, 234, 2
Cal.Rptr. 135 (4th Dist. 1960); Brown v. Busch, 152 Cal.App.2d 200,
203-204, 313 P.2d 19 (3d Dist. 1957).
At p. 672
Bank of America Nat. Trust & Savings Ass’n v. Reidy, 15 Cal.2d 243, 101
P.2d 77 (Cal.,Mar 27, 1940)
Attempt by Hammond Company to show sham bidding relationship beteen

Reidy and Bank of America. Fraud not found
*248 [1][2] It is the general rule that courts have power to vacate a
foreclosure sale where there has been fraud in the procurement of the
foreclosure decree or where the sale has been improperly, unfairly or
unlawfully conducted, or is tainted by fraud, or where there has been such a
mistake that to allow it to stand would be inequitable to purchaser and
parties. **Sham bidding and the restriction of competition are condemned, and
inadequacy of price when coupled with other circumstances of fraud may also
constitute ground for setting aside the sale. Haley v. Bloomquist, 204 Cal.
253, 268 P. 365; Dealey v. East San Mateo Land Co., 21 Cal.App. 39, 130 P.
1066; Bernheim v. Cerf, 123 Cal. 170, 55 P. 759; Packard v. Bird, 40 Cal. 378;
Goodenow v. Ewer, 16 Cal. 461, 76 Am.Dec. 540. **However, where on
foreclosure of a mortgage a deficiency judgment cannot be had, and that was
the situation confronting the bank (Reidy v. Young, supra), it is not unusual
for a mortgagee to make a bid for the property in the amount owing on the
debt. The sale is not rendered fraudulent by the fact that such bid exceeds
the value of the property at the time of sale and was made with the intent of
discouraging bidding or redemption by junior encumbrancers in the hope of
finally securing payment of the debt because of a rise in value of the
property in the future. So long as a bid is legitimately made, there is not
theory which requires the creditor to bid only a small amount, raising it by
degrees only to that required to meet competition. And the situation is not
altered where a pledgee of a mortgagee, acting in good faith for the best
interests of both, makes the same bid the mortgagee would himself have made.
Sargent v. Shumaker, 193 Cal. 122, 223 P. 464 (Cal.,Jan 30, 1924)
Distinguished by Haish v. Hall, citing Odell v. Cox, Graffam v.

Burgess, Schroeder v. Young
Where property is to be sold in a different city or township than the

city where the property is located, notice of the sale must be posted
in three public places in the city or township where the property is
located. And the notice of sale must be posted in three public
places in the city or township where the property is to be sold by
auction. And then also notice of the sale must be posted on the
location of the property to be sold itself. For a total of six
notices of sale plus one, or seven total notices of sale to be posted.
[2] Mortgages 266 369(3)
266 Mortgages
Mere inadequacy of price is not ground for setting aside a sale under power
in trust deed, but there must in addition be shown some element of fraud,
unfairness or oppression, though when the price is greatly disproportionate
to the value, very slight evidence of unfairness or irregularity will suffice.
[3] Mortgages 266 369(2)
266 Mortgages
That the owner of land did not know of pending sale under trust deed,
standing alone, is no ground for setting aside the sale, no notice other than
provided by the statute being necessary.
[5] Mortgages 266 369(3)
266 Mortgages
Irregularity which, in connection with great inadequacy of price, will
warrant setting aside sale under trust deed, must affirmatively appear to
have contributed to such inadequacy; so the fact that the sale was made in an
inaudible tone and a hurried manner would not avail without showing that the
purchaser was thereby prevented from making the bids that he desired, or that
any other person was ready, able, and willing to bid, or was present.
[6] Mortgages 266 369(3)
266 Mortgages
Where the amount secured by trust deed had been delinquent for seven months,
and no good reason is apparent why the administrator of the deceased
landowner should not have expected and anticipated that the beneficiary bank
would enforce the trust deed, he not having been led to believe that it would
not do so by letter of its attorney, that it would take such necessary action
against the estate on the secured notes “as may be desirable,” and he not
having asked the bank for an extension of time or made effort to procure a
loan elsewhere with which to make payment, his ignorance of the sale, though
statutory notice had been given, coupled with “mere inadequacy of price,”
meaning simply an inequality between the value of the property and the price,
as distinguished from a price so insignificant as to amount to nothing, is
insufficient to warrant setting aside the sale, which was for a price
amounting to a third of the value of the property.
MYERS, J.
The defendant appeals herein from a judgment in favor of plaintiff in an

action to quiet title and to set aside a trustee’s sale under power of sale
in a trust deed, and to cancel the deed executed pursuant thereto, or to
compel a reconveyance of the property. The essential facts may be states as
follows: On February 15, 1918, one E. W. Myers, who was then the owner of the
property involved herein, executed a trust deed conveying the same to Frank
D. Havener, trustee for the International Bank as beneficiary, to secure the
payment of principal sums agreegating $5,000, together with interest thereon
upon promissory notes executed be said Myers to said bank as payee. Myers
died September 12, 1919, and letters of administration upon his estate were
duly issued to the plaintiff herein. The promissory notes became due February
15, 1920, and **465 remained unpaid as to the principal thereof, as well as
certain installments*124 of interest. April 24, 1920, the bank, as
beneficiary, executed and served upon the trustee its declaration of default
and its demand that the trustee proceed to sell the property as provided in
the trust deed. April 27, 1920, the bank, as beneficiary, executed its
written notice of intended sale under the deed of trust, which was duly
recorded in the office of the county recorder May 7, 1920. Thereafter in the
following August the trustee caused to be posted and published notices of
sale under the deed of trust, which was noticed for September 7, 1920, at 10
o’clock a. m. At the time and place specified in the notice the trustee
offered the property for sale and sold the same to defendant Shumaker, who
was the only bidder therefor at said sale, for the sum of $5,654.69. The
purchase price was thereupon paid to the trustee, who executed and delivered
a deed of conveyance to said purchaser. Thereafter, in November, 1920, the
plaintiff commenced this action by filing a complaint in an ordinary action
to quiet title. After the trial of this action he filed a second amended
complaint, which was in two counts or causes of action. The first count
pleaded the conventional action to quiet title, and the second count set up
the facts with respect to the execution of the trust deed and the trustee’s
sale thereunder; alleged that said sale was void by reason of the alleged
failure to post or publish notice thereof in the manner required by law and
by the provisions of the trust deed therefor, and in addition thereto alleged
certain irregularities in the conduct of the sale, which will be hereafter
noted more in detail, and prayed for a cancellation of the trustee’s deed, a
reconveyance from the purchaser, and a decree quieting plaintiff’s title. The
trial court found most of the controverted facts in favor of plaintiff and
made its interlocutory decree wherein it adjudged the plaintiff, as
administrator, to be the owner in fee simple of the described premises,
subject to the payment by him to defendant Shumaker of the sum of $5,769.15,
and decreed that upon such payment said defendant should execute and deliver
to plaintiff a good and sufficient deed of conveyance of said premises, and
that in default of the execution of such deed upon the payment of said sum
that the same be executed by the county clerk, who was appointed a
commissioner for that purpose. The sum of $5,769.15 was the balance arrived
at by crediting defendant with the amount *125 paid by him as the purchase
price, together with additional sums paid by him in discharging delinquent
taxes against the property and an attorney fee allowed him by the court, and
charging him with all moneys which he had collected as rentals from the
property.
[1] It was the theory of the plaintiff, evidently concurred in by the learned
trial judge, that the trustee’s sale was utterly void because of the failure
to post notice thereof as required by law and by the provisions of the trust
deed. It is conceded that the notice of sale was duly published and for the
required length of time. It is conceded also that the notices thereof were
duly posted and for the required length of time in three public places within
the city of Calexico, within which the property was situated and was to be
sold and was sold. But it is respondent’s contention that the trustee was
required in addition thereto to post a fourth notice at the precise place
where the property was to be and was sold. This contention presents the most
important question involved upon this appeal.
The statute required (Civ. Code, § 2924), and the trust deed provided, that
notice of the proposed sale should be posted ‘in the manner and for a time
not less than that required by law for sales of real property upon
execution.’We are thus directed to section 692, Code of Civil Procedure,
which prescribes the manner of giving notice of sale under execution. As that
section existed at the time with which we are here concerned, it provided
that notice thereof must be given as follows:
‘1. In case of perishable property: By posting written notice of the time and
place of sale in three public places of the township or city where the sale
is to take place. * * *
‘2. In case of other personal property: By posting a similar notice in three

public places in the township or city where the sale is to take place. * * *
‘3. In case of real property: By posting a similar notice, particularly

describing the property, for twenty days, in three public places of the
township or city where the property is situated, and also where the property
is to be sold, and publishing a copy thereof. * * *’
It is an elementary rule in the construction of statutes that some effect

must be given to every word thereof if reasonably possible so to do, and the
word ‘also’ is of evident importance in this connection. The primary meaning
thereof and that in which it is most commonly used is ‘in like manner’ or ‘in
the same manner.’ See 1 Words *127 and Phrases, Second Series, p. 196; 1
Words and Phrases, p. 359, and cases there cited. It is thus a word of
reference, directing our attention to that which antecedes. As used herein it
has to do with the posting of notices, and the only specifications of the
manner of such posting to be found in the antecedent phraseology which could
be adopted by such reference are ‘for twenty days’ and ‘in three public
places of the township or city.’It thus seems reasonable to suppose that the
word ‘also’ was here used as a brief substitute for the repetition of those
two phrases. This conclusion appears the more probable when we consider that
the provisions of subdivisions 1 and 2 above quoted may be regarded as
evidencing a legislative determination that in so far as notice by posting is
concerned the posting in three public places within a township or city is
sufficient for the giving of notice to the inhabitants thereof.
We conclude, therefore, that in a case such as this, wherein the property was
to be sold in the same city in which it was situated, the law required the
posting of but three notices in three public places thereof.
[2] We come now to the question whether under the facts alleged, proved, and
found, the plaintiff was entitled to have the sale set aside on the ground of
irregularities in the conduct thereof, coupled with inadequacy of the
purchase price. As above stated, it was the evident view of the plaintiff and
of the trial judge that the sale was void for insufficient notice,*129 but
certain facts were alleged and found by the court which would be relevant to
an action to avoid the sale on the ground of constructive fraud, and
respondent contends that they are sufficient to sustain the judgment herein,
even though it be conceded that the notice of sale was duly given. It was
alleged in the second amended complaint and found by the court upon
sufficient evidence that the property was of the value of $25,000. It was
sold for $5,654.69, to which should be added perhaps an amount equal to the
aggregate liens against it for delinquent taxes and tax sales amounting to
some $1,300, together with an additional sum for taxes then unpaid, but not
yet delinquent. But adding all of these sums to the price actually paid it
still represented less than one-third of the actual value of the property,
and must, therefore, be said to have been clearly inadequate. There is
neither allegation nor finding herein of any actual fraud or fraudulent
intent upon the part of either of the defendants. That this omission was
intentional is evidenced, as we are told by counsel, by the further fact that
the trial judge in his written opinion filed herein expressly stated: ‘The
court finds that both purchaser and trustee acted in good faith. * * *’ We
are thus relegated to a consideration of the single question of constructive
fraud. It is well settled in this state that mere inadequacy of price,
however gross, is not in itself a sufficient ground for setting aside a sale
legally made. There must in addition be proof of some element of fraud,
unfairness or oppression before the court will be justified in depriving the
purchaser of his legal advantage. Where, however, the price obtained is
greatly disproportionate to the actual value, very slight evidence of
unfairness or irregularity will suffice to authorize the granting of the
relief. Rauer v. Hertweck, 175 Cal. 278, 165 Pac. 946; Winbigler v. Sherman,
175 Cal. 270, 165 Pac. 943; Back v. Losekamp, 179 Cal. 674, 179 Pac. 516;
Odell v. Cox, 151 Cal. 70, 90 Pac. 194; Baldwin v. Brown, 42 Cal. App. Dec.
368.FN1 The rule is stated in Odell v. Cox, supra, in the following language:
FN1 Rehearing granted.
‘Where, in addition to gross inadequacy of price, the purchaser has, in the

language of the United States Supreme Court, ‘been guilty of any unfairness
or has taken any undue advantage’resulting in such gross inadequacy and
consequent injury to the owner *130 of the property, he will be deemed guilty
of fraud warranting the interposition of a court of equity in favor of the
owner who is himself without fault.’(Italics added.)
The circumstances of claimed unfairness or irregularity relied upon by the

respondent herein, in addition to the inadequacy of consideration, are: **(1)
That the plaintiff did not know of the proposed sale and was given no notice
thereof by either of the defendants; **(2) that the trustee did not announce
said sale or call for bids in an audible tone of voice sufficient to enable
persons in the immediate vicinity to know that the trustee was selling the
property; **(3) that said sale was conducted in a hurried manner to an extent
which made it impossible for persons present to bid on said property: and
**(4) that the defendant bank by a letter to plaintiff had caused plaintiff
to believe that the said bank would not proceed to sell the property.
[3] The circumstance that the plaintiff did not know of the pending sale and
was not notified thereof by either of the defendants is not, standing alone,
of any importance herein. As this court said in Rauer v. Hertweck, supra:
‘There was no obligation upon them to give him any such notice. The statute
defines how notice of an execution sale must be given. To say that a sale may
be set aside because some other notice was not given would be to amend the
statute, and this we cannot, of course, do. When the officer conducting the
sale has done the acts prescribed by the Code, he has done his full duty. He
is not required to search for the debtor and give him any further notice than
that which the law exacts. Nor is any such duty imposed upon the judgment
creditor. Much less is one who may contemplate bidding at an execution sale
called upon to concern himself with the question whether the debtor has
actual knowledge of the proceeding.’
[4][5] Plaintiff alleged and the court found:
‘That said sale was not made at public auction, as provided by said trust
deed, in that the trustee did not announce said sale, or call for bids, in an
audible tone of voice, sufficient to enable persons in the immediate vicinity
of the place where said sale was held, to ascertain or know that the trustee
was selling the property herein described, and that said sale was conducted
in a hurried manner, to an extent which made it impossible for persons
present at the place of sale to bid *131 on said property, either en masse,
or in parcels.’
**468 It is not alleged in the complaint or found by the court that any other
person actually was present at the place of sale to bid on said property or
that any person was prevented from so doing either by the inaudible tone of
voice or the hurried manner in which the sale was conducted. It is neither
alleged nor found that there was any other person in existence who was ready,
able, and willing to bid on said property. These omissions become the more
significant when we reflect that the second amended complaint was not filed
until the trial had been had and concluded. Respondent now asserts that it
appears from the evidence that one Brown was present at the sale for the
purpose of bidding thereat, and would have bid the sum of $8,000 for one of
the properties included in the sale, but was prevented from so doing by
reason of the circumstances above mentioned. Appellants reply that it
conclusively appears from the evidence that Brown was neither ready, able,
nor willing to bid upon this property for the reason that it appears without
conflict that he was unable to make payment therefor, and that under the
terms of the trust deed the trustee was empowered to sell only ‘for cash in
gold coin of the United States.’Appellants confidently assert that, if the
trial court had found that any bidder was prevented from bidding at this sale
by reason of the irregularities complained of, such finding would have been
contrary to and wholly unsupported by the evidence. It is unnecessary for us
to so determine. It is sufficient to say for the purposes hereof that such a
finding would be in no way compelled or required by the evidence herein, and
‘it is not within the province of this court to infer from the findings
ultimate facts which would support the judgment when such facts do not
necessarily follow from the facts actually found.’ Rossini v. St. Paul, etc.,
Ins. Co., 182 Cal. 415, 421, 188 Pac. 564.
While it is true that, where the inadequacy of price is palpable and great,
slight irregularities in conjunction therewith will authorize a court to set
aside the sale, we are of the opinion that such irregularities, to have this
effect, **must have conduced to the inadequacy of the price, or in some other
way have contributed to the injury of the plaintiff. This conclusion is
indicated by the language commonly used in the statement of the rule. Thus in
the rule as stated in *132 Odell v. Cox, supra, we find the phrase “any
unfairness or * * * undue advantage’resulting in such gross inadequacy. * *
*’ (Italics added.) The same phraseology is found in the statement of the
rule in Winbigler v. Sherman, supra. The same thought is indicated in the
statement of the conclusion in Rauer v. Hertweck, supra, that--
‘The resulting loss can more properly be attributed to his [plaintiff’s]

neglect of his own interests than to any unfairness on the part of the
judgment creditor or the purchasers.’
The rule is thus stated in Freeman on Executions, § 309:
‘If the inadequacy can be connected with or shown to result from any mistake,
accident. surprise, misconduct, fraud or irregularity, the sale will
generally be vacated, **unless the complainant was himself in fault, or the
rights of innocent third parties have became dependent upon the
sale.’(Italics added.)
The sale en masse of several known lots or parcels, in the absence of

special circumstances to justify it, is clearly an irregularity; but this
court has frequently held that such an irregularity will not justify vacating
the sale, in the absence of an affirmative showing that it operated to the
actual injury of the owner. Hudepohl v. Liberty Hill, etc., Co., 94 Cal. 588,
29 Pac. 1025, 28 Am. St. Rep. 149; Meux v. Trezevant, 132 Cal. 487, 489, 64
Pac. 848; Summerville v. March, 142 Cal. 554, 558, 76 Pac. 388, 100 Am. St.
Rep. 145. These cases are not conclusive upon the question at bar for the
reason that in neither of them was the purchase price inadequate. But the
language used in discussing the question is significant.Meux v. Trezevant,
supra, involved a foreclosure sale wherein the premises were sold en masse,
although the decree of foreclosure required that they be sold in separate
parcels. This court said:
‘Unless it is made to appear that a larger sum would have been realized from
the sale of the property if it had been sold in separate lots or parcels, or
that the sale of less than the whole tract would have brought sufficient to
satisfy the writ, the sale will not be set aside. Hudepohl v. Liberty Hill,
etc., Co., 94 Cal. 591, 28 Am. St. Rep. 149. In this case there is no
statement in defendant’s affidavits tending to show that the property would
have brought more if sold separately, or that the sale of less than the whole
would have satisfied the writ. On the contrary, the affidavits on the part of
defendant show without*133 contradiction that the property sold for its full
cash value, and that it would not have brought as much as it sold for if it
had been sold in separate lots. The only pretense of injury set forth in
defendant’s affidavit is that he was injured by said sale in one lot, because
it ‘tended to reduce the number of bidders,’ and because ‘it deprived affiant
of the right to redeem either of said colony lots separately.’
‘This is clearly insufficient. Defendant does not show that he could redeem,
or that he ever desired to or now desires to redeem, any part of said
property. Courts will not set aside a sale under foreclosure for light or
trivial reasons. It must appear that there has been a material departure from
the mandates of the decree, or the law governing such sales, to the injury of
the party applying to have the same set aside. Nor can injury be presumed
from mere irregularities.’
Assuming in the instant case that no bidder other than the defendant
Shumaker attended the sale for the purpose of bidding thereat, or would have
attended it under **469 any circumstances, then plaintiff could not
conceivably have been injured by the low tone of voice or hurried manner in
which the sale was conducted, if it was sufficiently audible and sufficiently
deliberate to enable Shumaker to make the bids he desired. If such was the
case, as we must assume under the findings, plaintiff could not have been
injured by these claimed irregularities. We are of the opinion that under
these circumstances they afforded no ground for relief. Appellants contend
that the findings to the effect that the sale was made in an inaudible tone
of voice and in a hurried manner are wholly contrary to and unsupported by
the evidence. In view of the conclusion just announced it is unnecessary to
consider this contention.
[6] As to the fourth claimed irregularity the plaintiff alleged and the court
found:
‘That on July 28, 1920, the International Bank through and by its attorney
informed the plaintiff in writing, that it, the said bank, would take such
necessary action against the estate on the notes secured by said trust deed
‘as may be desirable,’ and which notice was in reply to a letter written by
the plaintiff to the International Bank on the 20th day of July, 1920, in
which the plaintiff asked the said defendant*134 bank for an additional
length of time to pay the notes secured by said trust deed.’
Appellants assert that the concluding phrase of said finding, ‘in which the
plaintiff asked the said defendant bank for an additional length of time to
pay the notes secured by said deed of trust’ is wholly unsupported by the
evidence, and to this we agree. The above-quoted allegation in plaintiff’s
complaint was immediately followed by the allegation:
‘And which letter of July 28, 1920, written by the said bank to plaintiff,
caused the plaintiff to believe that the said bank would not proceed to sell
the property described in said Exhibit A. * * *’
This allegation was denied by the defendants, and the court made no finding
thereon. A consideration of the evidence upon this point makes it apparent
that if a finding had been made responsive to this issue it would have been
adverse to plaintiff’s contention. This leaves the situation wholly
inadequate to bring the case within the rule of Winbigler v. Sherman, supra,
relied upon by respondent, wherein it was said that by means of a somewhat
similar letter written by the holder of the note to the owner of the property
the latter had been ‘lulled into a false security.’ There is not the
slightest evidence herein that the letter here in question had any effect of
lulling the plaintiff into a false security. **On the contrary, he testified
that he couldn’t say whether he had ever received the letter or not. He was
then shown a copy of the letter and asked to state whether or not he had
received the original, and he replied: **’No; I don’t remember receiving that
letter.’
Respondent insists that the present case is substantially identical with

Odell v. Cox and Winbigler v. Sherman, supra, and must therefore be ruled by
those decisions, in each of which a judgment setting aside the sale was
affirmed by this court. Appellants assert that those decisions have been
rendered inapplicable by the amendment in 1917 of section 2924, Civil Code
(St. 1917, p. 300), so as to require as a condition precedent to such a sale
that the beneficiary shall first record in the office of the county recorder
a notice of his intention to sell the property, which notice shall be
recorded at least three months prior to the sale. They argue that, such
record being created for the special benefit of the debtor, he is charged in
law with notice of its contents, whether he has *135 actual knowledge thereof
or not. We are not prepared to go thus far, nor do we deem it necessary to do
so in the disposition of the instant case. There are important elements in
each of the cited cases which serve to distinguish it from the case at bar.
Odell v. Cox was not a case of ‘mere inadequacy of price’ coupled with
irregularities in the conduct of the sale. There were no such
irregularities.’ Every requirement of the law with respect to the conduct of
the sale was fully complied with. Neither was it a case of ‘mere inadequacy
of price,’ which means ‘simply an inequality in value between the subject-
matter and the price.’The price there bid was so insignificant as to amount
in practical effect to nothing at all. In the language of the court:
‘The amount bid, $26.50, when considered in connection with property having a
cash value of $2,000 in the market, was a mere nominal sum, and the purchaser
acquired this valuable property for practically nothing.’
This fact, which is iterated and reiterated throughout that opinion, was
evidently regarded as a controlling factor in that decision. That case may be
taken as authority for the conclusion that, where the purchase price at such
a sale is so small as to amount to practically nothing, the transaction may
be regarded in equity as no sale at all, but rather a device for obtaining
the debtor’s property without compensation, and may be relieved against at
the instance of an owner who was himself entirely without fault or negligence
and whose lack of knowledge was ‘entirely excussable.’ In the case at bar the
purchase price can by no means be regarded as merely nominal, however
disproportionate it may have ben to the real value of the property.
In Winbigler v. Sherman the purchase price of $500 for property worth

$5,000, though much more disproportionate than in the instant case, could not
be regarded as merely nominal. **But there were circumstances**470 of
unfairness and oppression in that case which are absent from the case at bar.
It is true that one of the notes secured by the trust deed there in question
was past due and unpaid, but it was for only $100, and those notes had been
given in payment for certain pumping machinery which was defective, and was
not in accordance with the contract and was not properly installed, **so that
the maker had a good and valid *136 defense to an action upon the notes.
**Negotiations between the maker of the notes and the holder thereof for a
correction of these defects were in progress right up to the time of the
trustee’s sale. **The maker learned of the proposed sale only a half hour
before it was to take place. He then went to the trustee and the holder of
the notes and pleaded with them to postpone the sale for a reasonable time to
enable him to get the money to pay them, which was refused. The sale having
taken place, he promptly procured the money and tendered to the purchaser,
who was the holder of the notes, the entire amount due upon all of the notes,
together with all the costs of making the sale. The court justly concluded
that the refusal to grant even a brief postponement of the sale, under the
circumstances, could have had but one object and purpose, namely, to obtain
the debtor’s property for ‘a mere pittance.’ This was an act of such evident
unfairness and oppression as to amount to a constructive fraud upon the
debtor, who was himself without fault.
In each of the two cases last under consideration emphasis is placed upon
the circumstance that the debtor’s lack of knowledge that the sale was about
to take place was not due to his own fault or negligence. In Odell v. Cox,
which involved a sale under execution, the fact that the judgment debtor was
amply solvent was well known to the creditor, and the former had taken an
appeal from the judgment and filed a good and sufficient stay bond. But an
execution had been issued, without the debtor’s knowledge, between the time
of the entry of the judgment and the filing of the stay bond. The court said:
‘This lack of knowledge on his part was entirely excusable. Probably neither
he nor his attorneys had any reason to anticipate, in view of his solvency
and the appeal about to be taken, that an execution would be obtained to
enforce the judgment.’
In the case at bar no good reason is apparent, either in the findings or in

the evidence, why the plaintiff should not have expected and anticipated that
the bank would proceed with the enforcement of the trust deed according to
its terms. The amount due was in excess of $5,000. It had been delinquent at
the time of the sale nearly seven months. In the meantime the taxes had been
unpaid, the property had been sold for taxes, and other taxes thereon were
delinquent.*137 The plaintiff was collecting the rents, but was making no
payments on account of either the indebtedness or the taxes. It is true that
the estate was involved in litigation in the sense that a contest was pending
therein over an alleged will of the deceased, but it does not appear that the
plaintiff as administrator was a party thereto or in any way interested
therein or affected thereby. It appears that there were not sufficient funds
in the assets of the estate to enable him to pay these notes. But it does
not appear that he ever made an effort to procure a loan elsewhere to enable
him to make the payment, or even that he ever asked the defendant bank for an
extension of time for the payment. These circumstances serve to bring this
case fairly within the rule of Rauer v. Hertweck, supra, which was summed up
in the following language:
‘The attempt to show unfairness in the sale comes down simply to this: That
the execution sale was regularly made upon due statutory notice, but that the
judgment debtor did not, in fact, know of the sale, and no one gave him
notice of it. He did, however, know that a judgment had been entered against
him, and must be deemed to have known that his property might be levied on at
any time. He failed to pay the judgment, and took no steps to protect his
property until many months after the entry of judgment. He then found that a
sale had been had, and that the time for redemption had expired. The
resulting loss can more properly be attributed to his neglect of his own
interests than to any unfairness on the part of the judgment creditor or the
purchasers.’
The judgment is reversed.
Haish v. Hall, 90 Cal.App. 547, 265 P. 1030 (Cal.App. 2 Dist.,Apr 02, 1928)
Distinguishes Sargent v. Shumaker, with U.S. Supreme Court cases

Graffam v. Burgess, and Schroeder v. Young
Moeller v. Lien, 25 Cal.App.4th 822, 30 Cal.Rptr.2d 777 (Cal.App. 2 Dist.

Jun 07, 1994)
Following a trustee’s sale of a medical office condominium, the trustor

brought an action to set aside the sale, to cancel the trust deed, to quiet
title and for an accounting. Although the trial court found, with respect to
the events leading up to the sale as well as the sale itself, that the
trustee’s conduct had not been improper, that the trustor’s behavior had
evidenced a pattern of continued neglect and procrastination, and that the
sale had been made to bona fide purchasers for value, it ruled that the
trustor was entitled to equitable relief pursuant to Civ. Code, § 3275
(relief from forfeiture), since the sale price was grossly inadequate and
since the trustor had been unaware of his absolute right to a one-day
continuance of the sale in order to effectuate a payoff. Thus, the trial
court entered judgment in favor of the trustor, cancelling the trust deed and
quieting title in the trustor, on the condition that he pay certain sums to
the purchasers, the trustee, and another party. (Superior Court of Los
Angeles County, No. YC004338, Macklin Fleming, Judge. [FN*] )
The Court of Appeal reversed, and remanded the matter to the trial court for
purposes of vacating its orders requiring the trustor to pay various sums to
various parties in order to have the property returned to him and to take any
other necessary actions. The court held that the trustor could not attack the
validity of the sale. There were no grounds for such an attack, since there
were no irregularities in the procedure. Also, the sale was to bona fide
purchasers for value and a trustee’s deed containing the required statutory
recitals was delivered. Thus, the sale was conclusively presumed to be valid
(Civ. Code, § 2924). The inadequacy of the sale price was not a ground for
setting aside the sale, since there were no irregularities in the proceedings
and the sale was to bona fide purchasers. And the fact that the trustor was
unaware that he had a right to postpone the sale for one day was not an
irregularity in the proceedings and was not a ground for setting aside the
sale. The court also held that the trial court erred in applying *823Civ.
Code, § 3275, so as to set aside the sale. It would be inconsistent with the
comprehensive and exhaustive statutory scheme regulating nonjudicial
foreclosures, which scheme includes a myriad of rules relating to notice and
right to cure, to incorporate another unrelated cure provision into such
foreclosure proceedings. Moreover, the statute is expressly applicable only
as between parties to a contract, and it contains no language evidencing an
intent to override the general rule protecting the sanctity of title of a
bona fide purchaser. (Opinion by Grignon, J., with Turner, P. J., and
Armstrong, J., concurring.)
(4) Deeds of Trust § 36--Sale Under Power--Attack on Sale--Presumption of

Regularity of Sale--Effect as Dependent on Status of Purchaser.
Since the presumption that, if the trustee’s deed recites that all statutory
notice requirements and procedures required by law for the conduct of a
nonjudicial foreclosure sale have been satisfied, the sale has been conducted
regularly and properly (Civ. Code, § 2924) is rebuttable as to purchasers
other than bona fide purchasers, the purchaser’s title may in some instances
be recovered by the trustor in an *824 attack on the validity of the sale. As
to a bona fide purchaser, however, the presumption is conclusive. Thus, as a
general rule, a trustor has no right to set aside a trustee’s deed as against
a bona fide purchaser for value by attacking the validity of the sale. The
conclusive presumption precludes an attack by the trustor on a trustee’s sale
to a bona fide purchaser even though there may have been a failure to comply
with some required procedure that deprived the trustor of the right of
reinstatement or redemption. The conclusive presumption precludes an attack
by the trustor on the trustee’s sale to a bona fide purchaser even where the
trustee wrongfully rejected a proper tender of reinstatement by the trustor.
[See 3 Witkin, Summary of Cal. Law (9th ed. 1987) Security Transactions in
Real Property, §§ 148, 149; 4 Miller & Starr, Cal. Real Estate (2d ed. 1989)
§ 9:154.]
(5) Deeds of Trust § 10--Liabilities of Trustee--To Trustor--Where Trustor

Precluded From Attacking Foreclosure Sale.
Where the trustor under a deed of trust is precluded from suing to set aside
a nonjudicial foreclosure sale, the trustor may recover damages from the
trustee.
(6) Deeds of Trust § 39--Sale Under Power--Trustee’s Deed.

Although a nonjudicial foreclosure sale is generally complete upon acceptance
of a bid by the trustee, the conclusive presumption as to a bona fide
purchaser that, if the trustee’s deed recites that all statutory notice
requirements and procedures required by law for the conduct of the sale have
been satisfied, the sale has been conducted regularly and properly (Civ.
Code, § 2924) does not apply until a trustee’s deed is delivered. Thus, if
there is a defect in the procedure that is discovered after the bid is
accepted, but prior to delivery of the trustee’s deed, the trustee may abort
a sale to a bona fide purchaser, return the purchase price, and restart the
foreclosure process.
(7) Deeds of Trust § 36--Sale Under Power--Attack on Sale--To Bona Fide

Purchaser--Effect of Gross Inadequacy of Sale Price.
Where there is no irregularity in a nonjudicial foreclosure sale and the
purchaser is a bona fide purchaser for value, a great disparity between the
sales price and the value of the property is not a sufficient ground for
setting aside the sale. However, an irregularity in the nonjudicial
foreclosure sale coupled with a gross inadequacy of price may be sufficient
to set aside the sale, where the conclusive presumption does not come into
effect because the trust deed has not yet been delivered.

Purchaser--Effect of Trustor’s Unawareness of Right to One-day Postponement
of Sale.
In an action to set aside a trustee’s sale *825 of a medical office
condominium, the trustor could not attack the validity of the sale. There
were no grounds for such an attack, since there were no irregularities in the
procedure. Also, the sale was to bona fide purchasers for value and a
trustee’s deed containing the required statutory recitals was delivered.
Thus, the sale was conclusively presumed to be valid (Civ. Code, § 2924). The
fact that the sale price was only 25 percent of the value of the property did
not justify setting aside the sale, since there were no irregularities in the
proceedings and the sale was to a bona fide purchaser. The fact that the
trustor was unaware that he had a right to postpone the sale for one day was
not an irregularity in the proceedings and was not a ground for setting aside
the sale. Moreover, even if he had known of his right to a one-day
postponement, had exercised that right, and had tendered the amount due, and
the trustee had improperly rejected the tender, the sale could not have been
properly set aside against a bona fide purchaser for value.

Purchaser--Applicability of Statutory Right to Relief From Forfeiture.
In an action to set aside a trustee’s sale of a medical office condominium,
the trial court erred in applying Civ. Code, § 3275 (relief from forfeiture),
so as to set aside the sale even though the property had been bought by bona
fide purchasers. It would be inconsistent with the comprehensive and
exhaustive statutory scheme regulating nonjudicial foreclosures, which scheme
includes a myriad of rules relating to notice and the right to cure, to
incorporate another unrelated cure provision into such foreclosure
proceedings. Moreover, the statute is expressly applicable only as between
parties to a contract, and it contains no language evidencing an intent to
override the general rule protecting the sanctity of title of a bona fide
purchaser. The trial court attempted to do equity and place the parties back
in the positions they were in prior to the sale, but the trustor was not
entitled to equity. His delays, negligence, and inattention were the sole
cause of the sale. The bona fide purchasers were vested with title, and the
trustor had no further legal or equitable right, title, or interest in the
property.
Appellants Chun-Yen Lien and Fong T. Lien appeal from a judgment after a
court trial quieting title to real property in favor of respondent Henry G.
Moeller. Appellants were bona fide purchasers for value of certain real
property at a nonjudicial foreclosure sale. The trial court granted
respondent relief from forfeiture pursuant to Civil Code section 3275. It
ordered the nonjudicial foreclosure sale to be set aside and quieted title in
respondent on condition respondent reimburse appellants for the purchase
price, their other expenses, 10 percent interest, costs and attorney fees.
Appellants contend Civil Code section 3275 may not be applied against a bona
fide purchaser for value at a nonjudicial foreclosure sale, the trial court
abused its discretion in granting equitable relief and the reimbursement was
inadequate. [FN1] We reverse.
FN1 Respondent appeals conditionally from the orders requiring him to pay
money. Although respondent Henry G. Moeller is also an appellant by virtue of
his conditional appeal, for ease of reference, we refer to Moeller as
respondent in this opinion.
Procedural Background
On February 1, 1991, respondent sued American Securities Company, IMCO
Realty Services, Inc., Trustee’s Assistance Corporation and appellants to set
aside a trustee’s sale of a medical office condominium located in Torrance,
California, to cancel the trust deed, to quiet title and for an accounting.
On February 6, 1991, respondent filed a first amended complaint against IMCO,
American Securities, Sonoma Conveyancing Corporation, Trustee’s Assistance
and appellants asserting the following causes of action: (1) equitable action
to set aside trustee’s sale; (2) equitable action for cancellation of
trustee’s deed; (3) equitable action to quiet title; (4) action to recover
damages for breach of contract (promissory estoppel); (5) action to recover
damages for breach of contract (executed oral agreement); and (6) action to
recover damages for negligent misrepresentation. On May 1, 1991, a second
amended complaint was filed adding Wells Fargo Bank, N.A. as a defendant and
alleging three additional causes of action: (7) action to recover damages for
breach of duty to disclose facts; (8) action to recover damages for
constructive fraud; and (9) action to recover damages for breach of covenant
of good faith and fair dealing. On May 29, 1991, appellants cross-complained
against respondent for rent. [FN2]
FN2 Wells Fargo, IMCO, American Securities, Sonoma Conveyancing and Trustee’s
Assistance are not parties to this appeal.
Trial was commenced by the court on April 6, 1992, and taken under
submission on April 10, 1992. On April 13, 1992, the trial court rendered a
decision. Judgment was entered in favor of respondent cancelling the trust
*827 deed and quieting title in respondent on condition respondent pay
certain sums to appellants, Wells Fargo and IMCO by April 20, 1992.
Respondent tendered the sums in a timely fashion. Appellants rejected the
tender in order to preserve their right to appeal. The sums payable to Wells
Fargo and IMCO were deposited with the trial court in an interest-bearing
account pending the resolution of this appeal. In all other respects,
judgment was entered for defendants. Appellants appealed. Respondent appealed
conditionally from the orders requiring him to pay money to appellants, Wells
Fargo and IMCO.
Facts
In November 1979, respondent obtained a loan in the amount of $81,200 from
Wells Fargo secured by the medical office condominium. The remaining
principal amount of $72,600 became due and payable on November 5, 1989.
Respondent did not pay off the loan. He received two 90-day extensions of the
loan from Wells Fargo and continued to make the monthly payments. He did not
pay off the loan at the expiration of the extensions. Commencing in June
1990, Wells Fargo returned the monthly payments to respondent and began
foreclosure proceedings. On July 19, 1990, notice of default and 90-day
notice of foreclosure were served on respondent. Apparently, IMCO was Wells
Fargo’s foreclosure agent.
In August 1990, respondent applied to a branch of Wells Fargo for a loan to

refinance his existing loan. Respondent did not inform the branch that his
present loan was in foreclosure. The loan application was sent to the loan
department of Wells Fargo on September 13, 1990. The loan application was
rejected. Over the course of the next two months, respondent attempted to
allay the credit concerns which had lead to the rejection of his loan
application.
On November 6, 1990, a 30-day notice of sale under foreclosure was recorded

scheduling a sale of the property for December 7, 1990; the notice indicated
$83,827 was owing on the loan. On December 6, 1990, respondent’s loan
application was approved subject to a confirming appraisal. The foreclosure
sale of the property was continued to January 11, 1991. On December 28, 1990,
respondent was informed that he was required by federal regulations to post a
$1,500 deposit for the bank appraisal. Instead of posting the appraisal
deposit, which he believed was excessive, respondent obtained his own
appraisal of the property. Respondent’s expert appraised the property at
between $350,000 and $360,000. This appraisal was submitted to Wells Fargo on
January 9 or 10, 1991.
On January 10, 1991, respondent was informed that his appraisal did not
comply with federal regulations and he was required to deposit $1,500 for a
*828 bank appraisal. The foreclosure sale was continued to January 18, 1991.
On January 16, 1991, respondent requested the amount necessary to pay off the
loan and was informed the amount owing was $85,707.36. Respondent believed
this amount was excessive. Respondent testified that he asked for the amount
to be provided to him in writing; an unnamed Wells Fargo employee told
respondent she would do this and told respondent not to worry about the
foreclosure sale. This testimony was not credible and did not establish a
legally sufficient basis for reliance. Respondent neither deposited the
$1,500 appraisal sum nor paid off the loan.
On January 18, 1991, after confirming that neither amount had been received,
Wells Fargo authorized the foreclosure sale to go forward. Appellants, who
were speculators, bought the property at the foreclosure sale for $85,710,
the amount of the debt. Appellants were the sole bidders.
Respondent learned of the sale later that same day. Respondent obtained a
cashier’s check for the amount of the debt and sent the check to the
foreclosure agent. Apparently, respondent had available cash deposits in
another bank of $500,000. The check was received by IMCO on January 21, 1991,
and returned to respondent.
A trustee’s deed dated January 23, 1991, was recorded on January 30, 1991.
The deed contained the following language: "Beneficiary, as owner of the
obligations secured by said Deed of Trust executed and delivered to Trustee,
a written Declaration of Default and Demand for Sale. Default under said Deed
of Trust occurred as set forth in the Notice of Default and Election to Sell
Under Deed of Trust which was recorded in the office of the Recorder of said
county. Beneficiary made due and proper demand upon Trustee to sell said
property pursuant to the terms of said Deed of Trust. The posting and first
publication of the Notice of Trustee’s Sale of said property occur[r]ed not
less than three months from the recording of the Notice of Default and
Election to Sell Under Deed of Trust. Trustee executed its Notice of
Trustee’s Sale stating that it would sell, at public auction to the highest
bidder for cash, in lawful money of the United States, the real property
above described, which Notice of Trustee’s Sale duly fixed the time and place
of said sale as therein stated. [¶] All requirements of law regarding the
mailing, personal delivery and publication of copies of Notice of Default and
Election to Sell Under Deed of Trust and Notice of Trustee’s Sale, and the
posting of copies of Notice of Trustee’s Sale have been complied with."
Statement of Decision
The statement of decision included the following factual findings and legal
conclusions. Wells Fargo’s conduct in this matter did not constitute *829
negligence, bad faith, promissory estoppel or breach of a fiduciary duty.
Wells Fargo forbore from foreclosure for a total of 14 months and engaged in
no delinquencies or improprieties. The $1,500 appraisal fee was not
excessive. The payoff amount communicated to respondent was the correct
payoff amount.
Respondent’s behavior evidenced a pattern of continued neglect and

procrastination. Respondent treated the foreclosure in an entirely cavalier
fashion. The sole cause of the foreclosure sale was respondent’s own
negligence.
Appellants were bona fide purchasers for value. There were no irregularities
in the sale.
Respondent is entitled to equitable relief pursuant to Civil Code section

3275. The sale price at the foreclosure sale was grossly inadequate. The
assessed value of the property was $210,000, and the appraised value was
between $350,000 and $360,000. A smaller and less favorable unit in the same
complex had been sold a year earlier for $317,500. The value of the property
was four times the amount of the debt/sales price. Respondent lost 75 percent
of the value of the property in the foreclosure sale. A slight unfairness
occurred by reason of respondent’s failure to learn that he had an absolute
right under former Civil Code section 2924g, subdivision (c)(1) to a one-day
continuance of the foreclosure sale in order to effectuate a payoff. If
respondent had known of this right, he would have been able to stop the
foreclosure sale and pay off the loan from his available bank deposits.
The statutory scheme can be briefly summarized as follows. Upon default by

the trustor, the beneficiary may declare a default and proceed with a
nonjudicial foreclosure sale. (Civ. Code, § 2924; 4 Miller & Starr, supra, at
§ 9:131, p. 415.) The foreclosure process is commenced by the recording of a
notice of default and election to sell by the trustee. (Civ. Code, § 2924; 4
Miller & Starr, supra, at § 9:131, p. 416.) After the notice of default is
recorded, the trustee must wait three calendar months before proceeding with
the sale. (Civ. Code, § 2924, subd. (b); 4 Miller & Starr, supra, § 9:145, p.
471.) After the 3-month period has elapsed, a notice of sale must be
published, posted and mailed 20 days before the sale and recorded 14 days
before the sale. (Civ. Code, § 2924f; 4 Miller & Starr, supra, § 9:146, p.
472.) The trustee may postpone the sale at any time before the sale is
completed. (Civ. Code, § 2924g, subd. (c)(1); 4 Miller & Starr, supra, §
9:148, p. 481.) If the sale is postponed, the requisite notices must be
given. (Civ. Code, § 2924g, subd. (d).) The conduct of the sale, including
any postponements, is governed by Civil Code section 2924g. (Whitman v.
Transtate Title Co. (1985) 165 Cal.App.3d 312, 317 [211 Cal.Rptr. 582].) The
property must be sold at public auction to the highest bidder. (Civ. Code, §
2924g, subd. (a); Homestead Savings v. Darmiento (1991) 230 Cal.App.3d 424,
433 [281 Cal.Rptr. 367].)
During the foreclosure process, the debtor/trustor is given several

opportunities to cure the default and avoid the loss of the property. First,
the trustor is entitled to a period of reinstatement to make the back
payments and reinstate the terms of the loan. (Napue v. Gor-Mey West, Inc.
(1985) 175 Cal.App.3d 608, 614 [220 Cal.Rptr. 799].) This period of
reinstatement continues until five business days prior to the date of the
sale, including any postponement. (Civ. Code, § 2924c, subds. (a)(1), (e).)
In addition to the right of reinstatement, the trustor also possesses an
equity of redemption, which permits the trustor to pay all sums due prior to
the sale of the property at foreclosure and thus avoid the sale. (Civ. Code,
§§ 2903, 2905.) Additionally, at the time of the foreclosure sale in this
case, the trustor had the right *831 to postpone the trustee’s sale for one
day in order to pay off the loan. (Civ. Code, former § 2924g, subd. (c)(1);
Whitman v. Transtate Title Co., supra, 165 Cal.App.3d at pp. 317-320.) [FN3]
FN3 Prior to its amendment in 1992, Civil Code section 2924g, subdivision (c)
(1) provided in pertinent part: "There may be a postponement of the sale
proceedings at any time prior to the completion of the sale thereof at the
discretion of the trustee, upon instruction by the beneficiary to the trustee
that the sale proceedings be postponed, or upon the written request of the
trustor, provided the reason for such request is to permit the trustor to
obtain cash sufficient to satisfy the obligation or bid at the sale and the
written request identifies the source from which the funds are being
obtained. The trustor shall be entitled to make one request for postponement
under this paragraph and any postponement made at the request of the trustor
shall be for a period not to exceed one business day." In 1992, the statute
was amended to delete the trustor’s entitlement to request a one-day
postponement of the sale. (Stats. 1992, ch. 351, § 4.)
The purchaser at a foreclosure sale takes title by a trustee’s deed. If the

trustee’s deed recites that all statutory notice requirements and procedures
required by law for the conduct of the foreclosure have been satisfied, a
rebuttable presumption arises that the sale has been conducted regularly and
properly; this presumption is conclusive as to a bona fide purchaser.
(Civ. Code, § 2924; Homestead Savings v. Darmiento, supra, 230 Cal.App.3d at
p. 431.)
(4) Since the presumption is rebuttable as to purchasers other than bona

fide purchasers, the purchaser’s title may in some instances be recovered by
the trustor in an attack on the validity of the sale. (4 Miller & Starr,
supra, § 9:152, pp. 502-503.) As to a bona fide purchaser, however, the
presumption is conclusive. Thus, as a general rule, a trustor has no right to
set aside a trustee’s deed as against a bona fide purchaser for value by
attacking the validity of the sale. (Homestead Savings v. Darmiento, supra,
230 Cal.App.3d at p. 436.) The conclusive presumption precludes an attack by
the trustor on a trustee’s sale to a bona fide purchaser even though there
may have been a failure to comply with some required procedure which deprived
the trustor of his right of reinstatement or redemption. (4 Miller & Starr,
supra, § 9:141, p. 463; cf. Homestead v. Darmiento, supra, 230 Cal.App.3d at
p. 436.) The conclusive presumption precludes an attack by *832 the trustor
on the trustee’s sale to a bona fide purchaser even where the trustee
wrongfully rejected a proper tender of reinstatement by the trustor. (5)
[rejected in Bank of America v. La Jolla] Where the trustor is precluded from
suing to set aside the foreclosure sale, the trustor may recover damages from
the trustee. (Munger v. Moore (1970) 11 Cal.App.3d 1, 9, 11 [89 Cal.Rptr.
323].)
On November 6, 1990, a 30-day notice of sale of the property for December 7,

1990, was duly served and recorded. Since respondent was attempting to
refinance the loan, the sale was continued to January 11, 1991, and then to
January 18, 1991. The sale was held on January 18, 1991, and the property was
sold to appellants, bona fide purchasers for value. Respondent never
requested a postponement of the sale. A trustee’s deed containing the
requisite statutory recitals was delivered to appellants.
Wells Fargo was not negligent, did not act in bad faith, was not estopped
from foreclosing and did not breach any fiduciary duty to respondent. Wells
Fargo engaged in no delinquencies or improprieties. There were no
irregularities in the foreclosure proceedings. Wells Fargo had no obligation
to accept respondent’s untimely tender of the amount due.
(8) Under these circumstances, respondent could not attack the validity of
the sale to appellants. First, there were no grounds for attacking the
validity of the sale, as there were no irregularities in the procedure.
Second, the sale was to bona fide purchasers for value and a trustee’s deed
containing the required statutory recitals was delivered. Thus, the sale was
conclusively presumed to be valid.
The fact that the sale price was only 25 percent of the value of the property
did not permit the sale to be set aside where there were no irregularities in
the proceedings and the sale was to a bona fide purchaser. The fact that
respondent was unaware he had a right to postpone the sale for one day was
not an irregularity in the proceedings and did not permit the sale to be set
aside. Even if respondent had known of his right to a one-day postponement,
had exercised that right and had tendered the amount due, and the trustee had
improperly rejected the tender, the sale could not have been properly set
aside against a bona fide purchaser for value.
Bank of Seoul & Trust Co. v. Marcione, 198 Cal.App.3d 113, 244 Cal.Rptr. 1
(Cal.App. 2 Dist.,Feb 01, 1988)
Junior lienholder brought action against beneficiaries under first deed of

trust for unjust enrichment following foreclosure sale. The Superior Court,
Los Angeles County, Thomas C. Murphy, J., granted beneficiaries’ demurrer,
and junior lienholder appealed. The Court of Appeal, L. Thaxton Hanson, J.,
held that junior lienholder’s allegation that beneficiaries, through trustee,
precluded junior lienholder from bidding at foreclosure sale, thereby
resulting in enrichment of beneficiaries and consequent loss to junior
lienholder, stated cause of action.
Reversed.
from an order sustaining the demurrer of defendants Conrad C., Lillian B.,
Eugene, and Geraldina Marcione without leave to amend and dismissing the
first amended complaint. We reverse.
STANDARD OF REVIEW
[1] In testing a complaint, a demurrer admits all material and issuable facts
properly pleaded. However, it does not admit contentions, deductions, or
conclusions of fact or law in the complaint. (Daar v. Yellow Cab Co. (1967)
67 Cal.2d 695, 713, 63 Cal.Rptr. 724, 433 P.2d 732; Serrano v. Priest (1971)
5 Cal.3d 584, 591, 96 Cal.Rptr. 601, 487 P.2d 1241.)
FACTS
Plaintiff’s first amended complaint alleged the following facts. **Chul Soo
and Kyung Sook Park owned improved real property in Burbank. **The Parks, on
September 3, 1980, to secure payment of the principal sum and interest
provided in an all-inclusive note, executed and delivered to defendants a
trust deed. **The trust deed conveyed the property to Service Escrow Company
as trustee, naming defendants as beneficiaries. **Later G.T. Service
Corporation was substituted as trustee.
**The Parks, in September 1983, executed and delivered to plaintiff Bank of

Seoul and Trust Company a trust deed conveying the property to Ticor Title
Insurance Company of California as trustee.
In February 1985, G.T. recorded a notice of default and election to sell in

the Los Angeles County official records, avering that the Parks had breached
their obligation to defendants Marcione. After G.T. Service Corporation
noticed its intent to sell the property at a public auction, it held a non-
judicial foreclosure sale on January 10, 1986.
Representatives of the Bank of Seoul attended, and were ready, able, and
willing to bid in excess of $200,000 for the property by a bank cashier’s
check. Only plaintiff and the Marciones attended the auction. Before
completing the sale, plaintiff’s representatives announced to G.T.’s crier,
“we *117 bid,” but the crier ignored them, denying plaintiff an opportunity
to specify its higher bid, and declared the property sold to the Marciones
for their credit bid of $107,348.63. The Marciones and G.T. Service
Corporation refused plaintiff’s immediate demand to reopen the bidding and
allow plaintiff to state a higher bid.
G.T. Services Corporation delivered and executed a trustee’s deed for the
property, recorded in the Los Angeles County Recorder’s Office on January 23,
1986. The fair market value of the property exceeded $330,000. At the time of
the sale, the Parks owed plaintiff over $200,000, secured by the property and
subordinate to the Marciones’ trust deed. Plaintiff, as junior lienholder,
had an equity interest in the property exceeding $130,000, and was entitled
to receive any surplus from the sale to the extent plaintiff’s equity was
more than the amount owed to defendants.
The first amended complaint stated four causes of action against defendants
Marcione: **1) to set aside the trustee sale; **2) to cancel the trustee’s
deed; **3) for damages for wrongful trustee’s sale; **4) for unjust
enrichment against defendants Marcione.
G.T. Service Company’s demurrer was overruled on January 9, 1987; it cross-

complained against the Marciones for indemnity and contribution, but this
appeal only involves the Bank of Seoul’s causes of action against defendants
Marcione.
Defendants Marcione, on February 19, 1987, again demurred to plaintiff’s four

causes of action for failing to state a cause of action against under Code of
Civil Procedure section 430.10, subdivision (e). The trial court sustained
the demurrer on March 6, 1987, and filed a notice of ruling **3 and an order
re: grant of demurrer on March 26, 1987.
David v. Frost, 122 Cal.App. 750, 10 P.2d 504 (Cal.App. 2 Dist.,Apr 21,
1932)
Unclear case
Bank of America Nat. Trust & Savings Ass’n v. Century Land & Water Co., 19 Cal.App.2d 194, 65 P.2d
109 (Cal.App. 2 Dist. Feb 10, 1937)
Short case, with not enough analogous facts
266 Mortgages
In absence of irregularities or oppression, fraud or unfairness, holder of note secured by trust deed was entitled to
deficiency judgment of difference between foreclosure sale price and indebtedness without deduction for difference
between reasonable market value of property and amount for which holder purchased property at foreclosure sale,
where note was executed prior to enactment of statute limiting amount of deficiency judgment. Code Civ.Proc. §
580a, as added by St.1933, p. 1672.
[1][2][3][4] Section 580a of the Code of Civil Procedure (as added by St.1933, p. 1672) is not applicable to the
present action, since the note was executed prior to the enactment of the section. California Trust Company v.
Smead Investment Co., 6 Cal.App.(2d) 432, 44 P.(2d) 624; Brown v. Ferdon, 5 Cal.(2d) 226, 54 P.(2d) 712.
Defendants attempt to uphold the judgment with a discussion of the general duties and obligations of a trustee. It has
been held that the trustee may also be the beneficiary and may become a purchaser at the sale. California Trust
Company v. Smead Investment Co., supra; 25 Cal.Jur. 19, and cases there cited. In this state inadequacy of price is
not in itself sufficient ground for setting aside a sale legally made. If the price is palpably inadequate, slight
irregularities in conjunction with the sale might authorize the court to set it aside; but such irregularities to have this
effect “must have conduced to the inadequacy of the price, or in some other way have contributed to the injury of
the plaintiff.” Sargent v. Shumaker, 193 Cal. 122, 223 P. 464, 468. Since the appeal is upon the judgment roll, we
must look to the findings to determine if any irregularities exist. Nothing is contained therein which can be classified
as an irregularity or which indicates that there was any oppression, fraud, or unfairness. In the absence of such
findings plaintiff is entitled to judgment for the additional sum of $7,500.
None of the defendants, with the possible exception of defendant Merrill, have presented issues in the pleadings
which call for findings by the trial court on the subject of irregularities connected with the sale. Defendant Merrill
prosecutes a separate appeal from the judgment, and on that appeal we are this day filing an opinion reversing the
judgment as to defendant Merrill on a point having no bearing upon the issues raised by plaintiff’s appeal.
The judgment is modified, and the superior court is directed to enter judgment in favor of appellant and against
respondents other than respondent Merrill in accordance with the prayer of the complaint.
We concur: CRAIL, P. J.; McCOMB, Justice pro tem.
California Trust Co. v. Smead Inv. Co., 6 Cal.App.2d 432, 44 P.2d 624
(Cal.App. 2 Dist. Apr 25, 1935)
Appeal from Superior Court, Los Angeles County; Frank M. Smith, Judge.
Action by the California Trust Company against the Smead Investment Company.
Judgment for plaintiff, and defendant appeals.
Affirmed.
266 Mortgages
266k330 k. Statutory Provisions. Most Cited Cases
Statute limiting amount of deficiency judgment after sale of realty under
trust deed to difference between entire indebtedness to beneficiary and fair
market value of property at time of sale held inapplicable to action,
commenced after it became law, to recover deficiency in proceeds of sale on
foreclosure of trust deed executed before enactment thereof. Code Civ.Proc. §
580a.
266 Mortgages
Rendition of judgment for deficiency after sale on foreclosure of trust deed
held not abuse of trial court’s discretion, even if sale price was
inadequate, especially in absence of any claim of mistake, misapprehension,
or inadvertence, unfairness attending sale, or making thereof under
inequitable or oppressive conditions. Code Civ.Proc. § 580a.

266 Mortgages
266k346 k. Preliminary Proceedings in General. Most Cited Cases
Trust deed, requiring beneficiary to deliver it and note secured thereby to
trustee when written declaration of default and demand for sale was made,
held not to require manual delivery thereof; symbolic delivery being
sufficient.
[4] Mortgages 266 369(2)
266 Mortgages
**Irregularity is insufficient to invalidate trustee’s sale on foreclosure of
trust deed, in absence of claim that it operated to injury of owner of realty
sold.
This is an appeal from a judgment in an action for a deficiency upon a

promissory note which was secured by a deed of trust and after foreclosure
thereof. The note and deed of trust were executed on June 12, 1929, in favor
of the California Bank. The plaintiff herein was named as trustee in the deed
of trust. On October 23, 1929, the note was assigned to the plaintiff and the
plaintiff continued to be the owner thereof until it was surrendered to the
court for cancellation upon entry of final judgment herein. On February 14,
1933, at a time when the note had become due and certain instalments of
interest were unpaid and while the note was in the possession of the state
treasurer of California, as plaintiff’s pledgee, as a part of the $200,000
worth of security deposited by the plaintiff with said treasurer under the
provisions of section 96 of the Bank Act, plaintiff caused notice of default
and election to sell to be recorded in the office of the county recorder.
More than a month prior to the foreclosure sale the plaintiff withdrew the
note from the office of the state treasurer, substituting other collateral
with him. The foreclosure sale was held on June 13, 1933, the property being
purchased by the plaintiff for $27,000, leaving a deficiency unpaid, and the
present action was commenced on November 16, 1933, for the purpose of
obtaining a judgment for the deficiency and resulted in a judgment for the
plaintiff as prayed in its complaint. *434
(1) The principal contention of the defendant is that section 580a of the
Code of Civil Procedure applies to all such actions commenced subsequent to
its becoming law even though, as in this case, the trust deeds were executed
prior to its enactment. There is no merit in the defendant’s contention. This
court has succinctly stated its reasons for its position with regard thereto
in the case of Bennett v. Superior Court, 5 Cal. App. (2d) 13 [42 Pac. (2d)
80], Mr. Presiding Justice Albert Lee Stephens writing the opinion of the
court.
(2) The defendant next contends that the court has inherent equitable power
to refuse to allow a deficiency judgment based on the forced sale price when
the sale is attended with any unfairness or is made under conditions which
would be inequitable or oppressive. The defendant cites no California cases
in this behalf. He cites cases of other jurisdictions in which the courts
have refused to approve sales under foreclosure judgments and executions
because of inadequacy of sale price where the inadequacy resulted from
mistake, misapprehension or inadvertence on the part of the interested
parties or of intending bidders. It is obvious, however, the refusal to
approve a sale and thus requiring a new or resale is quite another matter
from refusing a judgment after the sale has been completed. **Furthermore, in
the instant case no claim of mistake, misapprehension or inadvertence is made
by the defendant, nor is any claim made that the sale was attended with any
unfairness or that it was made under conditions which would be inequitable or
oppressive. We see nothing in the record which would amount to an abuse of
discretion on the part of the trial court.
(3) The defendant contends that the sale was accompanied with certain
irregularities. In this regard he claims that paragraph G.1. of the trust
deed required that when written declaration of default and demand for sale
was made to the trustee, the beneficiary should at the same time deliver to
the trustee the trust deed and the note. A second irregularity claimed by the
defendant was that the plaintiff, being the trustee as well as the owner, was
unauthorized to charge and collect, as it did, a trustee’s fee for conducting
the sale. As to the first alleged irregularity, it is our conclusion *435
that manual delivery of the note and deed of trust was not necessary-symbolic
delivery was sufficient. **There is no claim by the defendant that harm or
prejudice resulted to him from the symbolic delivery. **An irregularity, even
if one has occurred, is not sufficient to invalidate a trustee’s sale in the
absence of a claim that the irregularity operated to the injury of the owner.
(25 Cal. Jur. 91, and cases cited.) (4) With regard to the fees of the
trustee, the courts of this state have repeatedly held that there is no
impropriety in the payee of the note being also the trustee in the deed of
trust. (25 Cal. Jur. 19, and cases cited.) No claim is made by the defendant
that the fee charged was other than the customary fee in the community for
like services and the court found that the charge was a reasonable one. The
defendant’s contention is that the plaintiff could not collect a fee for
itself because it had become the owner of the note, but the plaintiff was the
trustee from the beginning of the transaction and it was one of the
agreements of the trust deed that in case of foreclosure sale the plaintiff
would be entitled to a trustee’s fee.
Finally the defendant contends that certain findings of the trial court were
unsupported by the evidence. We have examined into these conditions and find
that in each case the findings were supported by substantial evidence.
Judgment affirmed.
Rowan v. Pedrotti, 138 Cal.App.2d 647, 292 P.2d 270 (Cal.App. 3 Dist. Jan
24, 1956)
Bad outcome
Summerville v. March, 142 Cal. 554, 76 P. 388 (Cal.,Mar 18, 1904)
Case involves judicial foreclosure, bad outcome. But instructive on

the need to establish injury.
The court below gave judgment that defendant Stevinson was the owner of the
land in fee simple, and that he and the defendant Humboldt Savings & Loan
Society recover their costs of the appellants herein. **Stevinson’s claim is
based on a sheriff’s sale made on a decree of foreclosure in an action
brought by the Humboldt Savings & Loan Society against Elizabeth Ann March
and others in the superior court of San Joaquin county. That action was begun
on October 7, 1893, against the mortgagors alone, and a notice of the
pendency of the action was filed in the recorder’s office of said county on
the same day. On the 11th of October, 1893, the mortgagors, who were then the
owners of the land subject to the foreclosure proceeding, executed a deed
conveying to one George B. Sperry, a defendant herein, a certain parcel of
the mortgaged land, containing about 100 acres. This deed was recorded on
October 12, 1893, and Sperry immediately took possession of the land so
conveyed to him, and continued to occupy and possess the same until the time
of the foreclosure sale. The appellants each claim rights in the land based
on execution sales upon judgments rendered against one or more of the
mortgagors subsequently to the execution of the deed to Sperry, and prior to
the foreclosure sale. The plaintiff, in his complaint, does not mention this
foreclosure sale. **The cross-complaints of the defendants Graf and Benjamin
are bills in equity, seeking to set aside the sale upon the sole ground that
the same was not conducted in the manner directed in the decree of
foreclosure. The mortgage upon which the decree was based provided that, in
the event of foreclosure, the premises, at the option of the mortgagee, might
be sold in several parcels, or as a whole in one parcel. The decree of
foreclosure, which was entered upon December 13, 1894, directed that the
premises be sold ‘in one parcel, as a whole, and as one farm.’ The sale did
not take place until November 27, 1899. **The plaintiff in the foreclosure
suit, and several of the mortgagors therein, and also said Sperry, were
present at the sale. Sperry and the mortgagors present requested the sheriff
to offer the land in separate *557 parcels, first offering the portion of the
property not conveyed to Sperry by the deed above mentioned. The plaintiff
consented to this, and thereupon, in pursuance of this agreement, the sheriff
first offered the property remaining to the mortgagors after the conveyance
to Sperry, whereupon Sperry bid therefor the sum of $16,722, which was $80.50
in excess of the amount necessary to pay the mortgage debt, interest, and
costs. The court finds that the sum bid by Sperry was a fair and reasonable
price for the premises sold to him, and that the premises so sold to him were
not then of any greater value than the sum bid. Thereafter the sheriff’s deed
was made in pursuance of the sale to Sperry, and the defendant Stevinson has
since acquired all the interest of Sperry under the foreclosure sale, and
also his title to the 100 acres previously purchased by him from the
mortgagors. **It is not claimed by the appellants that there were any
fraudulent or unfair practices in connection with the foreclosure sale. **The
sole objection to the validity of the sale is that the sheriff disobeyed the
direction contained in the decree that the premises be sold as a whole and as
one farm.
It is contended that the appellants, having succeeded to the interests of

some of the mortgagors, had a right to have the sale made in strict
accordance with the directions in the decree, and that they were prejudiced
by the sale as made, because, if the whole of the property had been sold,
there would have been a larger surplus to divide among those interested
therein, in which case they claim that they would have been entitled to a
larger sum of money that they will receive under the sale as made. This
contention is based chiefly on the theory that they would have been entitled
to some portion of the proceeds of the land sold to Sperry in case that tract
had been included in the foreclosure sale. **This, however, is a
misconception of their rights in the premises. Under section 2899 of the
Civil Code, the rule is that, where a mortgagor has sold a portion of the
mortgaged land, the mortgage must be enforced first against the unsold
portion of the mortgaged premises, before resort can be had to the portion
sold. Sperry, it is true, did not appear in the foreclosure suit and ask that
the decree preserve his rights in this respect. This right of the purchaser
of a portion of the mortgaged premises is, however, not entirely *558 lost to
him by his failure to seek or obtain the relief in the action in which the
**390 mortgage is foreclosed. The only effect of such failure is that the
right is transfered to any surplus that may arise upon the foreclosure sale.
Therefore, if the entire mortgaged premises had been sold at the foreclosure
sale, in the division of the surplus Sperry would have been entitled to the
whole of it, if the same had been necessary to make up his proportion of the
purchase price. Upon the coming in of the sheriff’s return of the foreclosure
sale, he could have appeared and had his right determined. **The appellants
here would have no right whatever to such portion of the surplus as Sperry’s
land represented in the purchase price. The sale of the whole of the premises
in one parcel would therefore not increase the amount of the surplus to which
they would be entitled, and they are in no respect damaged by the failure to
sell Sperry’s land with the other tract.
**The only ground upon which they could calim that they were prejudiced would
be upon the theory that, if the whole tract had been sold together, it would
have brought more as a whole than it did upon the parcels being sold
separately, and that the surplus to which they would have been entitled would
have been somewhat increased. This, however, is no more than saying that the
price at which the property was sold was inadequate. It is well settled that
inadequacy of price alone is not a sufficient ground for setting aside a
foreclosure sale. Central Pacific R. R. Co. v. Creed, 70 Cal. 501, 11 Pac.
772; Smith v. Randall, 6 Cal. 47; Connick v. Hill, 127 Cal. 165, 59 Pac. 832;
Humboldt, etc., Soc. v. March, 136 Cal. 321, 68 Pac. 968; Anglo-Cal. Bank v.
Cerf (Cal.) 75 Pac. 902; Freeman on Ex. §§ 308, 309, 305; Kleber’s Void Jud.
Sales, §§ 355, 356, 357. **But even this ground is taken away by the finding
of the court that the property sold to Sperry by the sheriff was not worth at
the time more than he bid therefor, and the further finding that the entire
mortgaged premises were not at that time worth more than $22,000. A court
will not entertain proceedings to set aside a foreclosure sale, although
irregular, upon the sole ground, not that the price is inadequate, but that
possibly, if it had been sold in a different manner, it might, by some
fortuitous circumstance, have brought more than its actual value. **There is
no claim made that there was any peculiarity in the situation *559 of the two
parcels with respect to each other, of such character that their value, when
taken together, would exceed the sum of the values of each as a separate
farm. The circumstances indicate the contrary, and the court finds that the
manner of selling the premises in two parcels did not cause it to sell for
less than it otherwise would have brought. If there was anything that would
make the premises as a whole more valuable than when separated into two
parcels, it was incumbent on the appellants to allege and prove it. **An
irregular sale will not be set aside unless it is shown, either from the
nature of the irregularity itself, or from extrinsic facts, that injury was
caused thereby. Humboldt v. March, supra. If a sale had been made of the
whole tract, and its full value realized, the difference between the value of
this tract, as found by the court, and the value of the whole tract, would
have belonged to Sperry, and not to these appellants. Sperry, having been the
first purchaser, had the first right; and, if he had allowed his land to be
sold with the other, he would have been entitled, upon a division of the
surplus, to the entire amount which the court should find represented the
proceeds of his part of the property. The court did not err in refusing to
set aside the sale. The sale being valid, it is immaterial what rights the
appellants may have acquired from the mortgagors. They were all subject to
the decree of foreclosure and to the rights of Sperry, and were extinguished
by the foreclosure sale and the deed subsequently executed thereunder.
Humboldt Sav. & Loan Soc. v. March, 136 Cal. 321, 324, 68 P. 968 (Cal.,Apr
29, 1902)
Facts involve a mortgage foreclosure not nonjudicial foreclosure.
**A party to an action cannot claim an absolute right to have such sale
vacated unless he shall show that he has sustained some injury by reason of
the irregularity.
Miller & Starr, California Real Estate 3D, Deeds Of Trust, Section
10:210, page 672 states the,
“sale can be set aisde where there is gross inadequacy of the price
paid at the sale, together with a slight irregularity, unfairness, or
fraud.” 17
Lindemann v. Anderson, 103 Cal.App. 683, 284 P. 1053 (Cal.App. 4 Dist.,Feb

03, 1930)
Commissioner did not file a bond therefore order in judicial

foreclosure was void.
Meux v. Trezevant, 132 Cal. 487, 64 P. 848 (Cal.,Apr 26, 1901)
Negative case, but illustrates that there must be injury.
Suit by T. R. Meux against N. M. Trezevant and another to foreclose a

mortgage. From an order denying a motion to set aside the sale under a decree
of foreclosure, defendants appeal. Affirmed.
Appeal and Error 30 1024.6
30 Appeal and Error

30XVI Review
30XVI(I)6 Questions of Fact on Motions or Other Interlocutory
or Special Proceedings
30k1024.6 k. Judicial Sales. Most Cited Cases
Where, on a motion to confirm a mortgage foreclosure sale, there is a
conflict as to whether the land constituted one known parcel or two separate
known parcels, the finding of the trial court on such question will not be
disturbed on appeal.
Mortgages 266 512
266 Mortgages
266X(M) Sale
266k512 k. Sale in Parcels or in Gross. Most Cited Cases
Where property was described in a mortgage as a quarter section of land, but
in fact consisted of a grape farm and four city lots, commissioners appointed
to sell the property under foreclosure decree and order of sale, following
the description in the mortgage, were not required to sell the vineyard
property in two separate parcels, it being divided only by an imaginary line,
but properly sold such property and each of the city lots as separate parcels.
266 Mortgages
266X(M) Sale
266k526 Confirmation
266k526(6) k. Proceedings. Most Cited Cases
Where a mortgagor opposed confirmation of sale on the ground that the
property was not sold in separate parcels, but it was shown that the property
sold for its full cash value, and **the only injury set forth in the
mortgagor’s affidavit was that the sale in one lot tended to reduce the
number of bidders, and deprived affiant of the right to redeem either parcel
separately, **but failed to allege that he could redeem or desired to do so,
the affidavit was insufficient to prevent confirmation.
266 Mortgages
266X(M) Sale
266k529(5) k. Irregularities Affecting Sale. Most Cited
Cases
A sale of land under mortgage foreclosure will not be set aside because the
same was not sold in separate parcels, as required by the mortgagor, **unless
it is made to appear that a larger sum would have been realized from the sale
if the property had been offered in separate parcels, or that **the sale of
less than the whole tract would have been sufficient to satisfy the debt.
Appeal from order denying motion to set aside sale under a decree of
foreclosure. The mortgage to plaintiff described as part of the premises
mortgaged the following: ‘The northeast quarter of the southwest quarter of
section 33, in township 13 south, of range 21 east, Mount Diablo base and
meridian, together with one-fourth of one cubic foot of water from the Fresno
Canal and Irrigation Company’s canal, appurtenant to said land.’
On the day of the sale, and at the time and place named in the notice, and
before the sale, the defendants served a written demand upon the commissioner
that the real estate be sold in separate parcels, to wit: ‘The county or
vineyard property separately as lot one and lot two, block three, Nevada
Colony, Fresno county, California, together with one-eighth of one cubic foot
of water from the Fresno Canal and Irrigation Company’s canal, appurtenant to
said lots of land, a plat of which colony, showing this division of land of
said colony, with lots so numbered and divided, is recorded in the office of
the recorder of said Fresno county, and said property is generally known, by
its description as aforesaid, as colony lots; and also the Fresno city lots
also separately as lot 21, block 204; lot 22, block 204; lot 25, block 337;
and lot 26, block 337,-all in said city of Fresno.’ The property referred to
in said demand as the county or vineyard property as lot 1 and lot 2 is the
said northeast quarter of southeast quarter of section 33, described in the
decree and order of sale. The commissioners sold the property in five
separate lots, selling the lots in the city of Fresno separately, *489 but
sold the vineyard property in one parcel, as described in the decree and
order of sale. The court properly refused to set aside the sale.
The commissioner in selling the vineyard property followed the decree and
order of sale. It was his duty to do so. Hopkins v. Wiard, 72 Cal. 262, 13
Pac. 687; Heyman v. Babcock, 30 Cal. 367.
There was a conflict as to whether the land constituted one known parcel or
two separate known parcels. In such case the finding of the court below as
to such question of fact will not be disturbed here. Gleason v. Hill, 65
Cal. 18, 2 Pac. 413. In a motion of this kind, it must be made clearly to
appear that the land consisted of separate ‘known lots or parcels.’ Connick
v. Hill, 127 Cal. 165, 59 Pac. 832.
In opposition to the unsupported affidavit of defendant N. M. Trezevant, the

plaintiff filed many affidavits, in which it was stated that the premises
consisted of one vineyard, known as the ‘Trezevant Vineyard,’ upon which
there is a dwelling house, two wells, a barn, a raisin house, outbuildings, a
small orchard, and the balance in vineyard; that there are no visible
monuments or landmarks upon the said land showing any division thereof, but,
on the contrary, the imaginary line that would have divided the land in the
manner claimed by appellant had been plowed across and planted in vines
running across its entire length and cultivated regardless of any
subdivisions; that the land or vineyard is almost entirely surrounded by
levees, fences, and irrigating ditches, and, in order to irrigate the western
portion of the vineyard, the water must be taken across the eastern portion;
that the water right constitutes a lien upon the whole land, and is not
capable of segregation and apportionment. In view of the order of the lower
court, we must consider the statements in these affidavits as true. **Unless
it is made to appear that a larger sum would have been realized from the sale
of the property if it had been sold in separate lots or parcels, or that the
sale of less than the whole tract would have brought sufficient to satisfy
the writ, the sale will not be set aside. Hudepohl v. Mining Co., 94 Cal.
591, 29 Pac. 1025. **In this case there is no statement in defendant’s
affidavits tending to show that the property would have brought more if sold
separately, *490 or that the sale of less than the whole would have satisfied
the writ. **On the contrary, the affidavits on the part of defendant show,
without contradiction, that the property sold for its full cash value, and
that it would not have brought as much as it sold for if it had been sold in
separate lots. **The only pretense of injury set forth in defendant’s
affidavit is that he was injured by said sale in one lot, because it ‘tended
to reduce the number of bidders,’ and because ‘it deprived affiant of the
right to redeem either of said colony lots separately.’ This is clearly
insufficient. Defendant does not show that he could redeem, or that he ever
desired to or now desires to redeem, any part of said property. Courts will
not set aside a sale under foreclosure for light or trivial reasons It must
appear that there has been a material departure from the mandates of the
decree, or the law governing such sales, to the injury of the party applying
to have the same set aside. Nor can injury be presumed from mere
irregularities. The order should be affirmed.
We concur: HAYNES, C.; SMITH, C.PER CURIAM.
For the reasons given in the foregoing opinion, the order is affirmed.
Action by the American Trust Company against M. S. De Albergaria. From a

judgment in favor of plaintiff, defendant appeals.
Affirmed.
American Trust Co. v. De Albergaria, 123 Cal.App. 76, 10 P.2d 1016

(Cal.App. 1 Dist.,Apr 26, 1932)
West Headnotes
[1] Mortgages 266 369(1)
266 Mortgages
Sale under trust deed, if irregular because postponed in defiance of
injunction, was voidable, not void.
[4] Mortgages 266 369(7)
266 Mortgages
Party attacking voidable sale under trust deed must show injury to himself
from asserted irregularity.
Mortgages 266 338
266 Mortgages
266k338 k. Restraining Exercise of Power. Most Cited Cases
Postponement of sale under trust deed until after dissolution of temporary
injunction held not to violate injunction restraining sale or “continuing”
sale.
Plaintiff sued in unlawful detainer to recover possession of real property
which it had purchased at a trustee’s sale. Plaintiff had judgment, and
defendant appealed, attacking the validity of the trustee’s sale. Respondent
has moved to dismiss the appeal upon the ground that a second sale gave it
clear title and that the questions raised on the appeal are therefore moot.
We do not pass on the motion to dismiss because we are satisfied that the
judgment must be affirmed.
The property is located in Contra Costa county, and was subject to a deed of
trust upon which default had occurred. Notice of sale under the terms of the
deed of trust was duly given, but before sale was made appellant went to the
Superior Court in San Francisco county and obtained a temporary injunction
restraining the trustees and those acting in its behalf from “selling or
attempting to sell, or continuing the sale” of the property. Pending hearing
of this injunction, respondent’s agent postponed the sale from the *78 day
set until December 10, 1929. On December 5 of that year the temporary
injunction was, after hearing in the San Francisco court, dissolved, and the
sale was made on December 10th. **Appellant was present at the time of the
sale, and does not attack it upon the ground of want of sufficient notice.
[1][2][3] The judgment must be affirmed for these reasons: The sale, if
irregular because postponed in defiance of the injunction, was voidable and
not void. Powell v. Bank of Lemoore, 125 Cal. 468, 472, 58 P. 83; 18 Cal.
Jur. p. 560. Being voidable at the most, appellant could attack the sale only
by offering to do equity. Humboldt Sav. Bank v. McCleverty, 161 Cal. 285,
290, 119 P. 82, where the conflicting rules are discussed and the California
rule is stated. This appellant has failed to do, and, his attack being
collateral, he is not entitled to equitable relief.
[4] **In any event, the party attacking such a sale must show injury to
himself from the asserted irregularity (25 Cal. Jur. 91; **1017Sargent v.
Shumaker, 193 Cal. 122, 132, 223 P. 464), and here, again, appellant has
failed in his proof.
But we should not be understood as implying that the sale under attack was
voidable or irregular. The injunction restrained the “continuing” of the sale
of the property until further order of the court. It did not restrain the
postponement of the date of sale. Respondent did not disobey the injunction
by the postponement until a date after the dissolution of the injunction. If
they had gone ahead with the sale or had continued to make the sale so that
the rights of the parties would have been changed pending the injunction,
appellant would have had ground for complaint. But their postponement of the
sale until after the dissolution of the injunction was in conformity with the
letter and spirit of the order as it kept the matters in statu quo, and we
are convinced that such was the only purpose of the court in issuing the
injunctive order.
speculation
1. the contemplation or consideration of some subject.
2. an instance of such activity.
3. a conclusion or opinion reached by such activity.
4. a conjecture or surmise; a guess. — speculator, n. — speculative,
adj.
prejudice: A decision resulting in prejudicial error substantially

affects an appellant’s legal rights and is often the ground for a
reversal of the judgment and for the granting of a new trial.
3. In the civil law prejudice signifies a tort or injury; as the act
of one man should never prejudice another. Dig. 60, 17, 74.
mandate n. 1) any mandatory order or requirement under statute,

regulation, or by a public agency
Knapp v. Doherty, 123 Cal.App.4th 76, 20 Cal.Rptr.3d 1, 04 Cal. Daily Op.

Serv. 9377, 2004 Daily Journal D.A.R. 12,769 (Cal.App. 6 Dist.,Sep 20, 2004)
Asserted procedural irregularity of too much, premature notice, is not

prejudicial.
Background: Buyer of home at nonjudicial foreclosure sale brought unlawful

detainer action to evict borrowers, and borrowers filed action against buyer,
lender, and trustee to set aside trustee’s sale on ground that sale notice
had not been served. The actions were consolidated, and summary judgment was
entered against borrowers in their action, and after trial in the Superior
Court, Santa Cruz County, Nos. CV145234 and CV145359,Robert Yonts, Jr., J.,
judgment was entered for buyer in his action. Borrowers appealed.
Holdings: The Court of Appeal, Walsh, J., sitting under assignment, held that:
(1) borrowers failed to show triable issue of material fact as to service of
notice of sale;
(2) service of notice of sale was required to occur only upon expiration of
three months after recordation of notice of default;
**(3) premature notice did not invalidate sale;
(4) inaccuracy in date of default in default notice was not material; and
(5) borrowers were not entitled to continuance of hearing on summary judgment
motion.
Affirmed.
228 Judgment
228V On Motion or Summary Proceeding
228k182 Motion or Other Application
Judgment 228 185.2(1)
228 Judgment
228k185.2 Use of Affidavits
The pleadings determine the issues to be addressed by a summary judgment
motion, and the declarations filed in connection with such motion must be
directed to the issues raised by the pleadings.
[5] Judgment 228 185(6)
228 Judgment
228k185 Evidence in General
228k185(6) k. Existence or Non-Existence of Fact Issue.
Most Cited Cases
A defendant moving for summary judgment meets its burden of showing that one
or more elements of the cause of action cannot be established by the
plaintiff by presenting affirmative evidence that negates an essential
element of plaintiff’s claim, or by submitting evidence that the plaintiff
does not possess, and cannot reasonably obtain, needed evidence supporting an
essential element of its claim.
[8] Mortgages 266 369(7)
266 Mortgages
A nonjudicial foreclosure sale is presumed to have been conducted regularly
and fairly; one attacking the sale must overcome this common law presumption
by pleading and **proving an improper procedure and the resulting prejudice.
[10] Judgment 228 185.3(15)
228 Judgment
228k185.3 Evidence and Affidavits in Particular Cases
228k185.3(15) k. Liens and Mortgages. Most Cited Cases
Defaulting borrowers failed to show triable issue of material fact as to
service of notice of sale, so as to defeat summary judgment motion, in their
action to set aside trustee’s nonjudicial foreclosure sale; borrowers failed
to rebut evidence that sale notice was properly served in accordance with
statutory requirements, and whether borrowers received actual notice was
immaterial. West’s Ann.Cal.Civ.Code § 2924b.
266 Mortgages
The defaulting trustor need not receive actual notice of the trustee’s
nonjudicial foreclosure sale so long as notice is provided to the trustor
that is in compliance with the statute. West’s Ann.Cal.Civ.Code § 2924b.
[13] Judgment 228 183

228 Judgment
Judgment 228 185.2(2)
228 Judgment
228k185.2 Use of Affidavits
228k185.2(2) k. Purpose and Function. Most Cited Cases
The function of the pleadings in a motion for summary judgment is to delimit
the scope of the issues, while the function of the affidavits or declarations
is to disclose whether there is any triable issue of fact within the issues
delimited by the pleadings.
[15] Judgment 228 183
228 Judgment
A plaintiff opposing a summary judgment motion cannot bring up new, unpleaded
issues in his or her opposing papers.
[16] Judgment 228 183
228 Judgment
A plaintiff wishing to rely upon unpleaded theories to defeat summary
judgment must move to amend the complaint before the hearing.
266 Mortgages
266k345 k. Time for Exercise of Power, and Limitations. Most
Cited Cases
After the notice of default is recorded, the trustee must wait three calendar
months before proceeding with the nonjudicial foreclosure sale. West’s
Ann.Cal.Civ.Code § 2924.
266 Mortgages
Any service of a notice of nonjudicial foreclosure sale must occur only upon
the expiration of three months after recordation of the notice of default.
West’s Ann.Cal.Civ.Code §§ 2924, 2924b2924f.
See 3 Witkin, Summary of Cal. Law (9th ed. 1987) Security Transactions in
Real Property, §§ 135-137; Greenwald & Asimov, Cal. Practice Guide: Real
Property Transactions (The Rutter Group 2004) ¶ 6:526 et seq. (CAPROP Ch. 6-
I); 4 Miller & Starr, Cal. Real Estate (3d ed. 2001) § 10:181 et seq.; Cal.
Jur. 3d, Deeds of Trust, § 282 et seq.
266 Mortgages
266 Mortgages
Trustee’s premature notice to defaulting borrowers of nonjudicial foreclosure
sale, mailed slightly before expiration of three months after recordation of
default notice, did not cause any injury to borrowers, even if sale price was
inadequate, and thus sale was not invalid; trustee’s deviation from statutory
notice requirements was slight, borrowers had notice of original sale date,
and trustee’s sale did not go forward until almost one year after date
noticed. West’s Ann.Cal.Civ.Code §§ 2924, 2924b2924f.
[20] Mortgages 266 369(3)
266 Mortgages
A great disparity between the foreclosure price and the value of the
property, by itself, is insufficient to set aside a nonjudicial foreclosure
sale. West’s Ann.Cal.Civ.Code § 2924.
[21] Mortgages 266 369(3)
266 Mortgages
Mere inadequacy of price, absent some procedural irregularity that
contributed to the inadequacy of price or otherwise injured the trustor, is
insufficient to set aside a nonjudicial foreclosure sale. West’s
Ann.Cal.Civ.Code § 2924.
266 Mortgages
Inaccuracy in date of default in trustee’s default notice was not material,
where notice properly stated nature of default and amount of default. West’s
Ann.Cal.Civ.Code §§ 2924, 2924b2924f.
266 Mortgages
If one breach is correctly stated on a notice of mortgagor’s default, an
erroneous statement of other defaults does not invalidate the default notice.
West’s Ann.Cal.Civ.Code §§ 2924, 2924b2924f.
266 Mortgages
One of the signal purposes of the notice of default is to advise the trustor
of the amount required to cure the default. West’s Ann.Cal.Civ.Code §§ 2924,
2924b2924f.
[25] Judgment 228 185(5)
228 Judgment
228k185 Evidence in General
228k185(5) k. Weight and Sufficiency. Most Cited Cases
Speculation is not evidence that can be utilized in opposing a motion for
summary judgment.
[26] Judgment 228 186
228 Judgment
228k186 k. Hearing and Determination. Most Cited Cases
In their action to set aside trustee’s nonjudicial foreclosure sale,
borrowers were not entitled to continuance of hearing on opposing parties’
summary judgment motion; application did not contain requisite declaration
indicating essential facts that borrowers believed existed to oppose motion
and why those facts could not have been presented in opposition to motion,
there were no facts essential to disposition of motion that justified
continuance, and application presented no justification for failure to
commence use of appropriate discovery tools at earlier date. West’s
Ann.Cal.C.C.P. § 437c(h).
*81 Johnn and Margaret Knapp (Borrowers) lost their home through nonjudicial
foreclosure sale in November 2002, nearly one year after the original date
noticed for the sale. During the entire time that the foreclosure sale was
threatened, they did nothing to cure their default. Afterward, the buyer at
the trustee’s sale filed an action to evict Borrowers. Two weeks later,
Borrowers sued to set aside the trustee’s sale, claiming that the sale notice
was never served, as required under Civ The lender, trustee, and buyer sought
summary judgment in the action to set aside the foreclosure. They effectively
negated Borrowers’ claim that the sale notice was not served. Borrowers
opposed summary judgment by raising other claims-not alleged in their
complaint-that the foreclosure proceedings were irregular because of defects
in the default notice and sale notice. After affording Borrowers three
separate hearings and the opportunity (twice) to submit supplemental
briefing, the trial court granted summary judgment. The unlawful detainer
case proceeded to trial, and the buyer was awarded possession of the premises.
Borrowers now appeal, asserting various claims of error with respect to the
granting of summary judgment against them in their action to set aside the
foreclosure sale. They argue that the trial court failed to recognize the
existence of triable issues of material fact with respect to claimed
irregularities concerning both the default notice and sale notice served and
recorded by the trustee. Borrowers claim that, at minimum, the court should
have granted their request for a continuance of the summary judgment motion.
**5 After a de novo review of the record, we conclude that the sale notice
was served slightly prematurely, but that this minor procedural irregularity
was in no way prejudicial to Borrowers. They received adequate notice of the
trustee’s sale; indeed, they received nine days more than the 20-day notice
required under section 2924b, subdivision (b)(2). Accordingly, summary
judgment was proper and we affirm the judgment.
FACTS
In or about September 1988, Borrowers executed a note and deed of trust in

favor of Great Western Bank. The deed of trust granted a security interest in
residential property located at 156 Las Colinas Drive, Watsonville,
California 95076 (Property). The note and deed of trust were thereafter
assigned to *82 Ocwen Federal Bank, FSB (Lender) in or about December 1996.
Borrowers defaulted on the loan. Lender initiated foreclosure proceedings in
September 2001.
On September 5, 2001, Lender-through the trustee, Cameron & Dreyfuss, PLC

(Trustee)-recorded a notice of default (Default Notice). **The notice
indicated that Borrowers had defaulted with respect to monthly payments
commencing in July 2000. The Default Notice identified the amount due under
the loan as of September 4, 2001, as being $38,011.40.
Lender, through Trustee, recorded on December 12, 2001, a notice of trustee’s

sale, dated December 6, 2001 (Sale Notice); the notice set the sale date for
December 27, 2001. The Sale Notice was posted on the Property on December 6,
2001. It was served on Borrowers by registered or certified mail and by first
class mail on November 28, 2001.
[1] Borrowers filed a bankruptcy petition in December 2001. Accordingly, the

trustee’s sale was postponed 13 times because of the pending bankruptcy. FN2 The
sale was postponed a 14th time at Lender’s request.
The trustee’s sale took place on November 14, 2002. The Property was sold to
the highest bidder, John P. Doherty (Buyer), who paid $240,100.FN3 The
trustee’s deed-recorded November 25, 2002-included a recital that the Trustee
had “complied with all applicable statutory requirements of the State of
California,” including the recordation and mailing of the Default Notice and
Sale Notice.
PROCEDURAL HISTORY
Buyer filed an action for unlawful detainer against Borrowers on December 16,
2002, (case no. CV145234). He alleged that he acquired title to the Property
by a trustee’s deed after foreclosure sale. Buyer alleged further that he had
served on Borrowers the appropriate statutory three-day notice to quit, that
the time had elapsed, and that he demanded possession of the Property.
On December 30, 2002, Borrowers filed suit (complaint) seeking, among other
things, to set aside the trustee’s sale and to cancel the trustee’s deed
(case no. CV 145359). The complaint named Buyer, Trustee, and Lender as
defendants. Borrowers alleged that the trustee’s sale under**6 which Buyer
took *83 title to the Property was invalid because they were not served with
the Sale Notice as required by law. Borrowers sought equitable relief-an
order setting aside the trustee’s sale, an order canceling the trustee’s
deed, and an accounting of the amount owed by them under the loan from
Lender-or, in the alternative, money damages.
On March 8, 2003, the court-pursuant to the parties’ stipulation-ordered the

two actions consolidated. Trustee filed a motion for summary judgment on the
complaint. Buyer and Lender joined in the motion. Lender filed a similar
motion for summary judgment. In partial response to the summary judgment
motions, Borrowers filed a motion to amend the complaint to allege-as an
additional basis for setting aside the trustee’s sale-that Lender’s Default
Notice contained an excessive demand.
The court conducted three hearings in connection with the summary judgment
motions. The court’s tentative ruling at the time of the first hearing (on
July 24, 2003) was to grant summary judgment. After extended argument, the
court continued the matter for further hearing to consider a case cited by
Borrowers at the hearing, System Inv. Corp. v. Union Bank (1971) 21
Cal.App.3d 137, 98 Cal.Rptr. 735 (System Inv.). The parties submitted
supplemental briefs, and the court issued a supplemental tentative decision
reaffirming its prior tentative decision.
After further argument on August 1, 2003, the court continued the case for a
third hearing for the parties to brief a new legal argument raised by
Borrowers at the hearing concerning the Sale Notice. After supplemental
briefing and a third hearing, the court granted the motions for summary
judgment. A formal order granting the summary judgment motions was entered on
September 2, 2003.
The unlawful detainer case proceeded to trial on August 25, 2003. At its
conclusion, the court awarded Buyer possession of the Property and damages of
$40 per day from August 20, 2003, to the date of judgment. The court entered
judgment in the consolidated cases on September 3, 2003. Thereafter, pursuant
to Borrowers’ motion, the court stayed the judgment pending appeal, allowing
them to retain possession of the Property under certain conditions.
Borrowers filed a notice of appeal on November 3, 2003. The appeal from the
judgment was filed timely (Cal. Rules of Court, rule 2(a)(1)) and is a proper
subject for appellate review. (Code Civ. Proc., § 437c, subd. (m); see also
Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter
Group 2004) ¶ 10:384, p. 10-122.12 [order granting summary judgment not
itself appealable, but appeal lies from judgment entered on such order].)
Borrowers assert that the trial court erred in granting summary judgment for
a variety of reasons. These claims are as follows:
**1. There was an irregularity in the Sale Notice: it was mailed to Borrowers
prematurely (i.e., on a date that was not at least three months after
recordation of the Default Notice).
**2. There was a material irregularity in the Default Notice: the motion
papers disclosed a discrepancy between the actual date of Borrowers’ default
and the date identified in the Default Notice.
**3. As a matter related to the second claim, the court erred in failing to
grant a continuance of the motion to permit Borrowers discovery concerning
the alleged discrepancy in the Default Notice.
**8 4. There was a dispute as to whether Buyer was a bona fide purchaser.
**5. Buyer purchased the Property for less than one-half of its fair market
value.
**6. The trial court erred when it concluded that the irregularity in the
foreclosure sale procedure must be prejudicial in order to furnish a basis
for an action to set aside the sale.
[8] Notably absent is the only ground for invalidating the foreclosure sale
that was alleged in Borrowers’ complaint: Borrowers were not served with the
Sale Notice. In the context of our de novo review of the granting of summary
judgment, we will first consider the pleaded lack of service of the Sale
Notice *86 and will then address Borrowers’ other claims of error concerning
the Default Notice, Sale Notice, and denial of the request to continue the
hearing on the summary judgment motions.FN4
FN4. We do not reach the fourth and fifth claims of error. A nonjudicial
foreclosure sale is presumed to have been conducted regularly and fairly; one
attacking the sale must overcome this common law presumption “by pleading and
proving an improper procedure and the resulting prejudice.” (Miller & Starr,
Cal. Real Estate (3d ed.2000) § 10:211, p. 679.) If the trustee’s deed
contains a recital that all default and sale notices have been given, the
notice requirements are statutorily presumed to have been satisfied, which
presumption is conclusive as to a bona fide purchaser at the foreclosure
sale. (§ 2924.) Since we conclude, post, that Borrowers’ claims of error
concerning the Default Notice, Sale Notice, and continuance request are
without merit, we need not decide whether Buyer was a bona fide purchaser; it
is irrelevant in this instance whether the presumption that the trustee’s
sale was properly conducted was rebuttable or conclusive. Likewise, whether
Buyer purchased the Property at the trustee’s sale for less than one-half of
its fair market value is also immaterial, since we have concluded that there
were no prejudicial procedural irregularities with respect to the trustee’s
sale. (See fn. 12, post.) The sixth issue identified in the text-whether the
notice defect must be prejudicial to set aside the trustee’s sale-is
discussed in the context of Borrowers’ challenge to service of the Sale
Notice, in part III C(3), post.
A. Nonjudicial foreclosure
Before addressing the issues on appeal, we give a brief overview of the

statutory framework governing nonjudicial foreclosures under the Civil Code.
Sections 2924 through 2924k“provide a comprehensive framework for the
regulation of a nonjudicial foreclosure sale pursuant to a power of sale
contained in a deed of trust.” (Moeller v. Lien (1994) 25 Cal.App.4th 822,
830, 30 Cal.Rptr.2d 777 (Moeller ).)
The court in Moeller succinctly summarized the procedure leading up to a

nonjudicial foreclosure as follows: **“Upon default by the trustor [under a
deed of trust containing a power of sale], the beneficiary may declare a
default and proceed with a nonjudicial foreclosure sale. (Civ.Code, § 2924;
[citation].) **The foreclosure process is commenced by the recording of a
notice of default and election to sell by the trustee. (Civ.Code, § 2924;
[citation].) **After the notice of default is recorded, the trustee must wait
three calendar months before proceeding with the sale. (Civ.Code, § 2924,
subd. (b); [citation].) **After the 3-month period has elapsed, a notice of
sale must be published, posted and mailed 20 days before the sale and
recorded 14 days before the sale. (Civ.Code, § 2924f; [citation].)” (Moeller,
supra, 25 Cal.App.4th at p. 830, 30 Cal.Rptr.2d 777.)
The statutes provide the trustor with opportunities to prevent foreclosure by

curing the default. The trustor may make back payments to reinstate *87 the
loan up until five business days prior to the date of **9 the sale, including
any postponement. (§ 2924c, subds.(a)(1), (e); Napue v. Gor-Mey West, Inc.
(1985) 175 Cal.App.3d 608, 614, 220 Cal.Rptr. 799.) Additionally, the trustor
has an equity of redemption under which the trustor may pay all amounts due
at any time prior to the sale to avoid loss of the property. (§§ 2903, 2905.)
The manner in which the sale must be conducted is governed by section 2924g.
“The property must be sold at public auction to the highest bidder.
(Civ.Code, § 2924g, subd. (a); [citation].) [¶] ... [¶] As a general rule,
the purchaser at a nonjudicial foreclosure sale receives title under a
trustee’s deed free and clear of any right, title or interest of the trustor.
[Citation.] A properly conducted nonjudicial foreclosure sale constitutes a
final adjudication of the rights of the borrower and lender. [Citation.] Once
the trustee’s sale is completed, the trustor has no further rights of
redemption. [Citation.] [¶] The purchaser at a foreclosure sale takes title
by a trustee’s deed. If the trustee’s deed recites that all statutory notice
requirements and procedures required by law for the conduct of the
foreclosure have been satisfied, a rebuttable presumption arises that the
sale has been conducted regularly and properly; this presumption is
conclusive as to a bona fide purchaser. (Civ.Code, § 2924; [citation].)”
(Moeller, supra, 25 Cal.App.4th at pp. 830-831, 30 Cal.Rptr.2d 777.)
B. Actual Service of Sale Notice
[10] Borrowers’ claim in equity to set aside the trustee’s sale alleged that
the statutory requirements for such sale were not met because the Sale Notice
was not served on them. The alternative cause of action for damages-which
incorporated all paragraphs of the first cause of action-was likewise based
upon the alleged lack of service of the Sale Notice.
Both of the motions established that the Sale Notice was served on Borrowers
on November 28, 2001, by certified or registered mail and by first *88 class
mail at the Property.FN5 In addition, Lender asserted that, contrary to the
allegations in the complaint, Borrowers actually received a copy of the Sale
Notice; **their bankruptcy counsel referred to the Sale Notice and attached
it to correspondence dated December 17, 2001 (i.e., 10 days before the
originally noticed sale date). On the face of the motion papers, the moving
parties/ defendants met their initial burden of negating one or more of the
essential elements of the causes of action in the complaint.**10 (See Guz,
supra, 24 Cal.4th at p. 334, 100 Cal.Rptr.2d 352, 8 P.3d 1089.) The burden
therefore shifted to Borrowers “to show that a triable issue of one or more
material facts exists as to that cause of action.” (Code Civ. Proc., § 437c,
subd. (p)(2).)
**FN5. The affidavit of mailing attached to the Sale Notice reflected a total
of ten mailings to Borrowers, collectively: (a) to 156 Las Colinas Drive,
Watsonville, CA 95076-0192 (four mailings [two by first class mail, two by
certified or registered mail] ); (b) to 156 Las Colinas Drive, Corralitos, CA
95076-0215 (four mailings [two by first class mail, two by certified or
registered mail] ); and (c) to 168 Madrona Rd., Boulder Creek, CA 95006-9616
(two mailings to Johnn Knapp only [one by first class mail, one by certified
or registered mail] ). The mailing to the Watsonville address is consistent
with the deed of trust executed in favor of Lender’s predecessor, which
listed the Property as being Borrowers’ address.
The separate statement response filed in opposition to Trustee’s motion FN6

disputed service of the Sale Notice; Borrowers cited the declaration of Ed
Frey (their counsel)-attaching excerpts from Borrowers’ depositions-as the
basis for this dispute. In addition, Borrowers alleged as a basis for
opposing Trustee’s motion the additional undisputed material fact that they
did not receive the Sale Notice, citing excerpts from their depositions.
FN6. The record reflects that Borrowers’ only written opposition to Lender’s
summary judgment motion was a one-page pleading incorporating by reference
their opposition to Trustee’s motion. We assume this to have been the case
because the issues involved in Lender’s motion were substantially the same as
those in Trustee’s motion, a fact acknowledged by Borrowers at the second
hearing on the motions.
On the record before us, Borrowers did not raise a triable issue of material
fact in connection with the service of the Sale Notice. (Code Civ. Proc., §
437c, subd. (p)(2); see also Sangster v. Paetkau (1998) 68 Cal.App.4th 151,
162, 163, 80 Cal.Rptr.2d 66.) Even assuming that Borrowers raised a disputed
issue of fact-namely, whether they actually received the Sale Notice-this
issue was not a material one.
[11] **In order to be effective, a copy of the notice of trustee’s sale-at

least 20 days prior to the sale-must be mailed by registered or certified
mail, postage prepaid, to the trustor, sent to his or her last known address
if different from the address listed on the deed of trust. (§ 2924b, subd.
(b)(2).) The trustor need not receive actual notice of the trustee’s sale so
long as notice is provided to the trustor that is in compliance with the
statute. *89(Strutt v. Ontario Sav. & Loan Assn. (1970) 11 Cal.App.3d 547,
553-554, 90 Cal.Rptr. 69.) As one court has held: “We pointedly emphasize,
however, that Civil Code sections 2924-2924h, inclusive, do not require
actual receipt by a trustor of a notice of default or notice of sale. They
simply mandate certain procedural requirements reasonably calculated to
inform those who may be affected by a foreclosure sale and who have requested
notice in the statutory manner that a default has occurred and a foreclosure
sale is imminent.” (Lupertino v. Carbahal (1973) 35 Cal.App.3d 742, 746-747,
111 Cal.Rptr. 112; see also Lancaster Security Inv. Corp. v. Kessler (1958)
159 Cal.App.2d 649, 652, 324 P.2d 634.)
The motions established that the Sale Notice was properly served in
accordance with statutory requirements. Borrowers presented no evidence to
rebut this proper service. The response and supporting evidence to the effect
that they did not actually receive the Sale Notice, at best, raised an issue
of immaterial fact.FN7 Summary judgment-at least on the claims as they were
alleged in the complaint-was thus proper.
FN7. Because the trustor’s actual notice of the impending trustee’s sale is
not required under the foreclosure statutes, we need not resolve whether
Borrowers, in fact, received the Sale Notice. We note from the record that
there is significant evidence-unrebutted by any declaration from Borrowers-
that they did receive the Sale Notice: Borrowers’ bankruptcy counsel had a
copy of the notice in his possession at least 10 days before the date
originally noticed for the sale. It suffices that the evidence demonstrated
that the trustee mailed the Sale Notice to Borrowers as required under
section 2924b, subdivision (b)(2).
C. Premature Service of Sale Notice
Borrowers claim that the Sale Notice was defective because it was mailed
prematurely:**11 it was mailed on **November 28, 2001, a date that was less
than three months after recordation of the Default Notice. They urge that
summary judgment was improper because of this “irregularity” in the service
of the Sale Notice.
Borrowers’ argument must be rejected for at least two reasons. **First, the
claim of defective service of the Sale Notice was not alleged in the
complaint. **Second, assuming arguendo that it is appropriate to consider the
contention, we conclude that: **(a) the Sale Notice was served slightly
prematurely; **(b) all other requirements of service, posting, publication
and recordation of the Sale Notice were satisfied; and **(c) Borrowers
suffered no prejudice from the premature service which could justify
invalidating the trustee’s sale.
1. Claim outside of allegations of complaint
The basis for invalidating the foreclosure sale, as alleged in the complaint,
was that the sale occurred “without [Trustee] having served a Notice of Sale
*90 of the Property upon Plaintiffs, which notice is required by law.” The
complaint did not allege that the sale was invalid because the service of the
Sale Notice was premature; indeed, such a claim would have been inconsistent
with the complaint’s allegation that the Sale Notice was not served.
[12][13][14][15][16] “ ‘The purpose of a summary judgment proceeding is to
permit a party to show that material factual claims arising from the
pleadings need not be tried because they are not in dispute.’ [Citation.]
‘The function of the pleadings in a motion for summary judgment is to delimit
the scope of the issues: the function of the affidavits or declarations is to
disclose whether there is any triable issue of fact within the issues
delimited by the pleadings.’ [Citations.] The complaint measures the
materiality of the facts tendered in a defendant’s challenge to the
plaintiff’s cause of action. [Citation.]” (FPI Development, Inc. v. Nakashima
(1991) 231 Cal.App.3d 367, 381, 282 Cal.Rptr. 508.) A “plaintiff cannot bring
up new, unpleaded issues in his or her opposing papers. [Citation.]”
(Government Employees Ins. Co. v. Superior Court (2000) 79 Cal.App.4th 95,
98-99, fn. 4, 93 Cal.Rptr.2d 820.)A plaintiff wishing “to rely upon unpleaded
theories to defeat summary judgment” must move to amend the complaint before
the hearing. (Leibert v. Transworld Systems, Inc. (1995) 32 Cal.App.4th 1693,
1699, 39 Cal.Rptr.2d 65; see also 580 Folsom Associates v. Prometheus
Development Co. (1990) 223 Cal.App.3d 1, 18, 272 Cal.Rptr. 227.)
**We conclude from a close reading of the complaint that the claim of
improper service of the Sale Notice was beyond the scope of the pleadings.
Furthermore, while Borrowers moved to amend the complaint, the proposed
amendment did not allege that the sale was invalid because the Sale Notice
was sent too early. Accordingly, the trial court could have properly rejected
this challenge as being beyond the scope of the pleadings. It is apparent,
however, that the court considered this challenge on its merits-either based
upon a liberal reading of the complaint, or because moving parties did not
object to Borrowers’ injection of an unpleaded theory in opposition to the
motions and thereby waived any objection. (See Stalnaker v. Boeing Co. (1986)
186 Cal.App.3d 1291, 1302, 231 Cal.Rptr. 323.) As discussed post, we address
Borrowers’ contention on its merits and conclude that summary judgment was
nonetheless proper.
2. The Sale Notice was served prematurely
[17] As noted, “[a]fter the notice of default is recorded, the trustee must
wait **12 three calendar months before proceeding with the sale.
[Citations.]” (Moeller, supra, 25 Cal.App.4th at p. 830, 30 Cal.Rptr.2d
777.)A power of sale under a mortgage or deed of trust may not be exercised
after breach by the mortgagor/trustor until (1) recordation of a proper
notice of default, and (2) “after the lapse of *91 the three months
[following such recordation] the mortgagee, trustee or other person authorized
to take the sale [has given] notice of sale, stating the time and place
thereof, in the manner and for a time not less than that set forth in Section
2924f.”(§ 2924.)
Section 2924f, subdivision (b) prescribes, inter alia, the contents of the
notice of sale, and sets forth certain requirements concerning the posting,
publication, and recordation of the notice. More specifically, at least 20
days before the sale, the notice of sale must be posted “in one public place
in the city where the property is to be sold, if the property is to be sold
in a city, or, if not, then in one public place in the judicial district in
which the property is to be sold ... [and] in a conspicuous place on the
property to be sold.”(§ 2924f, subd. (b)(1).) The statute also requires
publication of the notice in a newspaper of general circulation-in the city
where the property is situated or judicial district where the property is
located **if it is not located in a city-for three consecutive weeks, the
first publication occurring at least 20 days before the sale date. (Ibid.)
The notice of sale must also be recorded at least 14 days before the sale
date. (Ibid.)
As discussed in part III A, ante, the foreclosure statute also requires

service of the notice of default upon the mortgagor/trustor. (§ 2924b, subd.
(b)(2).) The trustee shall, “[a]t least 20 days before the date of sale,
deposit or cause to be deposited in the United States mail an envelope, sent
by registered or certified mail with postage prepaid, containing a copy of
the notice of the time and place of sale, addressed ... to each trustor or
mortgagor at his or her last known address if different than the address
specified in the deed of trust or mortgage.” (Ibid.)
[18] Borrowers contend that the above described statutory scheme requires
that any service of a notice of sale under section 2924b, subdivision (b)(2),
must occur only upon the expiration of three months after recordation of the
notice of default. The moving parties respond that the foreclosure statutes
do not require that the trustee wait for a full three months to serve the
notice of sale; the notice need only be served at least 20 days before the
sale date (which sale date is at least 20 days after the three-month period
expires).FN8 **We agree with Borrowers that the Civil Code requires that the
trustee wait until three months after the notice of default is recorded to
serve the notice of sale.
*92 Section 2924 requires the trustee to “give notice of sale” only “after
the lapse of the three months” following recordation of the notice of
default. (§ 2924.) The trustee “gives notice” under the foreclosure statutes
by recording, posting, publishing, and mailing the notice of sale. (See §§
2924b, subd. (b)(2), 2924f, subd. **13 (b)(1).) Clearly, in order to “give
notice” of the trustee’s sale, the trustee must wait for the expiration of
three months after recording the notice of default. (§ 2924; see also
(Moeller, supra, 25 Cal.App.4th at p. 830, 30 Cal.Rptr.2d 777) [“[a]fter the
3-month period has elapsed, a notice of sale must be published, posted and
mailed 20 days before the sale and recorded 14 days before the sale”].)
To conclude otherwise would lead to an anomalous result: giving notice of

sale would mean one thing in the case of its mailing, but something entirely
different in the case of its recordation, posting, and publication. Taken to
its extreme, a trustee could serve a notice of sale immediately after
recording the notice of default, so long as the sale date noticed was at
least three months plus 20 days after the recordation of the notice of
default. This flawed interpretation is not only contrary to the requirement
under section 2924 that the trustee wait three months to “give notice” of the
sale; **it would also permit a practice of discouraging borrowers from curing
defaults in the three-month period from the notice of default to the time
that a trustee may give notice of a foreclosure sale. (See I.E. Associates v.
Safeco Title Ins. Co. (1985) 39 Cal.3d 281, 286, 216 Cal.Rptr. 438, 702 P.2d
596 [three-month period after notice of default recorded “afford[s] the
trustor or junior lienholders an opportunity to cure the default”].)
**Trustee here served the Sale Notice on Borrowers on November 28, 2002, a
date that was slightly less than three months after recordation of the
Default Notice. The Sale Notice, however, provided Borrowers with 29 days’
notice of the trustee’s sale. Thus, while the Sale Notice did not comply
fully with the three-month requirement under section 2924, **it provided more
than the 20 days’ notice mandated under section 2924b, subdivision (b)(2).
3. Premature service of the Sale Notice did not invalidate sale
[19] Having determined that the Sale Notice was served prematurely, it
remains for us to decide whether this irregularity required denial of summary
judgment. Borrowers contend that the premature mailing of the Sale Notice-
coupled with the fact that the Property was sold (they claim) for far less
than its market value-raised a triable issue of fact concerning the validity
of the trustee’s sale. **They argue that prejudice from the procedural defect
need not *93 be shown, and that the defect need not have had an adverse
impact on the sales price. **Moving parties respond that, even if the Sale
Notice was mailed prematurely, Borrowers suffered no prejudice from this
minor procedural defect that would warrant setting aside the foreclosure sale.
The parties cite no cases that involve the precise question here: whether a
slight deviation from statutory notice requirements may invalidate a
foreclosure sale, where the trustee otherwise complies fully with the Civil
Code. **Stated otherwise, does the need for “strict compliance” with
foreclosure notice requirements recited in various cases FN9 mean that a
trustee’s sale must **14 be invalidated no matter how trivial the procedural
defect? **We answer this question in the negative.
FN9. See, e.g., System Inv., supra, 21 Cal.App.3d 137, 152-153, 98 Cal.Rptr.
735; Bisno v. Sax (1959) 175 Cal.App.2d 714, 720, 346 P.2d 814. Both cases-
cited by Borrowers-are readily distinguishable. In System Investment, there
were several significant defects that warranted setting aside the trustee’s
sale, including, inter alia, failure of the default notice to substantially
comply with section 2924b, **the beneficiary’s failure to reply to borrower’s
written inquiry regarding the **claimed default, and absence of service of
the default notice on required parties. (System Inv., supra, 21 Cal.App.3d at
pp. 153-154, 98 Cal.Rptr. 735.) Likewise, in **Bisno v. Sax, supra, 175
Cal.App.2d 714, 346 P.2d 814, **the court held that it was error to deny the
trustors’ request to enjoin the trustee’s sale; the equitable relief should
have been granted where trustors paid all outstanding amounts due-and the
beneficiary accepted such payments-so that the only default remaining at the
time of trial was due to acceleration of the entire indebtedness under the
note and deed of trust. (Id. at pp. 724-725, 730, 346 P.2d 814.) **The case
before us involves neither the occurrence of multiple, substantial defects
found in System Investment, **nor the trustor’s presale payment of the
outstanding obligation presented in Bisno v. Sax.
[20][21] It is settled that a great disparity between the foreclosure price

and the value of the property, by itself, is insufficient to set aside the
sale. (4 Miller & Starr, Cal. Real Estate (3d ed.2000) § 10:210, p. 672.)
**Inadequate price, even coupled with procedural irregularity, does not
automatically render a trustee’s sale subject to attack. **“[M]ere inadequacy
of price, absent some procedural irregularity that contributed to the
inadequacy of price or otherwise injured the trustor, is insufficient to set
aside a nonjudicial foreclosure sale. [Citations.]” (6 Angels, Inc. v.
Stuart-Wright Mortgage, Inc. (2001) 85 Cal.App.4th 1279, 1284, 102
Cal.Rptr.2d 711, italics added (6 Angels ); see also Sargent v. Shumaker
(1924) 193 Cal. 122, 129-130, 223 P. 464 [gross inadequacy in price must be
coupled with unfairness or advantage “resulting in such gross inadequacy and
consequent injury” to borrower]; Crofoot v. Tarman (1957) 147 Cal.App.2d 443,
446, 305 P.2d 56 [same].)
*94 Here, even assuming that the sale price was grossly inadequate, FN10 the
slight procedural irregularity in the service of the Sale Notice did not
cause any injury to Borrowers. They had notice of the original sale date; the
trustee’s sale did not go forward until almost one year after the date
noticed. There was no prejudicial procedural irregularity. Likewise, there
was no evidence that the premature service of the Sale Notice had any impact
whatsoever on the ultimate sales price.
FN10. Borrowers claimed that the Property had a fair market value of
$630,000, more than twice Buyer’s bid at the trustee’s sale. While the moving
parties challenged that claim, whether the price paid at foreclosure was
inadequate is irrelevant to the disposition of the summary judgment motions.
Because we conclude that there was no procedural irregularity that had any
prejudicial impact upon the foreclosure sale, any claim that the sales price
was inadequate does not raise a triable issue of material fact in Borrowers’
action to set aside the trustee’s sale. (See 4 Miller & Starr, Cal. Real
Estate, supra, § 10:210, p. 672.)
In support of their position, Borrowers rely on Whitman v. Transtate Title

Co. (1985) 165 Cal.App.3d 312, 211 Cal.Rptr. 582 (Whitman ), and Estate of
Yates (1994) 25 Cal.App.4th 511, 32 Cal.Rptr.2d 53 (Yates ). Neither case
supports their claim of error. In Whitman, the court held that the trustee’s
refusal to grant the borrower **a statutorily mandated postponement of the
sale, coupled with an inadequate sales price, justified setting aside the
trustee’s sale. (Whitman, supra, 165 Cal.App.3d at pp. 317, 322-323, 211
Cal.Rptr. 582.) The court held that such refusal was a denial of a
“substantial statutory right.” (Id. at p. 322, 211 Cal.Rptr. 582.) FN11 **Here,
no such substantial **15 statutory right was abridged by trustee’s premature
mailing of the Sale Notice, which otherwise gave Borrowers adequate and
timely notice of the trustee’s sale.
FN11. Under former section 2924g, subdivision (c)(1), the trustee, upon
trustor’s request before conclusion of the trustee’s sale, was required to
postpone the sale for one business day to afford the trustor the opportunity
to pay off the outstanding indebtedness. The court in Whitman rejected the
argument that this statute vested the trustee with discretion to grant or
deny such a postponement request by the trustor. (Whitman, supra, 165
Cal.App.3d at p. 320, 211 Cal.Rptr. 582.)
In Yates, the trustee-knowing that the borrower had died and that the public
administrator was the acting administrator of her estate-failed to give the
estate any notice of the decedent’s default. (Yates, supra, 25 Cal.App.4th at
p. 516, 32 Cal.Rptr.2d 53.) Based upon the complete absence of notice to the
administrator and a sale at a grossly inadequate price, the court set aside
the trustee’s sale. (Id. at pp. 522-523, 32 Cal.Rptr.2d 53.) Again, the facts
in Yates bear no resemblance to the case here, where Borrowers admittedly had
notice of the sale.
While no cases have expressly dealt with the issue we face here, courts have
rejected claims of deficient notice where no prejudice was suffered as a
result of the procedural irregularity. In one case, the Ninth Circuit
rejected the borrower’s claim that a foreclosure conducted under California
law was *95 invalid because notice of sale was sent to the wrong address.
(See Lehner v. United States (9th Cir.1982) 685 F.2d 1187 (Lehner ).) The
court reasoned: “[T]he record reveals clearly that she [the borrower] knew
the foreclosure sale was imminent. Her repeated efforts to delay the
impending sale attest to her knowledge.... She makes no suggestion that the
written notice would have supplied information not already known to her ...
nor did she allege that she never received actual notice of the foreclosure
sale. Her constitutional argument thus boils down to due process requiring
the meaningless formality of written (rather than oral) notice. [¶] We refuse
to elevate form over substance.” (Id. at pp. 1190-1191; see also Crummer v.
Whitehead (1964) 230 Cal.App.2d 264, 267-268, 40 Cal.Rptr. 826 [borrower’s
challenge to sale on basis that default notice not properly served on her
attorney rejected, where attorney actually received the notice].)
In another instance, a borrower challenged a foreclosure sale because the

sale notice’s description of the property to be sold erroneously included
property previously released. (See Crist v. House & Osmonson, Inc. (1936) 7
Cal.2d 556, 61 P.2d 758 (Crist ).) This claim was rejected, the court holding
that the error was not “of such a substantial nature that prejudice [was]
likely to result to the trustors.” (Id. at p. 559, 61 P.2d 758.)
Here, the notice irregularity was far less significant than the procedural
defects that the courts held insufficient to invalidate the foreclosure sales
in Lehner, supra, and Crist, supra. The borrower in Lehner had no written
notice, yet the sale was upheld since the borrower’s actual notice negated
any claim of prejudice. (Lehner, supra, 685 F.2d at pp. 1190-1191.) In this
instance, Borrowers were provided notice of the trustee’s sale through
service of the Sale Notice to their address as listed on the deed of trust.
Further-irrespective of Borrowers claim that they did not actually receive
the Sale Notice-they had imputed knowledge of the trustee’s sale at least 10
days before the originally noticed sale date; their bankruptcy counsel had a
copy of the written notice as early as December 17, 2001. (See § 2332
[principal and agent deemed to have notice of “whatever either has notice of,
and ought, in good faith and the exercise of ordinary care and diligence, to
communicate to the other”]; see also Lazzarevich v. Lazzarevich (1952) 39
Cal.2d 48, 50, 244 P.2d 1 [client held to knowledge of what client’s attorney
knows and should communicate to him or her].) This afforded more than
adequate time to protect Borrowers’ interests, which they did, in fact,
protect-Borrowers’ bankruptcy caused multiple **16 postponements of the
foreclosure sale over a period of a number of months. (See also *964 Miller &
Starr, Cal. Real Estate, supra, § 10:199, p. 628 [absence of proper notice
waived where notice actually received “within an adequate time to protect his
or her interests at the sale”].) FN12
FN12. But see Little v. CFS Service Corp. (1987) 188 Cal.App.3d 1354, 1361,
233 Cal.Rptr. 923, where the trustee’s sale was set aside because the sale
notice was not mailed to the trustor, junior lienor, or the judgment
creditor, which “lack of notice was clearly substantial and prejudicial.”
**Borrowers’ objection to the premature notice is, in effect, a criticism
that the trustee provided too much notice of the sale. **There is no evidence
that they were prejudiced by the premature mailing of the notice. Given the
fact that the trustee’s sale did not occur until almost a year after service
of the Sale Notice, it is difficult to imagine how Borrowers could claim any
prejudice.FN13
FN13. Borrowers argue further that the Sale Notice was invalid because it did
not contain a good faith estimate of the amount of the indebtedness. Although
mailed slightly before the expiration of three months after recordation of
the Default Notice, **there was no evidence that the Sale Notice contained
any material inaccuracies. **Borrowers presented no evidence that the Sale
Notice overstated the indebtedness. There was no evidence, for instance, that
a payment was made after the sale notice was mailed but before it was posted,
recorded, and published. **Indeed, it was undisputed that the last
installment payment was made nearly eight months before the mailing of the
Sale Notice. We thus reject Borrowers’ claim that the Sale Notice did not
provide a good faith estimate of the amount of the indebtedness.
Our conclusion that the premature mailing of the Sale Notice did not here
raise a triable issue of material fact concerning Borrowers’ challenge of the
trustee’s sale is also consonant with dicta in other California cases. In a
recent case involving a challenge to a trustee’s sale where there were no
notice irregularities, the appellate court noted: “ ‘As a general rule, there
is a common law rebuttable presumption that a foreclosure sale has been
conducted regularly and fairly.’ [Citations.] Accordingly, ‘[a] successful
challenge to the sale requires evidence of a failure to comply with the
procedural requirements for the foreclosure sale that caused prejudice to the
person attacking the sale.’ [Citation.] ... [T]he presumption must prevail
when the record lacks substantial evidence of a prejudicial procedural
irregularity. [Citation.]” (6 Angels, supra, 85 Cal.App.4th 1279, 1284, 102
Cal.Rptr.2d 711, first italics in original, second and third italics added;
accord, Residential Capital v. Cal-Western Reconveyance Corp. (2003) 108
Cal.App.4th 807, 819, 822, 134 Cal.Rptr.2d 162 [the question is whether
“there is a substantial defect in the statutory procedure that is prejudicial
to the interests of the trustor and claimants”].)
We thus conclude that the premature service of the Sale Notice here, even
coupled with an inadequate sales price-where the Trustee otherwise strictly
followed the statutory requirements for recording, posting, and publishing
the notice, and the notice was served on Borrowers more than the *97 required
20 days before the initial sale date-did not render the trustee’s sale
subject to attack. This holding is consistent with the above authorities, and
subserves the three purposes of the statutory scheme: “(1) to provide the
creditor/beneficiary with a quick, inexpensive and efficient remedy against a
defaulting debtor/trustor; (2) to protect the debtor/trustor from wrongful
loss of the property; and (3) to ensure that a properly conducted sale is
final between the parties and conclusive as to a bona fide purchaser.
[Citation.]” **17(Moeller, supra, 25 Cal.App.4th 822, 830, 30 Cal.Rptr.2d
777.) Therefore, Borrowers’ claim that the Sale Notice was served prematurely
did not create a triable issue of material fact requiring denial of summary
judgment.FN14
FN14. Trustee-citing Jackson v. County of Los Angeles (1997) 60 Cal.App.4th

171, 70 Cal.Rptr.2d 96-also argues that Borrowers are judicially estopped
from arguing the invalidity of the Sale Notice because of its premature
service. Since the complaint alleged that the trustee’s sale was invalid
because of the absence of service of the Sale Notice, Borrowers-Trustee
argues-cannot make the contradictory claim that the service was technically
improper. We acknowledge that Borrowers’ positing of conflicting contentions-
one pleaded and one asserted as an 11th hour effort to defeat summary
judgment-is troublesome. **We, however, reject Trustee’s argument, since
Borrowers never prevailed in any judicial proceeding on their claim that
there was no service of the Sale Notice. (See id. at p. 183 & fn. 8, 70
Cal.Rptr.2d 96 [judicial estoppel requires, inter alia, showing that party
was successful in assertion of earlier position].)
D. Claimed Irregularities in the Default Notice
[22] Borrowers contend that summary judgment was improper because there was a
triable issue of fact as to the existence of a “material irregularity” in the
Default Notice. The claimed irregularity concerned a discrepancy between the
date listed Default Notice (Jul. 1, 2000) as the date of default and the
actual date of default. This assertion is founded upon the statement in the
declaration of Chomie Neil in support of Lender’s summary judgment motion
that Borrowers “fell into default under the loan in January of 2001 by
failing to make their monthly mortgage payments.” This “material defect” in
the notice (Borrowers assert) warranted denial of summary judgment.
Borrowers’ contention is without merit.
As was the case with Borrowers’ claim that the Sale Notice was served
prematurely, the assertion that the Default Notice was defective was beyond
the scope of the complaint. **Borrowers did not plead that the trustee’s sale
should be set aside because the Default Notice was defective. Likewise, the
proposed amendment to the complaint did not address this particular issue;
**instead, it alleged that the Default Notice “contained charges and demands
in excess of the actual amount owing.” Had Borrowers wished to raise the
unpleaded issue of a claimed material defect as to the date of default as
reflected in the Default Notice, they were required to move to amend before
the summary judgment hearing. (Leibert v. Transworld Systems, Inc., supra, 32
Cal.App.4th 1693, 1699, 39 Cal.Rptr.2d 65.)
*98 Although Borrowers’ position is unclear, we will assume that they claim
that this discrepancy in the Default Notice was embraced by the proposed
amendment that more generally claimed that the notice contained an
overstatement of the amount of default. It is apparent from the record that
the trial court, in fact, did consider the merits of Borrowers’ claim in
conjunction with their motion to amend. Nonetheless, even were this issue
properly before the court, it did not justify denial of summary judgment.
Lender submitted a supplemental declaration from Neil describing in detail

the nature of Borrowers’ default and explaining his prior declaration that
the Borrowers’ default commenced in January 2001. According to this
supplemental declaration, as of January 1, 2001, Borrowers were, in fact,
delinquent back to the monthly payment that was due July 1, 2000. **On
January 4, 2001, Borrowers made a loan payment that was returned for
insufficient funds. **Borrowers made another loan payment on March 7, 2001,
that was returned for insufficient funds. **18 **Borrowers’ last payment
before the Default Notice was recorded in September 2001 was made March 30,
2001; it was applied to the loan installment that had been due July 1, 2000.
**At the time the Default Notice was recorded, Borrowers were 15 months in
arrears under the note and deed of trust. Neil also declared that there were
no “excessive charges” reflected in the Default Notice.
As observed by the trial court, Neil’s declarations disclosed that the

Default Notice was “not quite correct.” The Default Notice stated that the
breach was the failure to make the “installment which became due on 7/1/00”;
the March 30, 2001 payment was actually applied to the July 1, 2000
installment.FN15
FN15. Lender’s brief contains four material misstatements of the record to

the effect that Borrowers made no payments in 2001 and that the only two
attempted payments that year (on Jan. 4 and Mar. 7, 2001) were both returned
for insufficient funds. Lender makes these factual assertions-directly
contradicted by the declaration of its loan officer, Neil-to support its
erroneous claim that the July 1, 2000 installment was, in fact, owing when
the Default Notice was recorded in September 2001. While we are troubled by
these misstatements, they do not impact our ultimate rejection of Borrowers’
claim that irregularities in the Default Notice required denial of summary
judgment.
[23] Despite this inaccuracy as to the date of default, there was no evidence
presented that the Default Notice did not properly state the nature of the
default (failure to make installment payments and to pay late charges), or
the amount of the default ($38,011.40 as of Sept. 4, 2001). **“If one breach
is correctly stated, an erroneous statement of other defaults does not
invalidate the [default] notice.”(4 Miller & Starr, Cal. Real Estate, supra,
§ 10:183, p. 561, fn. omitted.) As stated in one case in which a challenge to
a foreclosure was rejected where the default notice accurately stated certain
*99 defaults but was inaccurate as to one of the installments for which an
extension was granted: “[T]he statute is sufficiently complied with if the
notice of default contains a correct statement of some breach or breaches
sufficiently substantial in their nature to authorize the trustee or
beneficiary to declare a default and proceed with a foreclosure. Since
reliance on these breaches is manifestly enough to authorize the proceeding,
the circumstance that erroneous statements may appear in the notice about
other breaches, which breaches, if they occurred, would only be cumulative so
far as their effect was concerned, may properly be treated as immaterial.”
(Birkhofer v. Krumm (1938) 27 Cal.App.2d 513, 523-524, 81 P.2d 609.)
[24] One of the signal purposes of the notice of default is to advise the
trustor of the amount required to cure the default. (4 Miller & Starr, Cal.
Real Estate, supra, § 10:183, p. 560.) There is no evidence that Borrowers
here were misled in any way by the Default Notice. **For instance, the fact
that the date of default was stated incorrectly in the Default Notice did not
cause Borrowers to act or fail to act in any way that resulted in their loss
of the Property.
Moreover, we reject Borrowers’ contention that the irregularity in the

Default Notice raised a triable issue of fact, because “[a] material defect
in the notice, such as a gross misstatement of the amount in default, voids
the sale.” (Bernhardt, Cal. Mortgage and Deed of Trust Practice (Cont.Ed.Bar
3d ed.2004) § 2.22, pp. 72-73.) **It is clear that the error in the Default
Notice-incorrectly stating the breach to have occurred with respect to the
July 1, 2000 payment-was an immaterial one.
**19 [25] Any suggestion by Borrowers that the Default Notice contained any
material misstatements-such as an overstatement of the amount of default-is
founded on nothing more than speculation. “Speculation, however, is not
evidence” that can be utilized in opposing a motion for summary judgment.
(Aguilar, supra, 25 Cal.4th 826, 864, 107 Cal.Rptr.2d 841, 24 P.3d 493; see
also Joseph E. Di Loreto, Inc. v. O’Neill (1991) 1 Cal.App.4th 149, 161, 1
Cal.Rptr.2d 636 [summary judgment opposition based on inferences “must be
reasonably deducible from the evidence, and not such as are derived from
speculation, conjecture, imagination, or guesswork”].) Borrowers’ opposition
to the summary judgment motions did not raise a triable issue of material
fact concerning any claimed irregularities in the Default Notice.FN16
FN16. Borrowers do not argue on appeal that the trial court abused its
discretion by denying their motion to amend the complaint. They are therefore
deemed to have waived any such challenge. (See Tiernan v. Trustees of Cal.
State University & Colleges (1982) 33 Cal.3d 211, 216, fn. 4, 188 Cal.Rptr.
115, 655 P.2d 317.)The proposed amendment alleged that the trustee’s sale was
invalid because the Default Notice contained excessive charges. There was no
refutation of Lender’s evidence-in the supplemental Neil declaration-that the
Default Notice contained no excessive charges. Therefore, since there was no
evidence to support the proposed amendment, the court appropriately exercised
its discretion by denying leave to amend. (Cf. Soderberg v. McKinney (1996)
44 Cal.App.4th 1760, 1773, 52 Cal.Rptr.2d 635 [leave to amend properly denied
where proposed amendment fails to state a cause of action].)
*100 E. Denial of Continuance of Summary Judgment Hearing
[26] One day before the deadline for opposing Trustee’s summary judgment
motion, Borrowers filed an ex parte application seeking various relief. Their
application-opposed by Lender-sought an order shortening time for service and
hearing on motions (a) to continue the August 25, 2003 trial date, (b) to
extend the deadline to serve expert witness disclosures,** (c) to compel
Lender to provide further responses to interrogatories, **(d) for leave to
shorten response time in connection with service of additional
interrogatories, and (e) for leave to amend Borrowers’ complaint and answer.
Borrowers also sought an order continuing the hearing on the summary judgment
motions; they requested that Trustee’s motion (set for July 24, 2003) be
continued to the same date as the hearing on Lender’s motion (Aug. 20,
2003).FN17 Although the record is sparse, the court apparently denied the
application to continue the Trustee’s motion, but granted Borrowers’
application to shorten time for service and hearing on their motions.FN18
FN17. The application requested that the two summary judgment motions be
heard “on the Wednesday prior to trial of this action.” Since trial was set
for August 25, 2003, we infer that the application sought a continuance of
the hearing on Trustee’s motion to August 20, 2003.
FN18. In reality, although it was not a continuance granted under Code of

Civil Procedure section 437c, subdivision (h), we note that the hearing on
Trustee’s motion was effectively continued twice for further briefing; the
last hearing date was 22 days after the original date noticed for the hearing.
Code of Civil Procedure section 437c, subdivision (h), reads as follows:

**“If it appears from the affidavits submitted in opposition to a motion for
summary judgment or summary adjudication or both that facts essential to
justify opposition may exist but cannot, for reasons stated, then be
presented, the court shall deny the motion, or order a continuance to permit
affidavits to be obtained or discovery to be had or may make any other order
as may **20 be just. The application to continue the motion to obtain
necessary discovery may also be made by ex parte motion at any time on or
before the date the opposition response to the motion is due.”
[27][28][29] We review the court’s decision under the abuse of discretion

standard. (Desaigoudar v. Meyercord (2003) 108 Cal.App.4th 173, 190, 133
Cal.Rptr.2d 408; Frazee v. Seely (2002) 95 Cal.App.4th 627, 634-635, 115
Cal.Rptr.2d 780.) Notwithstanding the court’s discretion in addressing such
continuance requests, “the interests at stake are too high to sanction the
denial of a continuance without good reason.” (Frazee v. Seely, supra, 95
Cal.App.4th at p. 634, 115 Cal.Rptr.2d 780.) Thus, “[t]o mitigate summary
judgment’s harshness, the statute’s drafters included a provision making
continuances-which are *101 normally a matter within the broad discretion of
trial courts-virtually mandated ‘ “upon a good faith showing by affidavit
that a continuance is needed to obtain facts essential to justify opposition
to the motion.” [Citation.]’ [Citation.] ... [There is] little room for doubt
that such continuances are to be liberally granted.” (Bahl v. Bank of America
(2001) 89 Cal.App.4th 389, 395, 107 Cal.Rptr.2d 270; accord Dee v. Vintage
Petroleum, Inc. (2003) 106 Cal.App.4th 30, 34-35, 129 Cal.Rptr.2d 923.)
Even employing the standard under which continuance requests under Code of
Civil Procedure section 437c, subdivision (h) are liberally granted, we
conclude that the trial court did not abuse its discretion by denying
Borrowers’ request in this instance. **We reach this conclusion for at least
three reasons.
**First, the application did not contain the requisite declaration indicating
in good faith the essential facts that Borrowers believed existed to oppose
the motion and the reasons those facts could not be presented in opposition
to the motion. **The application did not identify the declarations they
sought or the discovery they needed to develop the essential facts to oppose
the motion. Instead, the application pointed to **(1) an alleged discrepancy
between the date of default as indicated in the Default Notice and as noted
in the Neil declaration in support of Lender’s motion, and **(2) Lender’s
responses to interrogatories that Borrowers claimed were inadequate. The
information sought in the interrogatories, however, had nothing to do with
the claimed discrepancy in the Default Notice.FN19 The declaration in support
of the application thus failed to satisfy the requirement that it show “facts
essential to justify opposition may exist.” (Code Civ. Proc., § 437c, subd.
(h); Roth v. Rhodes (1994) 25 Cal.App.4th 530, 548, 30 Cal.Rptr.2d 706.)
FN19. The interrogatories-to which Lender asserted objections-inquired as to

the existence of any investigation conducted by a public entity concerning
the Lender’s alleged imposition of “excessive charges upon borrowers” over
the past seven years.
**Second, assuming, arguendo, the sufficiency of the declaration in support
of Borrowers’ application, the trial court was nonetheless justified in
concluding that there were no facts “essential” to the disposition of the
motion that justified a continuance of the hearing. The application included
Borrowers’ joint declaration: (1) indicating that they were uncertain as to
the precise amount that they owed Lender before the foreclosure because of
“turmoil in [their] lives”; and (2) attaching information from the Internet
that they claimed indicated that Lender had been subjected to “widespread
accusations of fraud, excessive charges, sharp practices, etc.” The former
assertion did not disclose an essential fact warranting a continuance.
**Further, the Internet *102 information was **21 clearly objectionable
hearsay FN20 and-based, inter alia, upon the issues as framed by the pleadings-
did not furnish a legitimate basis under Code of Civil Procedure section
437c, subdivision (h), for continuance of the motion.
FN20. Lender filed formal objections to Borrowers’ declaration, asserting,

inter alia, that the Internet information lacked foundation, was not
authenticated, and was inadmissible hearsay.
Moreover, Borrowers’ application alluded to Lender’s answers to

interrogatories that they claimed were deficient; however, the information
sought in those interrogatories was **not relevant to the matters alleged in
the complaint. Thus, it was appropriate for the court to deny Borrowers’
request to continue the hearing on Trustee’s summary judgment motion because
the matters raised in the application did not disclose “that facts essential
to justify opposition may exist but cannot, for reasons stated, then be
presented.” (Code Civ. Proc., § 437c, subd. (h); FSR Brokerage, Inc. v.
Superior Court (1995) 35 Cal.App.4th 69, 76, 41 Cal.Rptr.2d 404.)
**Third, the application presented “no justification for the failure to have
commenced the use of appropriate discovery tools at an earlier date.” (FSR
Brokerage, Inc. v. Superior Court, supra, 35 Cal.App.4th at p. 76, 41
Cal.Rptr.2d 404.) Borrowers did not explain any failure to discover facts
relating to the motions. **For instance, to the extent that Borrowers in
their joint declaration indicated uncertainty as to the amount of the
delinquency prior to the sale, they could have easily requested this
information through basic discovery at the commencement of the case. They
provided no explanation for not having done so. Thus, while perhaps not
determinative (see Bahl v. Bank of America, supra, 89 Cal.App.4th 389, 397-
398, 107 Cal.Rptr.2d 270), Borrowers’ lack of diligence here was an
additional factor relevant to the court’s exercise of discretion in its
refusal to continue the summary judgment hearing. (FSR Brokerage, Inc. v.
Superior Court, supra, 35 Cal.App.4th at p. 76, 41 Cal.Rptr.2d 404; A & B
Painting & Drywall, Inc. v. Superior Court (1994) 25 Cal.App.4th 349, 356-
357, 30 Cal.Rptr.2d 418.)
For all of the above reasons, we conclude that the trial court did not abuse
its discretion by denying Borrowers’ application to continue the hearing on
Trustee’s summary judgment motion.
*103 DISPOSITION
There were no triable issues of material fact presented in connection with

the motions for summary judgment, and summary judgment was thus appropriate
to dispose of the claims alleged in the complaint. Accordingly, the judgment
is affirmed.
Rauer v. Hertweck, 175 Cal. 278, 165 P. 946 (Cal.,Jun 04, 1917)
Bad outcome
Plaintiff did not have notice of the execution sale, but notice of the
sale was imputed to his attorney of record, And plaintiff stated that
the property was not sold in lots. Evidence didn’t show that the
property consisted of lots.
[10] Judgment 228 504(3)
228 Judgment
228XI Collateral Attack
228XI(B) Grounds
228k500 Errors and Irregularities
228k504 Irregularities in Proceedings
228k504(3) k. Defects in Entry, Form, and Contents
of Judgment. Most Cited Cases
Where it does not appear that two defendants in action to set aside execution
sale of real estate had any unity of interest or claim making it improper to
render several judgments against them, it will be presumed on collateral
attack that they did not.
Attorney and Client 45 104
45 Attorney and Client

45II Retainer and Authority
45k104 k. Notice to Attorney. Most Cited Cases
Where an attorney had actual knowledge of entry of judgment against his
client, such knowledge is in law knowledge of client.
Execution 161 230
161 Execution
161XI Sale
161XI(A) Manner, Conduct, and Validity
161k229 Bids
No inference of impropriety is to be drawn from fact that attorneys for
judgment creditor informed one of purchasers at execution sale that sale was
to be had, and suggested that he bid.
Execution 161 251(1)
161 Execution
161XI Sale
161XI(B) Opening or Vacating
161k251 Inadequacy of Price in Connection with Other
Objections
Mere inadequacy of price, however gross, is not sufficient ground for setting
aside an execution sale legally made, but there must, in addition, be proof
of some element of fraud, unfairness, or oppression, before a court will be
justified in depriving purchaser of his legal advantage.
This action was brought to set aside an execution sale of real estate. The
court below granted the motion of the defendants for a nonsuit, and thereupon
entered judgment in their favor. The plaintiff appeals from the judgment.
In October, 1910, one Webb brought an action against Rauer and others to
quiet his title to certain lands in Fresno county, and, in June, 1912,
obtained judgment against Rauer quieting his title, and for costs amounting
to $15.90. On December 19, 1912, an execution was issued on said judgment for
costs. The sheriff levied the writ upon a tract of real estate in Fresno
county, described as ‘Lot No. 7, Linda Vista Tract,’ belonging to Rauer, and
sold said tract on the 18th day of January, 1913, to Hertweck and Sparkman,
the defendants in this action, for the sum of $46. The sheriff duly made his
return on said sale, and, on the 20th day of January, 1914, issued his deed
to Hertweck and Sparkman, the purchasers at the execution sale. The complaint
alleges that on the day of the execution of the sheriff’s deed, and long
prior thereto, the plaintiff was the owner of the land so sold, and that the
same was worth between $100 and $150 per acre. He further alleges that he was
ignorant of the judgment against him, of the issuance of the writ of
execution, of the sale of the property, and of the issuance of the sheriff’s
deed, until about the 4th day of February, 1914; that no one ever notified
him of the proposed sale of his property, although the defendants in this
action, the attorneys for the judgment creditor, and the sheriff knew that
plaintiff’s residence was at the city of San Francisco. It is alleged **948
that the writ of execution was *280 issued and levied, and the sale made,
with the intent to prevent all knowledge thereof on the part of plaintiff
until after the sale and the issuance of the deed thereon, and that all said
acts were intentionally concealed from the plaintiff for the purpose of
depriving him of the whole of his land for a mere nominal sum. In addition,
it is alleged that the sheriff did not offer the land for sale in any smaller
parcel than the 20 acres.
There was testimony in support of the allegation of the complaint relative to

the value of the land. The 20 acres must therefore be taken to have been
worth between $2,000 and $3,000. The sum bid at the execution sale was only
$46. Clearly, therefore, the purchase price was but a small fraction of the
value of the property. It is, however, well settled in this state that mere
inadequacy*281 of price, however gross, is not itself a sufficient ground for
setting aside a sale legally made. There must, in addition, be proof of some
element of fraud, unfairness, or oppression, before a court will be justified
in depriving the purchaser of his legal advantage. Where, however, the price
obtained is greatly disproportionate to the actual value, very slight
evidence of unfairness or irregularity will suffice to authorize the granting
of the relief. These rules are clearly stated, and the authorities cited, in
Odell v. Cox, 151 Cal. 70, 90 Pac. 194. The same principles are declared and
applied in Winbigler v. Sherman (L. A. No. 4449) 165 Pac. 943, recently
decided in this court.
What, then, does the proof in this case show with respect to the unfairness
of the sale? The plaintiff, Rauer, testified that he had no knowledge of the
judgment, or of the proceedings on execution. But it appears without dispute
that on June 21, 1921, 11 days after the entry of the judgment, Mr. H. M.
Anthony, the attorney representing him in the action of Webb v. Rauer (and
who also represents him here), filed, on behalf of Rauer, a notice of appeal
from said judgment, and an undertaking to support such appeal. These facts
furnish conclusive evidence that Rauer’s attorney had actual knowledge of the
entry of the judgment against his client, and such knowledge is, in law, the
knowledge of Rauer himself. 6 C. J. 638; Mabb v. Stewart, 147 Cal. 413, 81
Pac. 1073. Besides this, there is uncontradicted evidence that on June 17,
1912, the attorneys for Webb wrote to Rauer’s attorney, requesting payment of
the judgment for the costs; that they mailed him a copy of the bill of costs,
and received a letter of acknowledgment; and that, in October, 1912, they
again wrote him asking that his client pay the costs. Both requests for
payment were ignored. The execution was not taken out until two months after
the sending of the second letter.
The notice of sale was published and posted in strict conformity with the
requirements of section 692 of the Code of Civil Procedure, but no one gave
Rauer or his attorney personal notice that the sale was to take place. The
sheriff and the undersheriff testified that they knew who Rauer was, and
could have found his address. Hertweck, one of the defendants, had done
business with Rauer. He knew that Rauer’s place of business was in San
Francisco, and that he was reputed to be a man of means. Sparkman, the other
defendant,*282 had never heard of Rauer. He testified that he first heard of
the proposed sale of the land when one of the attorneys for Webb told him
that there was to be an execution sale, and asked him if he did not want to
bid.
[5] The evidence which we have summarized constitutes plaintiff’s entire

showing on the question of the fairness of the sale. We are unable to find in
it anything going to show fraud, unfairness, or oppression. **The main stress
of the appellant’s argument is put upon the point that neither the judgment
creditor, the sheriff, nor the purchasers notified the judgment debtor of the
proposed sale. But there was no obligation upon them to give him any such
notice. The statute defines how notice of an execution **949 sale must be
given. To say that a sale may be set aside because some other notice was not
given would be to amend the statute, and this we cannot, of course, do. When
the officer conducting the sale has done the acts prescribed by the Code, he
has done his full duty. He is not required to search for the debtor and give
him any further notice than that which the law exacts. Nor is any such duty
imposed upon the judgment creditor. Much less in one who may contemplate
bidding at an execution sale called upon to concern himself with the question
whether the debtor has actual knowledge of the proceeding.
No inference of impropriety is to be drawn from the fact that the attorneys

for the creditor informed one of the defendants that a sale was to be had,
and suggested that he bid. The judgment debtor is benefited, rather than
harmed, by any action which tends to increase the number of bidders.
It is argued that the complaint alleges, and the answer fails to deny, that
the defendants knew that the writ was issued, and the sale made, with the
intent to prevent knowledge thereof by the plaintiff, and to deprive him of
his land. We think the complaint, properly construed, does not charge that
the defendants knew of the alleged intent. But, in any event, the answer was
clearly designed to dissociate the defendants from any connection with the
purpose, which, so far as they could know, may have been entertained by
others, to take an unfair advantage of the plaintiff. This may fairly be
interpreted as a denial of any knowledge on their part of such purpose, and
it was apparently so treated at the trial.
The attempt to show unfairness in the sale comes down simply to this: That
the execution sale was regularly made *283 upon due statutory notice, but
that the judgment debtor did not, in fact, know of the sale, and no one gave
him notice of it. He did, however, know that a judgment had been entered
against him, and must be deemed to have known that his property might be
levied on at any time. He failed to pay the judgment, and took no steps to
protect his property until many months after the entry of judgment. He then
found that a sale had been had, and that the time for redemption had expired.
The resulting loss can more properly be attributed to his neglect of his own
interests than to any unfairness on the part of the judgment creditor of the
purchasers. The case presents none of the peculiar circumstances of
oppression or inequitable conduct which were held, in Odell v. Cox and in
Winbigler v. Sherman, to justify relief from a sale made for an inadequate
price.
[8] It is claimed that the sale was irregular because the land was not
offered in subdivisions. Assuming that the evidence shows that the sale was
made as claimed by the appellant, there is no evidence that the situation was
such as to require the sheriff to sell the land otherwise than as a whole.
Section 694 of the Code of Civil Procedure provides that:
‘When the sale is of real property, consisting of several known lots or

parcels, they must be sold separately.’
The land is described in the record as ‘Lot No. 7 of the Linda Vista tract.’
There is nothing to indicate that it consisted of other known lots or
parcels. A sale in parcels was not therefore required. Gleason v. Hill, 65
Cal. 17, 2 Pac. 413; Connick v. Hill, 127 Cal. 165, 59 Pac. 832; Meux v.
Trezevant, 132 Cal. 487, 64 Pac. 848.
Finally, the appellant makes the point, raised by an amendment to his

complaint, that the judgment upon which the execution was issued was void. It
appears that the original action of Webb was brought against two defendants,
Dewey Navigation & Trading Company and Rauer, for the purpose of quieting
Webb’s title to certain lands. Deway Navigation & Trading Company defaulted,
and Webb took judgment against it on March 28, 1912. This judgment, it is
alleged in the amendment, is still in force. Rauer answered, and thereafter
Webb took against him the judgment which formed the basis of the execution.
The appellant’s contention is that since, as this court has often stated,
there can be but one final judgment in a case, the action was disposed of by
the *284 judgment against Dewey Navigation & Trading Company, and that the
later judgment against Rauer was void.
[9] Without regard to other possible answers to the contention, the rule
relied upon has no application to actions in which separate and independent
relief is sought against several defendants. The court may, under the express
provision of section 579 of the Code of Civil Procedure, render judgment
against one or more of the defendants, ‘leaving the action to proceed against
the others, whenever a several judgment is proper.’ Cole v. Roebling
Construction Co., 156 Cal. 443, 105 Pac. 255; Bell v. Staacke, 159 Cal. 193,
115 Pac. 221.
[10] It does not appear that the two defendants in the suit brought by Webb
had any unity of interest or claim making it improper to render several
judgments against them. On this collateral attack on the judgment, it will be
presumed that they did not.
Billings v. Farm Development Co., 74 Cal.App. 254, 240 P. 298 (Cal.App. 1

Dist. Aug 27, 1925)
Here one of the charges of fraud is the substitution of L. J. Hogan as a

trustee and it is claimed that this substitution was a part of a plot and a
conspiracy to cheat and defraud the plaintiffs, but it does not appear that
the original trustee, or some other substituted trustee, would not have been
compelled to do or would not have done the same acts performed by L. J.
Hogan. There is no specific allegation of injury from the substitution and
nothing from which injury might be inferred. [3] **The mere inadequacy of the
price bid at the foreclosure sale does not constitute fraud unless the
purchaser has been guilty of some deceit or has taken some undue advantage
"resulting in such gross inadequacy and consequent injury to the owner of the
property." (Odell v. Cox, 151 Cal. 70 [90 Pac. 194]; Sargent v. Shumaker, 193
Cal. 122, 129 [223 Pac. 464]; Jones v. Sierra Verdugo Water Co., 63 Cal. App.
254, 263 [218 Pac. 454].) The other acts which are set forth in the complaint
as constituting a part of this conspiracy to defraud the plaintiffs are the
declaration of plaintiffs’ default, publication of notice of sale, the sale
for an inadequate price and the subsequent conveyance to Bates. But none of
these acts is alleged to have been wrongful except the declaration of
plaintiffs’ default, and it does not appear from the complaint how or in what
manner any of them were not authorized by the contract between the parties or
to what extent any of them damaged the plaintiffs. [4] So far as the
plaintiff D. W. Billings is concerned it appears from the complaint that on
June 18, 1917, he had *260 conveyed to his wife and coplaintiff all his right
and interest in the property. The right to the return of the property having
been foreclosed by the judgment in favor of Bates his measure of damages for
the alleged fraud was quite different from that of his coplaintiff in this
connection. In addition to this the complaint is silent in the pleading of
any facts justifying an award of punitive damages. As to the plaintiff D. W.
Billings particularly it is apparent that this award is not justified by the
pleadings or the evidence, and that, as to the judgment for general damages,
it is far in excess of any actual damage which he suffered. We are satisfied
that the complaint does not state sufficient facts to support the judgment
for damages for fraud and deceit in behalf of plaintiff D. W. Billings and
that the defendants’ objection to the offer of evidence upon that ground
should have been sustained as to that plaintiff at least.
Lo v. Jensen, 88 Cal.App.4th 1093, 106 Cal.Rptr.2d 443, 01 Cal. Daily Op.

Serv. 3523, 2001 Daily Journal D.A.R. 4323 (Cal.App. 2 Dist.,May 03, 2001)
[4][5][6] Nor can we agree with Jensen that the proper remedy was an action
for damages, not an order setting aside the sale. “It is the general rule
that courts have power to vacate a foreclosure sale where there has been
fraud in the procurement of the foreclosure decree or where the sale has been
improperly, unfairly or unlawfully conducted, or is tainted by fraud, or *1098
where there has been such a mistake that to allow it to stand would be
inequitable to purchaser and parties.” ( Bank of America etc. Assn. v. Reidy,
supra, 15 Cal.2d at p. 248, 101 P.2d 77.) A debtor may apply to a court of
equity to set aside a trust deed foreclosure on allegations of unfairness or
irregularity that, coupled with the inadequacy of price obtained at the sale,
mean that it is appropriate to invalidate the sale. (Sierra-Bay Fed. Land
Bank Assn. v. Superior Court (1991) 227 Cal.App.3d 318, 337; , 277 Cal.Rptr.
753 3 Witkin, Summary of Cal. Law (9th ed.1987) Security Transactions in Real
Property, § 149.) Here, there was both unfairness and an inadequate price.
The court had the power to vacate the sale and properly made that order.
See internal citations to Bank of America v. Reidy in this document.
Jose Realty Co. v. Pavlicevich, 164 Cal. 613, 130 P. 15 (Cal.,Jan 27, 1913)
266 Mortgages
Proof that mortgagee procured trustee to sell property by falsely
representing that there had been a default, and became the purchaser himself,
without the owners having any notice or knowledge of the sale, held to
justify setting aside the sale.
The proof showed that on November 30, 1909, one J. A. Cottle, being then the
owner of the land subject to a deed of trust by him previously made, conveyed
it to one A. E. House, and that on September 21, 1910, said House executed a
deed purporting to convey the land to the plaintiff. The defendant for answer
alleged that on November 30, 1909, Cottle executed a deed conveying the land
to a trustee, with power of sale, to hold the same as security for the
payment of a note from Cottle to Pavlicevich, dated October 18, 1909, payable
one year after date, for $3,300, with interest at 7 per cent. per year,
payable monthly, and providing that, if the interest was not so paid, the
payee might declare the whole sum due, of which declaration the maker waived
notice; that no interest was paid for the months of May, June, July, or
August, 1910, whereupon the defendant declared the whole sum due, and the
trustee, at defendant’s written request, and in the manner prescribed by the
terms of the power of sale, offered the land for sale for nonpayment of debt,
sold it to Pavlicevich, and in pursuance thereof, on September 20, 1910,
conveyed the land to Pavlicevich by deed, which was duly recorded on the same
day, whereby defendant became the owner of the premises.
The note declared that it was payable at the office of Will M. Beggs, in San
Jose. The deed to the trustee provided that, in any deed made by the trustee
under the power of sale, the recital in such deed of any matter of fact,
including the fact that default had been made in the payment of the note or
interest thereon, when due, should be conclusive proof of such fact against
Cottle, his heirs and assigns. The deed executed by the trustee to
Pavlicevich recited that the interest on said note was on August 24, 1910,
overdue and unpaid, and that Pavlicevich had elected to consider the
principal as *616 immediately due and payable, and had directed the trustee
to proceed, and that the first publication of the notice of sale was on
August 25, 1910. The plaintiff, on the trial, did not controvert any of these
statements, except the statement that the interest on the note, or any part
of it, was overdue at or prior to the giving of said notice of sale. Its
contention is that it had bought the title of Cottle, and had assumed the
payment of the note; that it was able and willing to pay it at the office of
Beggs at the time the respective monthly payments became due; and
consequently that, under the provisions of section 3130 of the Civil Code, it
was not in default. **It also claimed that the trustee’s sale was
fraudulently procured by Pavlicevich; the fraud consisting of his conduct in
giving the direction to the trustee to sell the land for default in payment
of interest, when, by reason of plaintiff’s ability and willingness to pay
the interest at the time it fell due at the place of payment, there was no
default.
It was not necessary for plaintiff to plead fraud in its complaint. The
trustee’s sale was set up by the defendant as a defense to the action of the
plaintiff. In such a case, proof of fraud, sufficient to avoid the trustee’s
sale and deed, was admissible without further pleading; it being matter in
avoidance of the defense set up in the answer. Moore v. Copp, 119 Cal. 433,
51 Pac. 630; Brooks v. Johnson, 122 Cal. 570, 55 Pac. 423; White v.
Stevenson, 144 Cal. 112, 77 Pac. 828; Wendling Co. v. Glenwood Co., 153 Cal.
415, 95 Pac. 1029; Peck v. Noee, 154 Cal. 354, 97 Pac. 865.
The court found that no interest was ever paid on the note for any month
after April, 1910, but that, at all times since that date, ‘the payor of said
note has had sufficient funds at said office for the purpose of paying said
interest,’ and that the defendant had never demanded the payment of said
interest. **Upon this finding, it made a conclusion of law that there was no
default in the payment of interest, and that the declaration by Pavlicevich
that the principal was due, and the sale and deed made in pursuance thereof,
were fraudulent and void. **There was also a general finding that the
plaintiff was the owner of the land, subject to the deed of trust executed by
Cottle, and that the interest which the defendant *617 claims, in addition to
the rights conferred by said deed of trust, is without right. The defendant
gave notice of intention to move for a new trial, stating that the motion was
to be made on the minutes of the court. The notice in effect specified that
the evidence was insufficient to justify the following findings: (1) That
plaintiff is the owner of the premises; (2) ‘that the interest which
defendant has in the premises is without right;’ (3) ‘that the money for the
payment of the interest on said note was at all times ready at the place of
payment.’Although these are not in the customary form for such specifications
of insufficiency, we think they are sufficient to present the question
whether or not the finding on the subject of the default in the interest
payments is sustained by the evidence.
If the recital in the trustee’s deed is conclusive on Cottle and his

successors in interest, it would follow that this finding is contrary to the
evidence. That such recital is conclusive, where the deed of trust empowers
the trustee to make it, in the absence of fraud of which the purchaser at the
trustee’s sale had notice, appears to be settled by the decisions of this
court. Simson v. Eckstein, 22 Cal. 593; Carey v. Brown, 62 Cal. 374;
Mersfelder v. Spring, 139 Cal. 595, 73 Pac. 452.
**17 Respondent, however, claims that by showing that Pavlicevich, knowing

that there had been no such default, declared the principal and interest due,
and caused the trustee to make a sale under the power by falsely informing
him that the payor was in default, and that Pavlicevich himself bought the
property at the trustee’s sale, and that the owners of the property were not
informed of the sale or of the notice given thereof, and had no knowledge of
it, it has established the proposition that the sale and deed were procured
by fraud, and that this is is sufficient to let in proof of the falsity of
the recital in the deed of the trustee, and set aside the sale made by him.
We are of the opinion that, if these facts were shown, the fraud claimed
would be sufficiently established. But we think the proof was lacking so far
as the facts of there having been no default in payment of interest and of
knowledge by Pavlicevich are concerned.
It is admitted that the interest for the four months above specified has
never been paid. It is not claimed that Pavlicevich knew, or ever was
informed, that the plaintiff, or any *618 other person, had funds in the
hands of Beggs, or with any other person at his office or elsewhere, with
which to pay the interest, or that any money had been placed there for that
purpose. Pavlicevich testified that the loan to Cottle was made for him
through the agency of Beggs, to whom he had intrusted the money for that
purpose; that he demanded from Beggs in his office, about the 1st of June,
1910, the payment of the interest due on May 18, 1910; and that during the
months of May, June, July, and August, 1910, he went repeatedly to Beggs’
office to collect the interest, but failed to get it, and that Beggs never
offered to pay it. This, clearly, was ample evidence of the existence of a
default. In rebuttal, Beggs testified that he was the president of the Jose
Realty Company, and that in February, 1910, he told Pavlicevich that said
company had succeeded to the interest of Cottle in the property, and was to
look after the payment of the note and interest. He further testified that he
had advanced $8.50 for Pavlicevich to pay costs in a justice court suit, in
which he was attorney for Pavlicevich, and that Pavlicevich, in January,
1910, agreed that this advance might be adjusted the next time the interest
fell due on the note; that no interest was paid from that time until May 5th,
when he paid to Pavlicevich $57.75, being interest for three months ending
April 18th; that the $8.50 was not then adjusted or deducted; that
Pavlicevich, shortly afterwards, asked Beggs to find a purchaser for the
note, saying that he needed the money; that Beggs tried to do this, and that
there were several conversations between them about it; and that Pavlicevich
never demanded payment of the interest from him, or from anybody else in his
presence, or to his knowledge. There is no testimony that any person ever
offered to pay such interest. Beggs was then asked the question, ‘Did you
have funds at your office, or had any of the persons in charge of your
office, sufficient to pay the interest at any time had it been demanded?’ to
which he answered, ‘Yes, sir.’ This was all the evidence tending to show that
the plaintiff was able and willing to pay the interest at the office of Beggs.
The purpose of this evidence was to bring the case within the provisions of
section 3130 of the Civil Code, which reads as follows: ‘It is not necessary
to make a demand of payment upon the principal debtor in a negotiable
instrument in order *619 to charge him; but if the instrument is by its terms
payable at a specified place, and he is able and willing to pay it there at
maturity, such ability and willingness are equivalent to an offer of payment
upon his part.’Under this section, no demand was necessary in order to create
a default in payment. The latter clause of the section manifestly refers to
section 1500 of the Civil Code, which provides that: ‘An obligation for the
payment of money is extinguished by a due offer of payment, if the amount is
immediately deposited in the name of the creditor, with some bank of deposit
within this state, of good repute, and notice thereof is given to the
creditor.’Under this section it has been uniformly held that although such an
offer, when not followed by an immediate deposit, does not pay the debt, or
extinguish the obligation to pay it, yet, if the mere offer is duly made, the
effect is that there is at that time no breach of the promise to pay. Randol
v. Tatum, 98 Cal. 399, 33 Pac. 433; O’Conor v. Braly, 112 Cal. 37, 44 Pac.
305, 53 Am. St. Rep. 155; Knowles v. Murphy, 107 Cal. 115, 40 Pac. 111; Wolff
v. Canadian Co., 123 Cal. 543, 56 Pac. 453; Montgomery v. Tutt, 11 Cal. 318,
327.Section 3130, of course, cannot be complied with by a mere passive
ability and willingness. There must be an ability to pay, manifested by
providing funds at the place of payment in the hands of some person there
present, who is authorized to pay it on the debt and is willing to do so. If,
therefore, the plaintiff had placed sufficient money in the office of Beggs,
to be applied to the payment of this interest, in charge of some person there
who was authorized and directed to use it for that purpose, when demand was
there made, or if it had been in attendance there by its agent, with
sufficient money and authority to pay such interest, and had been able and
willing thereafter to pay it on demand, it would not have been in default for
nonpayment of interest, although the obligation to pay it would remain.
Montgomery v. Tutt, supra, 11 Cal. 318.
But the evidence does not show this to be the case. It merely shows that
Beggs, or **18 some other person in his office, had money enough to pay the
interest at any time, had it been demanded. It does not show that the money
belonged to the plaintiff, or that it had been provided or placed there by
the plaintiff, or any other person, for the purpose of paying this *620
interest, or that Beggs, or that any other person in his office, was willing
to pay it out on the interest, or had been authorized or instructed to do so,
or that any of them intended to do so if the interest had been demanded.
There was therefore no proof that ‘the payor of said note has had sufficient
funds at said office’ to pay the interest, or that the payor had sufficient
or any funds there ‘for the purpose of paying said interest’ as the findings
declare, or that the payor was ‘able and willing to pay it there,’ in the
sense necessary to constitute the equivalent of an offer to pay under section
3130, aforesaid. The proof in rebuttal was not sufficient to overcome the
positive proof of the defendant that the interest was not paid when due.
The judgment is vacated, and the order denying a new trial is reversed.
Jones v. Sierra Verdugo Water Co., 63 Cal.App. 254, 218 P. 454
Appeal from Superior Court, Los Angeles County; Charles S. Burnell, Judge.
Action by A. Halden Jones and another against the Sierra Verdugo Water
Company and others. From a judgment for defendants on demurrer, plaintiffs
appeal. Affirmed.
[5] Judicial Sales 229 39
229 Judicial Sales

229k34 Opening or Vacating
229k39 k. Inadequacy of Price. Most Cited Cases
Mere inadequacy of price, however gross, is not itself sufficient ground for
setting aside judicial sale; but there must be fraud, unfairness, or
oppression, which must account for and bring about inadequacy of price.
[5][6] The established rule in this state is that:
“Mere inadequacy of price, however gross, is not itself a sufficient ground

for setting aside a sale legally made. There must, in addition, be proof of
some element of fraud, unfairness, or oppression, before a court will be
justified in depriving the purchaser of his legal advantage.” Rauer v.
Hertweck, 175 Cal. 280, 281, 165 Pac. 948. See, also, Bock v. Losekamp, 179
Cal. 676, 677, 179 Pac. 516.
Appellants claim that they are entitled to have the sale set aside under this
statement of the rule. They claim that the facts alleged by them in their
complaint do show that, in addition to inadequacy of price, there was fraud
and unfairness. But the accompanying fraud, unfairness, or oppression which
will suffice to make inadequacy of price a ground for setting aside a sale
must be such as accounts for and brings about the inadequacy of price. **The
rule is stated in Ruling Case Law as follows:
“What causes, in addition to inadequacy of price, are sufficient to lead the

court to withhold confirmation from a sale at a sacrifice, cannot well be
reduced to any general rule; but they must be such as were calculated to
prevent the property from bringing its value, or something reasonably near
what it should bring at a public sale, and which on the particular occasion
have actually produced that effect.” 16 R. C. L. p. 98.
In Burton v. Kipp, 30 Mont. 275, 76 Pac. 563, it is said:
“It is not alleged that the sale in question was attended by any irregularity
on the part of the sheriff or the plaintiff in the writ, or that any mistake,
surprise, accident, misconduct, or fraud intervened, by which the inadequacy
of price was brought about. *** Mere inadequacy of price, not attended by
circumstances of fraud, misconduct, accident, mistake, or surprise tending to
influence the result, is not sufficient to invalidate such a sale. Otherwise
the mere lack of competitive bids, or the intervening of any like
circumstance whereby the price realized should be deemed inadequate, would be
sufficient to render questionable*264 the title obtained by sale under
execution.” (Italics ours.)
There is nothing alleged in plaintiffs’ complaint from which even a remote

inference **458 can be drawn that the conduct which appellants stigmatize as
fraudulent tended in any wise to bring about the inadequacy of the price bid
for the property. There is nothing to show that the sale was not properly
conducted in the utmost good faith on the part of the trustee, or that
appellants did not have due and timely notice of the sale, or that the
stockholders or directors of the Verdugo and Crescenta Companies did aught to
prevent competition in the bidding. So far as the allegations show to the
contrary, the small price realized may have been the result of lack of
bidders, or incumbrances upon the property, or a variety of other causes over
which neither the trustee nor the stockholders or directors of either of the
water companies had any control. Under the terms of the trust deed, the
bondholders had the right to have their claims satisfied by a sale of the
property. The Crescenta Company, the sole bidder, was under no obligation to
bid more than it deemed proper. It was at liberty to bid what it wished,
leaving it to others to make higher bids if they chose. Since the inadequacy
of price was not attended by circumstances of fraud, misconduct, accident,
mistake, or surprise, which tended to influence the result by preventing the
property from bringing its value, it follows that those bondholders who
requested the trustee to sell-bondholders who are not complaining and who had
the right to collect their claims in this manner-cannot be deprived of the
fruits of this sale merely because the bid was not higher.
Bernheim v. Cerf, 123 Cal. 170, 55 P. 759 (Cal.,Dec 27, 1898)
Example of mistake in obtaining a foreclosure judgment by striking an

answer that was unverified when the complaint was unverified. And the
complaint being unverified did not require the answer to be verified.
Mortgagee: n. the person or business making a loan that is secured by

the real property of the person (mortgagor) who owes him/her/it money.
Goodenow v. Ewer, 16 Cal. 461, 1860 WL 983, 76 Am.Dec. 540 (Cal.,Oct Term
1860)
Ie. of mistake of law. Mistake of law of plaintiff not including the
vendee, as a party in the foreclosure suit which resulted that he only
purchased one-third not one-half of the property at issue.
One of two tenants in common mortgaged his estate, and subsequently the two
conveyed one-third of the whole estate to a third party. The mortgagee
foreclosed without making such vendee a party, and became the purchaser at
the foreclosure sale for the amount of his debt and costs, under a mistake,
supposing that he thereby acquired the vendee’s interest in the property. The
vendee afterwards acquired the remaining interest of the two tenants in
common. The mortgagee applied for a sale of the whole property, on the ground
that it was incapable of partition, and asked to be reimbursed out of the
proceeds to the extent of one-third of the amount paid, on the ground of his
mistake in bidding on the supposition that he acquired a title to one-half,
instead of only one-third, of the property. **Held that, his mistake being
one of law, he was not entitled to relief under the particular circumstances.
Stafford v. Russell (1953) 117 Cal.App.2d 326 255 p.2d 814
Bad outcome
(8) Trust Deeds § 78--Sale Under Power--Attack on Sale--Inadequacy of Price.

Inadequacy of price is not in itself a sufficient ground for setting aside a
trustee’s sale legally made, since there must be, in addition, proof of some
element of fraud, unfairness or oppression which accounts for the inadequacy.
(9) Trust Deeds § 81--Sale Under Power--Attack on Sale--Offer to Pay Debt.

A trustor fails to establish a right to equitable relief from a trustee’s
sale, where, among other things, notwithstanding notice of the proposed sale
and knowledge of the identity of the trustee, the trustor made no attempt to
tender any of the amount due under the note and deed until more than two
years after the sale, and then made the tender to the original payee rather
than the assignee of the note.
(8) Plaintiff is not entitled to any relief because of the alleged

inadequacy of the price for which the lots sold at the trustee’s sale. In
this state, “it is a settled rule that inadequacy of price, however gross, is
not in itself a sufficient ground for setting aside a trustee’s sale legally
made; there must be in addition proof of some element of fraud, unfairness or
oppression as accounts for and brings about the inadequacy of price.”
(Stevens v. Plumas Eureka Annex Mining Co., 2 Cal.2d 493, 496 [41 P.2d 927].)
Nor does plaintiff allege additional facts which show he is entitled to
relief. It is not claimed there was any irregularity in the notice of default
or the conduct of the sale. We have determined it was proper to add the
amount paid for delinquent taxes and for rerecording the trust deed.
Plaintiff states in his amended complaint that the defendant trustee
“notified plaintiff that the sum necessary to remedy said default was
approximately $1,600.00,” including the amount paid for taxes and
rerecording. There is no suggestion in plaintiff’s pleading that he did not
know of the trustee’s sale, or that he or anyone else was prevented from
attending and bidding. Indeed it is clear from Stafford v. Clinard, supra,
that plaintiff brought an unsuccessful action to enjoin the sale. It is, of
course, true that plaintiff claims the sale was made contrary to the alleged
oral agreements. But as we have pointed out these alleged agreements cannot
be the basis for any relief.
On this point plaintiff relies on Darden v. Reese, 88 Cal.App.2d 904 [200

P.2d 81]. It is clearly distinguishable since there the execution “sale was
made without the knowledge of plaintiff, the owner of the stock.” There are
also other materially differentiating facts.
(9) Although plaintiff had actual notice of the proposed trustee sale
prior to the date of sale and of necessity must be deemed to have had notice
of the person who had requested the trustee to sell, and appears to have had
actual knowledge of the identity of such person in view of his suit to enjoin
the sale (see Stafford v. Clinard, supra), yet he made no attempt to tender
any amount due under the note and trust deed until more than two years
thereafter, and then made *334 the alleged tender to the original payee of
the note and not to the assignee thereof. Plaintiff’s position is utterly
lacking in equity.
Taliaferro v. Crola, 152 Cal.App.2d 448, 313 P.2d 136 (Cal.App. 1 Dist. Jul
15, 1957)
Fraud
Countrywide v. U.S. 2007_wl_87827
Keycites for Jose v. Pavlicevich, Block v. Tobin
Harker v. Rickershauer 94 Cal.App. 755, 271 P. 912
Harker v. Rickershauser, 94 Cal.App. 755, 271 P. 912 (Cal.App. 3 Dist.,Nov

14, 1928)
Leeper v. Beltrami fraud associated with nonjudicial foreclosure
Elements of fraud
Maison v. Puntenney 212 Cal. 134
Hernandez v. Downey Savings and Loan Ass’n, 2009 WL 704381 (S.D.Cal. Mar
17, 2009)
Applies most current decisional law in regard to the likelihood of

success for a preliminary injunction. But is wrongly decided on the
issue of burden of proof for a prohibitory injunction is a
preponderance of the evidence not clear and convincing evidence which
is for a mandatory injunction.
See case authority
At p. 680
When the trustee’s deed contains recitals and the sale is voidable, a
trustor who challenges the validity fo the sale must prove that the
conclusive presumption is not applicable either because it does not
apply to the buyer since the buyer was the beneficiary, or because
there are grounds for equitable relief such as fraud, or because the
presumption does not apply to the third party buyer because the buyer
is not a bona fide purchaser.8 The trustor must also prove that he or
she has suffered some injury or has been prejudiced by the
irregularity in the proceedings.9
Comment: The statutory presumption only applies to the propriety of

the required notices, but it does not apply to other requirements of
the foreclosure process. Also, it only operates in favor of a bona
fide purchaser and is not applicable when the property is purchased by
the beneficiary at the foreclosure sale.
See case authority
At p. 683
On the other hand, where the sale is void the trustor can avoid the
sale even where title is held by a bona fide purchaser. 20
20 Little v. Cfs Service Corp. 188 Cal.App.3d 1354, 1358, 1362, 233
Cal.Rptr. 923 (2d Dist. 1987) (whee sale is void it has no legal
effect or binding force and is incapable of being enforced); In re
Worcester, 811 F.2d 1224, 1231-1232, 16 Collier Bankr. Cas. 2d (MB)
589, Bankr. L. Rep. (CCH) Paragraph 71637, 7 Fed R. Serv. 3d 733 (9th
Cir. 1987); Whitman v. Transtate Title Co., 165 Cal.App.3d 312, 322-
323, 211 Cal.Rptr. 582 (4th Dist. 1985)

ed., 2009 update) Debtor Strategies § 7.63 page 576 states,
The present effect of the trustee’s deed recitals (described in

Section 7.62) is modified by CC Section 2924, which provides a
statutory basis for the validity of certain recitals. This section
limits the scope of the recitals in two respects. First only the
recitals on giving notice (mailing, publication, delivery, and posting
are included in Section 2924, leaving out the other recitals (of
default, proper delay, demand to sell, and proper sale)”

ed., 2009 update) Debtor Strategies § 7.67 pages 580 states,
“The Restatement of Mortgages proposes that sales at ‘grossly

inadequate” prices be set aside and puts that standard generally at
less than 20 percent of fair market value.’ Restatement (Third) of
Property: Mortgages Section 8:3, Comment b (1997)”
Rights and Remedies on Default
Who to communicate to request information, to effect redemption, to

sale information.
California Civil Practice, Real Estate Secured Transactions Section

4:95, Nonjudicial foreclosure, page 4-137

4:102, Nonjudicial foreclosure, page 4-151 states,”
The particular irregularity must be shown to have injured or

prejudiced the plaintiff. [California Trust Co. v. Smead Invest. Co.
(1935) 6 Cal.App.2d 432, 44 P.2d 624]
Wells Fargo is a criminal actor. The court must consistent with its
binding duties under the Code of Judicial Conduct
The court must consistient with its dutues under the Code of Judicial
Conduct and consistent with its duties to protect the people of the
State of California and the people of the United States, the
Constitution to enforce the law that is in force and effect.
Void sale held in placentia, newspaper publication must be in the in a
newspaper in the county meeting circulation requirements, judicial
district
Injuries have been defined by case law as no right to engage in the

sale, injury to cure a default and to redemption under civil code
section 2924, lulling the party to be noticed into a false sense of
security
Injury of an illegal, oppressive, fraudulent sale. And could have

paid from proceeds of the sale. However stress the illegality of the
sale.
And again First Alliance was not authorized to record the Notice of
the Sale. And under the law of Section 2924 of the Civil Code of the
State of California. Dimock v. Emerald. It is well settled,
To carry out the crime of filing a false deed in order to cover the
fact that the deed that they had was void.
Whitman, In re Worcester, Dimock, and Winbigler v. Sherman (slight

irregularity), case involving fraud in the procurement, internal
citations in Lo v. Jensen.
Irregularity which otherwise caused injury, is a lower standard than

fraud, Injury redeem,
Element of tender is not necessary if deed is void. See Smith v.

Williams
CC 3439 fraudulent conveyance, badges of fraud, Fillip v. Bucurenciu

(2005) 129 Cal.App.4th 825
Use of and/or in notice of default invalidates notice of default.

Cameron v. Firstar 2003 WL 21494323
In Whitman v. Transtate Title Co. (1985) 165 Cal.App.3d 312, 322, 211
Cal.Rptr. 582, the court stated,
In “a trustee sale gross inadequacy of price coupled with even slight

unfairness or irregularity is sufficient basis for setting the sale
aside.”
Sargent v. Shumaker, 193 Cal. 122, 129, 223 P. 464 (Cal.,Jan 30, 1924)
**It is well settled in this state that mere inadequacy of price, however
gross, is not in itself a sufficient ground for setting aside a sale legally
made. There must in addition be proof of **some element of **fraud,
**unfairness or **oppression before the court will be justified in depriving
the purchaser of his legal advantage. **Where, however, the price obtained is
greatly disproportionate to the actual value, very slight evidence of
unfairness or irregularity will suffice to authorize the granting of the
relief. Rauer v. Hertweck, 175 Cal. 278, 165 Pac. 946; Winbigler v. Sherman,
175 Cal. 270, 165 Pac. 943; Back v. Losekamp, 179 Cal. 674, 179 Pac. 516;
Odell v. Cox, 151 Cal. 70, 90 Pac. 194;
And,
At p. 131,
“where the inadequacy of price is palpable and great, slight irregularities

in conjunction therewith will authorize a court to set aside the sale, we are
of the opinion that such irregularities, to have this effect, **must have
conduced to the inadequacy of the price, or in some other way have
contributed to the injury of the plaintiff.”
(optional)
At p. 132
“The rule is thus stated in Freeman on Executions, § 309:
‘If the inadequacy can be connected with or shown to result from any mistake,
accident. surprise, misconduct, fraud or irregularity, the sale will
generally be vacated, unless the complainant was himself in fault, or the
rights of innocent third parties have became dependent upon the
sale.’(Italics added.)”
Bank of Seoul & Trust Co. v. Marcione, 198 Cal.App.3d 113, 119 244
Cal.Rptr. 1 (Cal.App. 2 Dist.,Feb 01, 1988)
Positive outcome
As Justice Kaufman has written, “While mere inadequacy of price, standing

alone, will not justify setting aside a trustee’s sale, gross inadequacy of
price coupled with even slight unfairness or irregularity is a sufficient
basis for setting the sale aside.” (Whitman v. Transtate Title Co. (1985) 165
Cal.App.3d 312, 323, 211 Cal.Rptr. 582:
Darden v. Reese 88 Cal.App.2d 904, 909, 200 P.2d 81, definition of

unfairness and acts of oppression. See shepards cites to quoted
treatises.
“Acts of oppression and unfairness which will justify vacating an

execution sale need not amount to legal fraud. ‘Unfairness,’ as it
relates to conduct in connection with execution sales, embraces all
types of dishonesty, *910 deception and oppression which operate to
the prejudice of the judgment debtor or others interested in the
sale.”
Smith v. Kessler 43 Cal.App.3d 26, 117 Cal.Rptr.470

Bank of America Nat. Trust & Savings Ass’n v. Reidy, 15 Cal.2d 243, 248 101
P.2d 77 (Cal. Mar 27, 1940)
*248 [1][2] It is the general rule that courts have power to vacate a
foreclosure sale where there has been fraud in the procurement of the
foreclosure decree or where the sale has been improperly, unfairly or
unlawfully conducted, or is tainted by fraud, or where there has been such a
mistake that to allow it to stand would be inequitable to purchaser and
parties. **Sham bidding and the restriction of competition are condemned, and
inadequacy of price when coupled with other circumstances of fraud may also
constitute ground for setting aside the sale.
Lo v. Jensen, 88 Cal.App.4th 1093, 1097, 106 Cal.Rptr.2d 443, 01 Cal. Daily

Op. Serv. 3523, 2001 Daily Journal D.A.R. 4323 (Cal.App. 2 Dist.,May 03, 2001)
“It is the general rule that courts have power to vacate a foreclosure sale
where there has been fraud in the procurement of the foreclosure decree or
where the sale has been improperly, unfairly or unlawfully conducted, or is
tainted by fraud, or *1098 where there has been such a mistake that to allow
it to stand would be inequitable to purchaser and parties.” ( Bank of America
etc. Assn. v. Reidy, supra, 15 Cal.2d at p. 248, 101 P.2d 77.) A debtor may
apply to a court of equity to set aside a trust deed foreclosure on
allegations of unfairness or irregularity that, coupled with the inadequacy
of price obtained at the sale, mean that it is appropriate to invalidate the
sale. (Sierra-Bay Fed. Land Bank Assn. v. Superior Court (1991) 227
Cal.App.3d 318, 337; , 277 Cal.Rptr. 753 3 Witkin, Summary of Cal. Law (9th
ed.1987) Security Transactions in Real Property, § 149.) Here, there was both
unfairness and an inadequate price. The court had the power to vacate the
sale and properly made that order.
Harth v. Baum, 7 Cal.App.2d 114, 45 P.2d 284 (Cal.App. 2 Dist.,May 22,

1935)
where a sale is made for a price greatly disproportionate to the value of the
property, courts will set aside the sale on very slight evidence of
unfairness or irregularity, “such irregularities, to have this effect, must
have conduced to the inadequacy of the price, or in some other way have
contributed to the injury of the plaintiff.” Sargent v. Shumaker, 193 Cal.
122, 131, 223 P. 464, 468. Nothing of that kind is shown here.
Angell v. Superior Court, 73 Cal.App.4th 691, 700, 86 Cal.Rptr.2d 657, 99

Cal. Daily Op. Serv. 5736, 1999 Daily Journal D.A.R. 7307 (Cal.App. 4 Dist.
Jul 16, 1999)
“In order to challenge the sale successfully there must be evidence of a

that caused prejudice to the person attacking the sale. The mere inadequacy
of price, standing alone, does not justify setting aside the trustee’s sale,
but the sale can be set aside where there is a gross inadequacy of the price
paid at the sale, together with a slight irregularity, unfairness, or fraud.”
(4 Miller & Starr, Cal. Real Estate 2d (1989) Deeds of Trust and Mortgages, §
9:154, pp. 506-507, fns. omitted.)
Prudential Ins. Co. of America v. Sly, 7 Cal.2d 728, 62 P.2d 740 (Cal.,Nov
24, 1936)
[6] Although defendant urges that the sale was for an inadequate price, in
proportion to the alleged value of the property, it is settled that, without
proof of fraud or other fault, such inadequacy does not avoid the sale.
Stevens v. Plumas Eureka Annex Mining Co., supra.
Castello v. Central Eureka Min. Co., 85 Cal.App.2d 772, 193 P.2d 968
(Cal.App. 1 Dist. Jun 02, 1948)
Appellants recognize that even gross inadequacy of consideration in the

absence of some fraud, mistake or other inequitable conduct in the matter of
the sale, is not a ground of equitable intervention. Sargent v. Shumaker, 193
Cal. 122, 129, 223 P. 464; Engelbertson v. Loan & Building Ass’n, 6 Cal.2d
477, 479, 58 P.2d 647; Prudential Insurance Co. v. Sly, 7 Cal.2d 728, 731, 62
P.2d 740; 25 Cal.Jur. 90.
Injury in fraudulent procurement of the trustee sale.
Next, cite Jose v. Pavlicevich, and Harker v. Rickershauser for fraud

in the procurement of the foreclosure decree.
Fraud in the procedural aspects of CC 2924;
[p See 3 Witkin, Summary of Cal. Law (9th ed. 1987) Security Transactions in
Real Property, § § 139, 149; Greenwald & Asimov, Cal. Practice Guide: Real
Property Transactions (The Rutter Group 2004) ¶ 6:535 et seq. (CAPROP Ch. 6-
I); Cal. Jur. 3d, Deeds of Trust, § § 317, 318; Cal. Civil Practice
(Thomson/West 2003) Real Property Litigation, § 4:85 et seq.; 4 Miller &
Starr, Cal. Real Estate (3d ed. 2001) § § 210, 211.]
Failure to comply with mandatory statutes
To act in compliance with mandatory statutes
To act in compliance with statutory requirements

The statutory requirement of a 3-month period between the notice of

default and the notice of sale, followed by an additional 20-day
period between the notice of sale and the actual trustee sale…
The requirements of the Section 2924 and decisional law that is in

force and effect
Failure to comply with required statutory procedures under Section

2924 of the Civil Code of the State of California; and under the
authorization of decisional law that is in force and effect.
Failure to comply with required statutory restrictions and regulations
under Section 2924 of the Civil Code of the State of California; and
under the authorization of decisional law that is in force and effect.
When the foreclosure sale was not held in compliance with the
statutory procedural requirements (Residential Capital v. Cal-Western
Reconveyance Corp., 108 Cal.App.4th 807, 823 134 Cal.Rptr.2d 162)
p. 580
All the requirements of the state’s foreclosure law have been met…
Only a slight irregularity will invalidate a sale if the bid is
grossly inadequate. Whitman v. Transtate Title Co. (1985) 16
Cal.App.3d 312, 211 Cal.Rptr.582

However CC §2953 outlaws waivers of trustors’ rights on foreclosure

and may be read to invalidate the authorizing provisions in the deed
of trust if the trustor can show that the facts did not occr as
recited. See 4 Witkin, Summary of California Law, Security
Transactions in Real Property §164 (10th ed 2005).

Gross disparity between sale price and property value, combined with
evidence of even slight unfairness or irregularity in the sale
process. See Stevens v. Plumas Eureka Annex Mining Co. (1935) 2 Cal.2d
493, 41 P.2d 927; Sargent v. Shumaker (1924) 193 Cal. 122, 223 P. 464;
Estate of Yates v. West End Fin. Corp., supra; Lopez v. Bell (1962)
207 Cal.App.2d 394, 24 Cal.Rptr. 626; Foge v. Schmidt (1951) 101
Cal.App.2d 681, 226 P.2d 73 (Miscommunication related to an agreement
for postponement of the foreclosure sale is not the type of
irregularity that justifies setting the sale aside. See Nguyen v.
Calhoun (2003) 105 Cal.App.4th 428, 129 Cal.Rptr.2d 436.)
Purported sale conducted by a former trutee who was substituted out

v. Emerald Props. (2000) 81 Cal.App.4th 868, 97 Cal.Rptr.2d 255. But
see Jones v. First Am. Title Ins. Co. (2003) 107 Cal.App.4th 381, 131
Cal.Rptr.2d 859,

“§7.77 3. Drawbacks of Challenging Sale During Eviction
Waiting to defend against an unlawful detainer action generally

gives the trustor less leverage than can be acquired by initiating an
action to vacate the sale.
An unlawful detainer action can proceed at a much faster pace. See
generally California Landlord-Tenant Practice, chaps 10-11 (2d ed Cal
CEB 1997)
The purchaser’s title in an unlawful detainer action can be challenged

by the trustor’s claiming noncompliance with statutory foreclosure
requirements (see §7.26); other grounds are not permitted. Cheney v.
Trauzettel (1937) 9 Cal.2d 158, 69 P.2d 832; Abrahamer v. Parks (1956)
141 Cal.App.2d 82, 296 P.2d 341. See Vella v. Hudgins (1977) 20 C.3d
251, 142 Cal.Rptr. 414; Evans v. Superior Court (1977) 67 Cal.App.3d
162, 136 Cal.Rptr. 596 (tenant having express agreement to purchase
property from subsequent purchaser after foreclosure may litigate
title defensively in unlawful detainer action). See Landlord-Tenant
§§10.54, 10.73, 11.62-11.64”

ed., 2009 update) Debtor Strategies § 7.106 page 625 states,
-Has the movant shown by competent evidence that the debtor owes money
under the note or has otherwise failed to perform under the note or
deed of trust? See Fed R Evid 102, 104(a), 602, 801-802, 803(6);
American Express Travel Related Servs. Co. v. Vinhee (In re Vinhee)
(BAP 9th Cir 2005) 336 BR 437, 444

4:102, Trustee’s deed; purchaser’s title, page 4-150 states,
“(3) for discussion of unlawful detainer actions, see REAL PROPERTY

LITIGATION Unlawful Detainer Actions Ch18] In that action, the
purchaser need only prove acquisition of title at the sale. [Abrahmaer
v. Parks 1956, 2nd Dist) 41 Cal.App.2d 82, 296 P.2d 341]
The only defense is that the sale was not conducted in compliance with
the terms of the statute (Civ. Code §§2924 et seq. and of the security
instrument. [Cheney v. Trauzettel (1937) 9 Cal.2d 158, 69 P.2d 832;
MCA, Inc. v. Universal Diversified Enterprises Corp. (1972), 2nd Dist)
27 Cal.App.3d 170, 103 Cal.Rptr. 522]”
From California Pleading And Practice, Trust Deeds, Legal Background;

Section 555.63(b), page 555-139
[2]
Action to Set Aside Sale
[a] Equitable Action
A completed private sale may in proper circumstances be attacked by an

action to set aside the sale, in which the court will review the
proceedings with care to see that the trustor’s rights were not
violated [Stirton v. Pastor (1960) 177 Cal.App.2d 232, 234, 2
Cal.Rptr. 135;
[b] Grounds
The trust deed was invalid
There was fraud, unfairness, or failure to comply with the trust deed
provisions or statutory requirements [see, e.g. Whitman v. Transtate
Title Co. (1985) 165 Cal.Ap.3d 312, 322-323, 211 Cal.Rptr.582(failure
to comply with mandatory postponement requirement); Standley v. Knapp
(1931) 113 Cal.App.91, 97-102, 298 P. 109 (failure to properly post
notice of sale)]
A gross disparity between the purchase price and the value of he

poperty was coupled with some (even slight) unfairness or irregularity
[see eg. Angell v. Superior Court (1999) 73 Cal.App.4th 691, 700, 86
Cal.Rptr.2d 657 (defect in notice of sale, couplecd with gross
inadequacy of price was sufficient to set aside sale); Whitman v.
Transtate Title Co. (1985) 165 Cal.App.3d 312, 322-323, 211 Cal.Rptr.
582 (failure to postpone sale on request of trustor’s successor in
interest); See also Sargent v. Shumaker (1924) 193 Cal. 122, 1228-1229
PRACTICE TIP: Irregularity in Sale Must Be Significant to Justify Set

Aside Action. It is this practitioner’s experience that the type of
accompanying irregularity to justify a “set aside” action must be
rather significant in nature. For example, lack of proper notice in
tandem with a low sales price of the property will justify relief.
However slight deviations in technical requirements for the format of
the notice of default or notice of sale apparently do not constitute
the type of gross irregularity that will justify the disruption of a
trustee’s sale [see e.g. Countrywide Home Loans Inc. v. Clance (1977)
54 Cal.App.4th 828, 830, 62 Cal.Rptr.2d 899]. By William M. Hensley
On setting aside a nonjudicial foreclosure courts have applied

opinions from both execution sales and trustee sales
On the grounds for setting aside a nonjudicial foreclosure sale courts

have applied opinions from both execution sales and trustee sales in
their holdings
In reaching the opinions on setting aside a nonjudicial foreclosure

sale courts have applied opinions from both execution sales and
trustee sales
VI., Formulatikng a More Complex Rule, At p. 51
A conjuntive rule is a rule that sets out a test with elements all of
which must be met.
From both the setting aside of execution sales and trustee sales.
On looking to the equitable doctrine of setting aside a nonjudicial

foreclosure, courts have applied opinions from both execution sales
and trustee sales. Although the rule of executions is different CCP
Section ABC, the appellate courts have found that the function,
purpose and policy of the law are sufficiently similar to apply
opinions from execution sales.
Statutes are different the appellate courts have found that the
element of the equitable doctrine of setting aside the sale
sufficiently similar to apply the opinions from the execution sales.
To be relied on as authority in their holdings.
To rely on their reasoning in their current holdings
Section 8.4 page 161 states,
“In the explanation of the law, you set up a framework by setting

forth the rules that guided courts in the past and then illustrate
those rules with the facts, holding and rationale of the case law.”
An example of this is the Supreme Court of the State of California in

Sargent v. Shumaker, reliance upon Odell v. Cox.
To establish grounds
Cases 1 and 2 illustrate the parameters of the equitable doctrine
Ch 11, Statutory analysis, page 180,
The statute is permits,
“Legislators cannot foresee all situations in which a statute may

apply, so many times words and phrases are drafted without specificity
that the statute will apply to a broader range of circumstances.”
From the plain meaning of the words in the Legislative Intent in

Section 2924, From the plain meaning of the words in what the
Legislature intended
On looking to the substantive issues of setting aside a nonjudicial

foreclosure courts have applied opinions from both execution sales and
trustee sales.
On the issue of setting aside a nonjudicial foreclosure courts have

applied opinions from both execution sales and trustee sales.
On the issue of setting aside a nonjudicial foreclosure, the grounds

have developed applying opinions from both execution sales and trustee
sales.
Have held that opinions from both execution sales and trustee sales
apply.
Legal principle
In rendering opinions on setting aside a nonjudicial foreclosure,
courts have applied opinions from both execution sales and trustee
sales.
Courts have rendered opinions applying those from both execution and
trustee sales
Applying opinions from both execution sales and trustee sales
Have applied opinions from both execution sales and trustee sales
Courts have held that opinions from execution sales also apply
and trustee sales apply.
In light of the purpose or policy behind the rule.
Have applied prior opinions from both execution sales and trustee
sales.
While rules of law under execution sales and nonjudicial foreclosure

sales are different
While these laws are not exactly the same

While these rules of law are differ,
While these laws are different. There is also a similarity in the
function served by both rules of law, both are about the equitable
grounds for setting aside a foreclosure sale. And courts have held
that there is sufficient similarity in the functions or purposes and
policy served by the statutes so that they can be a precedent
So that they can be relied upon, so that they can be held as

precedent, and that when the legislature passed it applied these
principles to CC 2924, California Legislature passed it had the
function, purposes and policy in mind
Courts have held as precedents opinions from execution sales are

precedents for
Courts have held opinions from execution sales are precedents for
nonjudicial foreclosure.
Does the constitutional proscription against the impairment of the

obligation of contracts apply?
Have applied prior opinions interpreting the doctrine under both

execution sales and trustee sales.
Establish grounds courts have applied opinions from both execution

sales and trustee sales
On the common law doctrine, On the equitable doctrine of setting aside
a nonjudicial foreclosure, in interpreting the grounds courts have
applied opinions from both execution sales and trustee sales.
Appellate courts of the state of California, have applied case law

from execution sales and trustee sales as precedents for nonjudicial
foreclosure
Have relied on opinions from execution sales and trustee sales as

supporting authority for nonjudicial foreclosure.
Apply
Winbigler v. Sherman, 175 Cal. 270, 165 P. 943 (Cal.,Jun 04, 1917)
Supreme Court holding of and according to the terms of the deed of

trust
‘Counsel for respondent have not referred to any decision holding that under
a trust deed in the form here presented the publications of the notice of
sale must be continued down to the very time of the sale; therefore, we may
be justified in assuming that there is no such decision. In addition to that,
however, we have examined some of the principal text-books and digests, and
we fail to find any declaration of law in support of respondent’s contention.
**The rule, of course, is that in executing a power of sale the trustee must
act in good faith and strictly follow the requirements prescribed by the
trust deed with respect to the manner of sale.
Edwards, Linda, Legal Writing Process Analysis, and Organization, Aspen

Publishers, III. Two Rules: One Substantive and One Procedural page 74,
“Use whichever rule tells you which facts have legal significance. If the
substantive rule defines what facts are relevant and the procedural rule
tells the judge the only standard for analyzing those facts, then the
procedural rule really functions only as a gloss on the substantive rule.
In such case, use the substantive rule as your overall structure, simply
phrasing the issue with reference to the standard imposed by the procedural
rule.
“statutory interpretation”, “statutory construction” “legislative intent”
IV General Principles of Rule Explanation, page 89,
“When you are dealing with a rule based primarily on a case, your most
important tools for ‘proving’ the rule are (1) describing what the court said
about the rule, (2) describing how the court applied the rule, (3) pointing
out relevant information about how the court did not apply the rule, (4)
pointing out any relevant facts the courts emphasized, and (5) describing the
policy considerations that support the rule. The value in each of these
tools is not simply reporting them, but rather in using them to make a point
about the rule.”
IX. Organizing the Discussion of Multiple Auithorities, II. Ordering
Authorities For An Analysis Primarily Requiring Statutory Construction, page
128,
“You have already learned that statutes are construed by case opinions. If
case authority has already told you what the statute means, then you can rely
on the case law to the extent of its precedential value. But what should you
do if no binding case law has construed this statute, at least not with
regard to your particular question? You will have to predict how a court
would construe it.
Where no binding case authority has construed a statute, judges decide what
the statute means primarily by considering (in rough order of importance):
(1) the text itself, (2) the intent of the legislature, (3) the policies
implicated by the possible interpretations, (4) the interpretation of any
governmental agencies charged with enforcement of the statute, and (5) the
opinions of other courts and respected commentators.
In constuing section 2924 of the Code of Civil Procedure of the State of

California, the court held, that there can be only one trustee at any one
time.
Neumann, Richard, Legal Reasoning and Legal Writing; Structure, Strategy, and
Style (3d ed., Aspen L. & Bus. 1998)
In re Applin 108 B.R. 253, 257, 29 Fed. R. Evid. Serv. 779

(Bankr.E.D.Cal. Nov 21, 1989)
Evidentiary burdens in relief from stay.

Evidence on routine motions for relief from stay in bankruptcy court is
generally taken on affidavits as permitted by federal civil rule unless it
appears that live testimony would be of assistance to trier of fact.
Fed.Rules Civ.Proc.Rule 43(e), 28 U.S.C.A.; U.S.Bankr.Ct.Rule E.D.Cal., Rule
3; Rules Bankr.Proc.Rule 9017, 11 U.S.C.A.
CONCLUSIONS OF LAW
[1] The party moving for relief from the automatic stay on a theory of lack
of equity in the property must make out a prima facie case by way of
competent evidence as to the essential elements required for relief,
including the value of the property and the claims against it. The
Bankruptcy Code spells out the moving party’s burden: "the party requesting
such relief has the burden of proof on the issue of the debtor’s equity in
property." 11 U.S.C. § 362(g)(1).
[2] The requisite proof is established by way of presenting competent

evidence to establish a record. Such evidence must be admissible under the
Federal Rules of Evidence because those rules expressly apply in bankruptcy
courts. Fed.R.Evid. 101 and 1101(a).
[3] Evidence on routine motions for relief from stay in this court is
generally taken on affidavits as permitted by Federal Rule of Civil Procedure
43(e) unless it appears that live testimony would be of assistance to the
trier of fact. [FN4] Local Rule 3. This enables the court to winnow the
genuine disputes of fact and law from the 2,500 "contested matters" under
Bankruptcy Rule 9014 that annually appear on its calendar. [FN5]
FN4. Federal Rule of Civil Procedure 43 is made applicable in all bankruptcy

matters by Bankruptcy Rule 9017.
FN5. "Contested matters" are essentially items that call for the court to
determine questions of law and fact that are of a sufficiently
straightforward nature as to enable their resolution on a "short cause" basis
without offending requirements of due process.
The fact of accepting affidavits does not relax the fundamental mandates of
due process and does not excuse compliance with the requirement that evidence
be admissible pursuant to the Federal Rules of Evidence. Thus, the hearsay
rule, and its exceptions, remain applicable. Fed.R.Evid. 802-804. Hearsay
within hearsay is inadmissible unless each layer conforms with a hearsay
exception. Fed.R.Evid. 805.
[4] In addition to affidavits, this court often takes judicial notice of the
schedules filed in the case when the value of property is in issue. The
debtors’ schedules are a key document in a bankruptcy case and are executed
by debtors under penalty of perjury. Representations by a debtor in the
schedules as to such matters as the value of property, when offered against a
debtor, are eligible for treatment as admissions by a party-opponent.
Fed.R.Evid. 801(d)(2).
[5] Judicial notice of basic filings in the bankruptcy case is permissible

to fill in gaps in the evidentiary record of a specific adversary proceeding
or contested matter. In re E.R. Fegert, Inc., 887 F.2d 955 (9th Cir.1989).
See
11_usc_362_necessity_for_reorganization_or_rehabilitation_real_propert
y_digest.
In regard to relief from stay personal residence is necessary for

effective reorganization of property.
Pari materia:
Latin, Of the same matter; on the same subject.] The phrase used in
connection with two laws relating to the same subject matter that must
be analyzed with each other.
For example, the federal gift tax provisions supplement the federal
estate tax provisions. The two are in pari materia and must be read
together because the gift tax provisions were enacted to prevent the
avoidance of estate taxes
Utilize more thorough argument that trustee was not authorized to act/
Gross inadequacy of price combined with slight irregularity renders
the sale void. In the request for stay.
Amended Request For Stay August 20, 2009 contains refutation of WELLS
FARGO statement that they had substituted the trustee.
In Supplemental Brief to Motion For Relief From The Automatice Stay Miguel Duarte
stated, “at page 5 line 19, “Although Movant has requested the full transcripts
from the two hearings that encompassed Movant’s Motion For Summary Judgment that
transcripts have not yet been produced by the Superior Court. 2 Movant does however
have true and correct copies of their moving papers and Debtor’s opposition 3
(Request for Judicial Notice filed concurrently herewith, Ex. 10) Moreover, as an
officer of the Court, Movant’s counsel can testify to the fact that claims against
Movant’s title to the property were heard.
2
Transcripts of the both hearing’s that encompassed Movant’s Motion for Summary
Judgment have been ordered and should be available prior to the continued hearing.
3
Due to the voluminous nature of Debtor’s opposition to Movant’s Motion for
Summary Judgment, Movant will not be filing a copy of the Debtor’s opposition.”
And then in, Declaration Of Miguel Duarte In Support of Movant’s Supplemental Brief
To Motion For Relief From Stay, Mr. Miguel Duarte states under the penalty of
perjury at page 12, line 13, “I was also the attorney of record for the Movant in
the prior unlawful detainer matter where David and Soon Chey were defendants. In
that case Movant filed a Motion for Summary Judgment that was heard on March 13,
2009. After a rather lengthy hearing that included defendant’s claims of fraud the
Court stated Movant had purchased the property at a validly conducted trustee’s
sale.”
No evidence to establish forum shopping. Authorization under FRCP 8 to assert

alternative causes of action
Evidentiary Objections To Debtors Reply To Movant’s Supplemental Brief To Motion

For Relief From Automatic Stay
U.S. v. Dibble, 429 F.2d 598 (9th Cir.(Cal.) Jul 06, 1970)
Public records authenticated by the custodian of records is admissible

under the public records exception.
Forensic document examiner’s report admissible.
U.S. v. Mooney, 315 F.3d 54, 60 Fed. R. Evid. Serv. 60 (1st Cir.(Me.),Dec 30, 2002)
III. EXPERT TESTIMONY
[12] The defendant also argues that the district court misapplied Federal Rule of Evidence 702 by allowing the
government’s proffered handwriting expert to testify that the defendant was the author of several letters that
acknowledged his involvement in the burglary. The defendant does not contend that the expert’s testimony should
have been struck in its *62 entirety. Instead, he makes the more narrow argument that, although the reliability of the
expert’s methodology suffices to support testimony regarding the similarity and differences between the handwriting
on the letters and that of the defendant, the expert’s reliability cannot sustain the admission of his ultimate opinion
as to whether the defendant authored the letters. The district court disagreed, and we fail to see how the district court
abused its discretion in reaching its conclusion.
Under Rule 702, a qualified expert witness may testify “in the form of an opinion, or otherwise, if **(1) the
testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods,
and (3) the witness has applied the principles and methods reliably to the facts of the case.” Fed.R.Evid. 702. The
Supreme Court has held that this rule imposes a gate-keeping function on the trial judge to ensure that an expert’s
testimony “both rests on a reliable foundation and is relevant to the task at hand.” Daubert v. Merrell Dow Pharm.,
Inc., 509 U.S. 579, 597, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993) ; see also Kumho Tire Co. v. Carmichael, 526 U.S.
137, 147-49, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999) (holding that Daubert applies not only to scientific testimony
but also to technical and other specialized expert testimony).
In Daubert, the Court identified four factors that may assist a trial court in determining the admissibility of an
expert’s testimony: **(1) whether the theory or technique can be and has been tested; **(2) whether the technique
has been subject to peer review and publication; **(3) the technique’s known or potential rate of error; and **(4) the
level of the theory or technique’s acceptance within the relevant discipline. 509 U.S. at 593-94, 113 S.Ct. 2786.
These factors, however, are not definitive or exhaustive, and the trial judge enjoys broad latitude to use other factors
to evaluate reliability. See Kumho Tire, 526 U.S. at 153, 119 S.Ct. 1167. Further, a trial judge’s decision to admit or
exclude expert testimony will be reversed only for abuse of discretion. See United States v. Diaz, 300 F.3d 66, 74
(1st Cir.2002) (citing Gen. Elec. v. Joiner, 522 U.S. 136, 138-39, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997)).
A review of the district court’s voir dire hearing on the admissibility of the handwriting expert’s proposed testimony
reveals that the judge did not abuse his discretion. **The expert testified that he and other forensic document
examiners employ the same methodology to analyze and compare a known individual’s handwriting samples to the
handwriting on the document at issue. **This methodology has been subject to general peer review through
published journals in the field. In addition, its accuracy has been tested, with one study concluding that certified
document examiners had a potential rate of error of 6.5%. The proffered expert indicated that he was certified by the
American Board of Forensic Document Examiners to apply this methodology. He also testified that he submitted to
proficiency tests twice a year, and that all of his work is reviewed and confirmed by at least one other document
examiner.
At the close of the hearing, the district judge concluded that the handwriting expert’s proposed testimony should be
admitted in its entirety because it was reliable and based upon valid technical and specialized knowledge. Finding
the Daubert factors relevant to his evaluation of the reliability of the expert’s testimony, the judge noted that all the
factors were met in this case. The judge also found persuasive the historical acceptance of handwriting testimony,
noting that the Federal Rules of Evidence specifically allow expert witnesses to authenticate *63 questioned
documents by comparing the handwriting on them to previously authenticated specimens. See Fed.R.Evid. 901(b)
(3).
[13] The defendant argues that the district court erred in admitting the expert’s opinion that the defendant was the
author of the incriminating letters. He contends that the field of handwriting analysis lacks sufficient standards and
testing to verify that analysts can accurately and definitively identify the author of a questioned document.
Specifically, he asserts that the discipline lacks a set standard regarding the number of handwriting similarities
required to make a “match,” and that the studies regarding its accuracy have been subject to criticism. The
defendant, however, misunderstands Daubert to demand unassailable expert testimony. As we previously have
explained,
Daubert does not require that the party who proffers expert testimony carry the burden of proving to the judge that
the expert’s assessment of the situation is correct....It demands only that the proponent of the evidence show that
the expert’s conclusion has been arrived at in a scientifically sound and methodologically reliable fashion.
Ruiz-Troche v. Pepsi Cola of P.R. Bottling Co., 161 F.3d 77, 85 (1st Cir.1998).
We disagree with the defendant that another trial court’s decision regarding a different expert, United States v.
Hines, 55 F.Supp.2d 62 (D.Mass.1999), compels us to find that the district judge in this matter abused his discretion.
The Hines opinion, of course, has no binding effect. We are not faced here with the question of whether the district
court abused its discretion by excluding, as in Hines, opinion testimony by a handwriting expert. Nor do we know if
the “particular facts and circumstances of the particular case,” Kumho Tire, 526 U.S. at 158, 119 S.Ct. 1167,
distinguish Hines. V comparison testimony and the expert’s ultimate opinion on authorship were inevitably linked
because they were based on the same methodology. We find no abuse of discretion in that ruling.
[14] We also note that Rule 702 specifically allows qualified experts to offer their opinions, a testimonial latitude
generally unavailable to other witnesses. See Kumho Tire, 526 U.S. at 148, 119 S.Ct. 1167 (citing Daubert, 509 U.S.
at 592, 113 S.Ct. 2786). The rule affords experts this leeway on the “assumption that the expert’s opinion will have a
reliable basis in the knowledge and experience of his discipline.” Id. Accordingly, once a trial judge determines the
reliability of the proffered expert’s methodology and the validity of his reasoning, the expert should be permitted to
testify as to the inferences and conclusions he draws from it, and any flaws in his opinion may be exposed through
cross-examination or competing expert testimony. See Ruiz-Troche, 161 F.3d at 85 (citing Daubert, 509 U.S. at 590,
596, 113 S.Ct. 2786). The district judge did not abuse his discretion in admitting the expert’s ultimate opinion on
authorship.
On the need for a Daubert hearing as to admissibility of forensic document examiner
In Daubert v. Merrell Dow Pharmaceuiticals, Inc. (1993) 509 U.S. 579,

589, 113 S.Ct. 2786, the Supreme Court stated, the trial judge must
ensure that any and all scientific testimony or evidence admitted is
not only relevant, but reliable.
**the trial judge must ensure that any and all scientific testimony or
evidence admitted is not only relevant, but reliable.
FN7. THE CHIEF JUSTICE “do[es] not doubt that Rule 702 confides to the judge
some gatekeeping responsibility,”
Kumho Tire Co., Ltd. v. Carmichael (1999) 526 U.S. 137, 152, 119 S.Ct.
1167
“Daubert’s gatekeeping requirement. The objective of that requirement is to ensure

the reliability and relevancy of expert testimony. It is to make certain that an
expert, whether basing testimony upon professional studies or personal experience,
employs in the courtroom the same level of intellectual rigor that characterizes
the practice of an expert in the relevant field. Nor do we deny that, as stated in
Daubert, the particular questions that it mentioned will often be appropriate for
use in determining the reliability of challenged expert testimony. Rather, we
conclude that the trial judge must have considerable leeway in deciding in a
particular case how to go about determining whether particular expert testimony is
reliable. That is to say, a trial court should consider the specific factors
identified in Daubert where they are reasonable measures of the reliability of
expert testimony.
[5][6] The trial court must have the same kind of latitude in deciding how to
test an expert’s reliability, and to decide whether or when special briefing or
other proceedings are needed to investigate reliability, as it enjoys when it
decides whether or not that expert’s relevant testimony is reliable. Our opinion in
Joiner makes clear that a court of appeals is to apply an abuse-of-discretion
standard when it “review[s] a trial court’s decision to admit or exclude expert
testimony.” 522 U.S., at 138-139, 118 S.Ct. 512. That standard applies as much to
the trial court’s decisions about how to determine reliability as to its ultimate
conclusion. Otherwise, the trial judge would lack the discretionary authority
needed both to avoid unnecessary “reliability” proceedings in ordinary cases where
the reliability of an expert’s methods is properly taken for granted, and to
require appropriate proceedings in the less usual or more complex cases where cause
for questioning the expert’s reliability arises. Indeed, the Rules seek to avoid
“unjustifiable expense and delay” as part of their search for*153 153“truth” and
the “jus[t] determin[ation]” of proceedings. Fed. Rule Evid. 102.”
Millenkamp v. Davisco Foods Intern., Inc., 562 F.3d 971, 68 UCC Rep.Serv.2d
863, 09 Cal. Daily Op. Serv. 4480, 2009 Daily Journal D.A.R. 5327 (9th Cir.
(Idaho),Apr 14, 2009)
(1)
Pursuant to the standards set forth by *979Daubert v. Merrell Dow
Pharmaceuticals, Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993) ,
and Federal Rule of Evidence 702, the district court allowed Dr. Kertz’s
expert opinion that the milk permeate likely caused the calves’ illness. The
district court has discretion whether to hold a Daubert hearing in
determining whether to admit expert testimony. See In re Hanford Nuclear
Reservation Lit., 292 F.3d 1124, 1138 (9th Cir.2002). We review the district
court’s decision to admit Dr. Kertz’s testimony for an abuse of discretion.
Clausen v. M/V New Carissa, 339 F.3d 1049, 1055 (9th Cir.2003) (citing
Metabolife Int’l, Inc. v. Wornick, 264 F.3d 832, 839 (9th Cir.2001)). We may
only reverse the district court, if our review leaves us with "a definite and
firm conviction that the district court committed a clear error of judgment
in admitting that testimony." Clausen, 339 F.3d at 1055 (citing SEC v.
Coldicutt, 258 F.3d 939, 941 (9th Cir.2001) ). We review the district court’s
decisions to admit Exhibits 25 and 18 for abuse of discretion. See Tritchler,
358 F.3d at 1155.
(a)
[5][6] Davisco argues that the district court erred by failing to hold a
Daubert hearing before admitting Dr. Kertz’s testimony and that the testimony
lacked foundation. We disagree. "District courts are not required to hold a
Daubert hearing before ruling on the admissibility of scientific evidence."
In re Hanford Nuclear Reservation Lit., 292 F.3d at 1138 (citing United
States v. Alatorre, 222 F.3d 1098, 1102 (9th Cir.2000)). Davisco deposed Dr.
Kertz. The parties provided the district court with briefing on his
scientific expertise and proposed testimony prior to trial. The district
court could properly determine that this information comprised an adequate
record from which the court could make its ruling. See Oddi v. Ford Motor
Co., 234 F.3d 136, 154 (3d Cir.2000) (deciding no abuse of discretion for
failure to hold an evidentiary hearing when district court had depositions
and affidavits of plaintiffs’ experts). In addition, Dr. Kertz testified as
to his credentials, prior to the district court’s ruling on the admissibility
of his opinion. Accordingly, we conclude that the district court conducted an
adequate inquiry before admitting Dr. Kertz’s testimony (despite not
conducting a separate Daubert hearing).
[7] Moreover, Dr. Kertz’s scientific testimony was admissible, because it

was supported by a sufficient foundation. He arrived at his conclusions using
scientific methods and procedures. Those conclusions were not mere subjective
beliefs or unsupported speculation. See Claar v. Burlington N. R.R. Co., 29
F.3d 499, 502 (9th Cir.1994).
”[H]andwriting comparison testimony has long been a feature of litigation in
federal courts. For instance in 1902 opinion in Neall v. United States, 118 F.
699 (9th Cir. 1902) the Ninth Circuit upheld the use of a handwriting expert in a
case in which the government attempted to show that a military officer had forged a
signature on a certificate of deposit” (United States v. Prime 220 F.Supp.2d 1203
(W.D. Wash., Sep 20 2002))
U.S. v. Prime, 431 F.3d 1147, 68 Fed. R. Evid. Serv. 1288, 2005 Daily
Journal D.A.R. 14,358 (9th Cir.(Wash.),Dec 14, 2005)
Forsensic document examiner admission of expert testimony was

warranted.
Background: After defendant’s motion in limine for exclusion of proposed

expert testimony regarding handwriting on counterfeit money orders and other
documents was denied, 220 F.Supp.2d 1203, defendant was convicted in the
United States District Court for the Western District of Washington, Robert
S. Lasnik, J., for conspiracy to commit wire fraud, conspiracy to manufacture
counterfeit securities, and possessing, manufacturing, and uttering
counterfeit securities. The Court of Appeals affirmed. On grant of
certiorari, the Supreme Court, 543 U.S. 1101, 125 S.Ct. 1005, 160 L.Ed.2d
1007, vacated and remanded for further consideration in light of Supreme
Court’s United States v. Booker decision.
Holdings: In an amended opinion, the Court of Appeals, Trott, Circuit Judge,

held that:
(1) admission of expert testimony of forensic document examiner was warranted;
(2) denial of motion for substitution of counsel was warranted;
(3) admission of extrinsic evidence did not affect verdict; and
(4) defendant was entitled to remand for determination of whether district
court would have imposed materially different sentence if guidelines had been
known to be advisory.
Conviction affirmed; sentence remanded.
Opinion, 363 F.3d 1028, superseded.
[2] Criminal Law 110 472
110 Criminal Law

110XVII Evidence
110XVII(R) Opinion Evidence
110k468 Subjects of Expert Testimony
110k472 k. Matters Involving Scientific or Other
Special Knowledge in General. Most Cited Cases
Although not an exclusive list, the factors a trial court considers in
determining reliability of expert testimony, include: **(1) whether a method
can or has been tested, **(2) the known or potential rate of error, **(3)
whether the methods have been subjected to peer review, **(4) whether there
are standards controlling the technique’s operation, and **(5) the general
acceptance of the method within the relevant community. Fed.Rules Evid.Rule
702, 28 U.S.C.A.
[6] Criminal Law 110 1153.12(3)

110 Criminal Law
110XXIV Review
110XXIV(N) Discretion of Lower Court
110k1153 Reception and Admissibility of Evidence
110k1153.12 Opinion Evidence
110k1153.12(3) k. Admissibility. Most Cited Cases
The Court of Appeals reviews the district court’s decision to admit or deny
expert testimony for abuse of discretion. Fed.Rules Evid.Rule 702, 28 U.S.C.A.
[7] Criminal Law 110 1134.49(5)
110 Criminal Law

110XXIV Review
110XXIV(L) Scope of Review in General
110XXIV(L)4 Scope of Inquiry
110k1134.49 Evidence
110k1134.49(5) k. Opinion Testimony. Most Cited
Cases
The Court of Appeals reviews the district court’s evaluation of the
reliability of expert testimony on a case-by-case basis.
[8] Criminal Law 110 491(1)
110 Criminal Law

110XVII Evidence
110XVII(R) Opinion Evidence
110k491 Comparison of Handwriting
Admission of expert testimony of forensic document examiner, that handwriting
on counterfeit money orders and other documents was that of defendant, was
warranted, in prosecution for conspiracy to commit wire fraud, conspiracy to
manufacture counterfeit securities, and possessing, manufacturing, and
uttering counterfeit securities; theory underlying handwriting analysis had
been tested, with high degree of accuracy shown in identification of writers,
there was extensive peer review in area, and handwriting similarity evidence
had been generally accepted in courts for decades. Fed.Rules Evid.Rule 702,
28 U.S.C.A.
ADMISSIBILITY OF EXPERT TESTIMONY
Prime moved in limine to exclude Storer’s expert testimony. The court held a
Daubert hearing where both sides were allowed to offer voluminous materials and
expert testimony regarding the reliability of the proposed testimony. Daubert v.
Merrell Dow Pharms., Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993).
After careful consideration, the court denied the motion, see United States v.
Prime, 220 F.Supp.2d 1203 (W.D.Wash.2002), and Storer testified that, in her
opinion, Prime’s handwriting appeared on counterfeit money orders and other
incriminating documents. On appeal, Prime contends that the admission of expert
testimony regarding handwriting analysis was unreliable under Daubert, and thus the
court abused its discretion by allowing Storer to testify.
Handwriting Analysis
[2] In Daubert, the Supreme Court set forth the guiding principle that “under
[Federal Rule of Evidence 702] FN2 the trial *1152 judge must ensure that any and
all scientific testimony or evidence admitted is not only relevant, but reliable.”
509 U.S. at 589, 113 S.Ct. 2786. In order to assist the trial courts with this
task, the Court suggested a flexible, factor-based approach to analyzing the
reliability of expert testimony. Id. at 593-95, 113 S.Ct. 2786. Although not an
exclusive list, these factors include: **1) whether a method can or has been
tested; **2) the known or potential rate of error; 3) whether the methods have been
subjected to peer review; **4) whether there are standards controlling the
technique’s operation; and **5) the general acceptance of the method within the
relevant community. Id. at 593-94, 113 S.Ct. 2786.
FN2. “If scientific, technical, or other specialized knowledge will assist the
trier of fact to understand the evidence or to determine a fact in issue, a witness
qualified as an expert by knowledge, skill, experience, training, or education, may
testify thereto in the form of an opinion or otherwise ...” FED. R. EVID. 702.
[3][4][5][6] Kumho Tire Co. v. Carmichael resolved any post-Daubert uncertainty

that the trial judge’s responsibility to keep unreliable expert testimony from the
jury applies not only to “scientific” testimony, but to all expert testimony. 526
U.S. 137, 148, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999). As a result, this “basic
gatekeeping obligation” applies with equal force in cases, such as this one, where
“non-scientific” experts wish to relate specialized observations derived from
knowledge and experience that is foreign to most jurors. Id. Kumho Tire also makes
it clear that “the trial judge must have considerable leeway in deciding in a
particular case how to go about determining whether particular expert testimony is
reliable,” as well as the ultimate determination of whether the proposed expert
testimony is reliable. Id. at 152, 119 S.Ct. 1167. Accordingly, we review the
district court’s decision to admit or deny expert testimony for abuse of
discretion. Id.
[7] In accordance with Kumho Tire, the broad discretion and flexibility given to
trial judges to determine how and to what degree these factors should be used to
evaluate the reliability of expert testimony dictate a case-by-case review rather
than a general pronouncement that in this Circuit handwriting analysis is reliable.
As the Supreme Court concluded,
we can neither rule out, nor rule in, for all cases and for all time the
applicability of the factors mentioned in Daubert, nor can we now do so for subsets
of cases categorized by category of expert or by kind of evidence. Too much depends
upon the particular circumstances of the particular case at issue.
Id. at 150, 119 S.Ct. 1167; see also United States v. Hankey, 203 F.3d 1160, 1168
(9th Cir.2000) (quoting Skidmore v. Precision Printing and Packaging, Inc., 188
F.3d 606, 618 (5th Cir.1999) (“Whether Daubert’s suggested indicia of reliability
apply to any given testimony depends on the nature of the issue at hand, the
witness’s particular expertise, and the subject of the testimony. It is a fact-
specific inquiry.”) (internal citations omitted)).
In this case, Storer was given 112 pages of writing known to be Prime’s, 114 pages
of Hiestand’s, and 14 pages of Hardy’s. She was then asked whether the handwriting
on 76 documents associated with the alleged conspiracy, such as envelopes, postal
forms, money orders, Post-it notes, express mail labels and postal box
applications, belonged to any of the co-conspirators.FN3 Storer “identified” Prime’s
handwriting on 45 of the documents.
FN3. Prime has not raised as an issue, and we have no reason to believe, that the
questioned writing samples were of insufficient length to support a valid analysis.
**Following the Daubert hearing, the district court issued a brief order
concluding that the proposed forensic document examination*1153 testimony was
reliable. After the conclusion of the trial, the district court issued a more
detailed Order Regarding Defendant’s Motion in Limine, which thoroughly and
specifically analyzed the reliability of Storer’s testimony with respect to each of
the Daubert factors. See Prime, 220 F.Supp.2d 1203.
1. Whether the theory or technique can be or has been tested
**[8] Handwriting analysis is performed by comparing a known sample of handwriting

to the document in question to determine if they were written by the same person.
The government and Storer provided the court with ample support for the proposition
that an individual’s handwriting is so rarely identical that expert handwriting
analysis can reliably gauge the likelihood that the same individual wrote two
samples. The most significant support came from Professor Sargur N. Srihari of the
Center of Excellence for Document Analysis and Recognition at the State University
of New York at Buffalo, who testified that the result of his published research was
that “handwriting is individualistic.” With respect to this case in particular, the
court noted that Storer’s training credentials in the Secret Service as well as her
certification by the American Board of Forensic Document Examiners were
“impeccable.”
The court also believed that Storer’s analysis in this case was reliable given the
“extensive” 112 pages containing Prime’s known handwriting.
2. Whether the technique has been subject to peer review and publication
The court cited to numerous journals where articles in this area subject
handwriting analysis to peer review by not only handwriting experts, but others in
the forensic science community. Additionally, the Kam study, see infra, which
evaluated the reliability of the technique employed by Storer of using known
writing samples to determine who drafted a document of unknown authorship, was both
published and subjected to peer review. The court also noted that the Secret
Service has instituted a system of internal peer review whereby each document
reviewed is subject to a second, independent examination.
3. The known or potential rate of error
In concluding that the type of handwriting analysis Storer was asked to perform had
an acceptable rate of error, the court relied on studies conducted by Professor
Moshe Kam of the Electrical and Computer Engineering Department at Drexel
University. Professor Kam’s studies demonstrated that expert handwriting analysts
tend to be quite accurate at the specific task Storer was asked to perform-
determining whether the author of a known writing sample is also the author of a
questioned writing sample. When the two samples were in fact written by the same
person, professional handwriting analysts correctly arrived at that conclusion 87%
of the time. On the other hand when the samples were written by different people,
handwriting analysts erroneously associated them no more than 6.5% of the time.
While Kam’s study demonstrates some degree of error, handwriting analysis need not
be flawless in order to be admissible. Rather, the Court had in mind a flexible
inquiry focused “solely on principles and methodology, not on the conclusions that
they generate.” Daubert, 509 U.S. at 595, 113 S.Ct. 2786. As long as the process
is generally reliable, any potential error can be brought to the attention of the
jury through cross-examination and the testimony of other experts.
4. The existence and maintenance of standards controlling the technique’s operation
The court recognized that although this area has not been completely standardized,
*1154 it is moving in the right direction. The Secret Service laboratory where
Storer works has maintained its accreditation with the American Society of Crime
Laboratory Directors since 1998, based on an external proficiency test.
Furthermore, the standard nine-point scale used to express the degree to which the
examiner believes the handwriting samples match was established under the auspices
of the American Society for Testing and Materials (“ASTM”). The court reasonably
concluded that any lack of standardization is not in and of itself a bar to
admissibility in court.
5. General acceptance
The court recognized the broad acceptance of handwriting analysis and specifically
its use by such law enforcement agencies as the CIA, FBI, and the United States
Postal Inspection Service.
Given the comprehensive inquiry into Storer’s proffered testimony, we cannot say
that the district court abused its discretion in admitting the expert handwriting
analysis testimony. The district court’s thorough and careful application of the
Daubert factors was consistent with all six circuits that have addressed the
admissibility of handwriting expert testimony, and determined that it can satisfy
the reliability threshold. See United States v. Crisp, 324 F.3d 261, 269-70 (4th
Cir.2003); United States v. Mooney, 315 F.3d 54, 63 (1st Cir.2002); United States
v. Jolivet, 224 F.3d 902, 906 (8th Cir.2000); United States v. Paul, 175 F.3d 906,
911 (11th Cir.1999); United States v. Jones, 107 F.3d 1147, 1161 (6th Cir.1997);
United States v. Velasquez, 64 F.3d 844, 850-52 (3d Cir.1995).”
From Rutter Group Federal Trials, Evidence, page 8F-73
[8:1646] Effect of Expert Testimony: Expert opinion testimony is not conclusive

even if uncontradicted. The weight to be given the testimony is deterined by the
jury. [Powers v. Bayliner Marine Corp. (6th Cir. 1996) 83 F.3d 789, 798]
From Weinstein’s Federal Evidence, Section 4-702, Federal Rules Approach To

Expert
[b] Need for Evidentiary Hearing
It is always within the trial court’s discretion to hold an

evidentiary hearing to determine the reliability of proffered expert
testimony.n51 However, the court’s gatekeeper role is necessarily
different during a bench trial. When the gatekeeper and the fact
finder are the same, the court may admit evidence subject to the
ability later to exclude it or disregard it, if the evidence turns out
not to meet the standard of reliability under Rule 702.n51.1
A separate reliability hearing is also unnecessary "in ordinary

proceedings where the reliability of an expert’s methods is properly
taken for granted."n52 In such cases, the opponent’s objections go to
the weight, rather than to the admissibility, of the testimony. When
the information before the court is sufficient to support a ruling on
the reliability of the proposed evidence, the court has discretion to
resolve the challenge without an evidentiary hearing.n53
[(n53)Footnote 52. Reliability proceedings unnecessary in some instances.

Kumho Tire Co. v. Carmichael, 526 U.S. 137, 152, 119 S. Ct. 1167, 143 L. Ed. 2d 238
(1999) ; see, e.g., United States v. Nichols, 169 F.3d 1255, 1262-1264 (10th Cir.
1999) **(evidentiary hearing not necessary when trial court properly concludes that
proposed testimony does not involve new scientific theories or methodologies and
opponent’s arguments related solely to alleged flaws in laboratory tests, which
involve credibility of witnesses and weight to be accorded to evidence by trier of
fact).]
(n54)Footnote 53. If trial court presented with sufficient

information by parties, evidentiary hearing not necessary.
1st Circuit See, e.g., Foster-Miller, Inc. v. Babcock &

Wilcox Canada, 210 F.3d 1, 14 (1st Cir. 2000) (trial court’s
review of materials submitted with motion to exclude expert
testimony was sufficient performance of its gatekeeping
function).
2d Circuit See, e.g., United States v. Williams, 506 F.3d

151, 160-161 (2d Cir. 2007) (trial court did not abuse its
discretion in denying murder defendant’s request for Daubert
hearing to challenge ballistic expert’s testimony, because
before testimony was presented to jury, government provided
"an exhaustive foundation" for witness’s expertise, citing
Weinstein’s).
6th Circuit See, e.g., In re Scrap Metal Antitrust Litig.,

527 F.3d 517, 532 (6th Cir. 2008) (trial court did not abuse
its discretion by failing to hold Daubert hearing, because
record on expert testimony was extensive, and Daubert issue
was fully briefed by parties).
7th Circuit See, e.g., United States v. Majors, 196 F.3d

1206, 1215 (11th Cir. 1999) (trial court’s failure to hold
hearing on admissibility of proffered expert testimony not
abuse of discretion in view of witness’s qualifications
through training and experience to analyze financial records
of type he reviewed in preparation for testimony).
8th Circuit See, e.g., Group Health Plan, Inc. v. Philip

Morris USA, 344 F.3d 753, 761 (8th Cir. 2003) (trial court’s
failure to hold evidentiary hearing was not abuse of
discretion, because court allowed parties to exceed normal
page limits in their briefs and permitted plaintiffs to
present written submissions by several experts in support of
their argument); Anderson v. Raymond Corp., 340 F.3d 520,
523-524 (8th Cir. 2003) (trial court was not required to hold
evidentiary hearing before excluding expert testimony in
product liability case, because court reviewed expert’s
lengthy deposition testimony before concluding that he was
not qualified and his opinion was not sufficiently reliable
to be admissible).
9th Circuit See, e.g., Millenkamp v. Davisco Foods Int’l,

Inc., 562 F.3d 971, 979 (9th Cir. 2009) (‘‘District courts
are not required to hold a Daubert hearing before ruling on
the admissibility of scientific evidence’’; trial court did
not abuse its discretion in failing to hold Daubert hearing
when parties provided court with briefing on expert’s
scientific expertise and proposed testimony and expert
testified about his credentials prior to court’s ruling on
admissibility).
FRE 703 Bases of Opinion
36. ---- Handwriting identification testimony
Testimony of handwriting expert, not challenged by defendant, charged with

making false statement in acquisition of firearm and with transportation of
firearm in interstate commerce by felon, regarding her comparison of
photocopies of samples of defendant’s handwriting and form completed and
signed by defendant at time of purchase of gun was admissible, although
documents used for comparison were not the originals and were not admitted
into evidence. U. S. v. Shields, C.A.10 (Utah) 1978, 573 F.2d 18. Criminal
Law 491(1); Criminal Law 1036.6
Opinion of a document examiner for the Postal Inspection Service that

defendant’s handwriting was on United States Treasury check stolen from the
mail was admissible where it rested upon an adequate factual basis and
personal knowledge. U. S. v. Reece, C.A.8 (Ark.) 1977, 547 F.2d 432. Criminal
Law 458
Only baseless speculation could assign documents used as standards to any

hand other than that of defendant, where expert testified that documents and
note were all written by same person, and it was not error to admit into
evidence standards used by handwriting experts to show that defendant had
written note which accompanied narcotics, notwithstanding defendant’s
contention that it was not established that he had written standards. U. S.
v. Liguori, C.A.2 (N.Y.) 1967, 373 F.2d 304. Criminal Law 404.85
FRE Rule 103. Rulings on Evidence
(a) Effect of Erroneous Ruling.--Error may not be predicated upon a ruling which
admits or excludes evidence unless a substantial right of the party is affected,
and
(1) Objection.--In case the ruling is one admitting evidence, a timely objection
or motion to strike appears of record, stating the specific ground of objection, if
the specific ground was not apparent from the context; or
(2) Offer of Proof.--In case the ruling is one excluding evidence, the substance of
the evidence was made known to the court by offer or was apparent from the context
within which questions were asked.
Once the court makes a definitive ruling on the record admitting or excluding
evidence, either at or before trial, a party need not renew an objection or offer
of proof to preserve a claim of error for appeal.
(b) Record of Offer and Ruling.--The court may add any other or further statement
which shows the character of the evidence, the form in which it was offered, the
objection made, and the ruling thereon. It may direct the making of an offer in
question and answer form.
(c) Hearing of Jury.--In jury cases, proceedings shall be conducted, to the extent
practicable, so as to prevent inadmissible evidence from being suggested to the
jury by any means, such as making statements or offers of proof or asking questions
in the hearing of the jury.
(d) Plain Error.--Nothing in this rule precludes taking notice of plain errors
affecting substantial rights although they were not brought to the attention of the
court.
McKnight By and Through Ludwig v. Johnson Controls, Inc., 36 F.3d 1396, 1406, 40 Fed. R. Evid. Serv.
965, Prod.Liab.Rep. (CCH) P 14,079 (8th Cir.(Mo.) Sep 30, 1994)
[11] Federal Courts 170B 627.1
170B Federal Courts

170BVIII(D) Presentation and Reservation in Lower Court of Grounds of Review
170Bk627 Evidence and Witnesses
170Bk627.1 k. In General. Most Cited Cases
**Defendant waived challenge to admission of expert testimony by failing to object that expert was not qualified or
that he lacked scientific basis for opinions.
170B Federal Courts

170Bk637 k. Scope and Effect of Objection or Exception. Most Cited Cases
Objection on one ground does not allow party to argue on appeal that evidence should have been excluded on
different grounds.
170B Federal Courts

170Bk639 Motions Presenting Objections
170Bk643 k. Sufficiency and Scope of Motion; Necessity of Ruling on Objection or Motion. Most
Cited Cases
Basis for objecting to testimony of plaintiff’s expert as speculative was apparent when expert testified that
manufacturing defect existed in exploding battery, and, thus, defendant’s motion to strike was not timely objection.
Fed.Rules Evid.Rule 103(a)(1), 28 U.S.C.A.
[14] Evidence 157 557
157 Evidence
157XII Opinion Evidence
157XII(D) Examination of Experts
157k557 k. Experiments and Results Thereof. Most Cited Cases
Testimony of plaintiff’s expert that explosion of car battery was caused by manufacturing defect was admissible in
products liability suit; opinion was drawn from result of experiments introduced into evidence.
170B Federal Courts

170Bk639 Motions Presenting Objections
170Bk643 k. Sufficiency and Scope of Motion; Necessity of Ruling on Objection or Motion. Most
Cited Cases
If ground for objection becomes apparent while witness is testifying, subsequent motion to strike testimony after
witness finishes does not preserve issue for appeal. Fed.Rules Evid.Rule 103(a)(1), 28 U.S.C.A.
[16] Evidence 157 506
157 Evidence
157XII Opinion Evidence
157XII(B) Subjects of Expert Testimony
157k506 k. Matters Directly in Issue. Most Cited Cases
Expert testimony that car battery was unreasonably dangerous was admissible in products liability suit arising out of
exploding battery; although testimony addressed ultimate issue, it was of little assistance to jury since expert had
testified about probability of leaks and combustibility of hydrogen gas.
“JCI next argues that the trial court erred in allowing Jacobson to testify as an expert without establishing a proper
foundation for his qualification as an expert or for the scientific basis of his conclusions under Federal Rules of
Evidence 702 and 703. McKnight argues that JCI failed to raise these issues at trial and, even assuming they were
raised, that there was more than sufficient foundation for Jacobson’s expert testimony.
After trial in this case, the Supreme Court of the United States addressed the standard for admitting expert testimony
under Rule 702 in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469
(1993). JCI and McKnight agree that Daubert now controls the question of admissibility of expert testimony.
In Daubert, the Court held that the widely applied test for admitting expert testimony only if it was “generally
accepted” within the scientific community was not consistent with Federal Rule of Evidence 702, or the other rules
addressing expert testimony. 509 U.S. at ----, 113 S.Ct. at 2794. The Court went on to point out the methods and
standards that should govern the trial court’s determination of whether to admit expert testimony. The Court held
that the trial court should first determine under Rule 104(a) whether the expert’s testimony rests on a reliable
foundation. Id. 509 U.S. at ----, 113 S.Ct. at 2796. The key question in that regard should be “whether the reasoning
or methodology underlying the testimony is scientifically valid and ... whether that reasoning or methodology
properly can be applied to the facts in issue.” Id.FN9
FN9. The Court then went on to point out particular inquiries that may help the trial court determine
whether there is a sufficient foundation. The Court ended with a section pointing out that its ruling would
not make for an expert “free-for-all” because the traditional means of attacking shaky but admissible
evidence, including vigorous cross-examination, presentation of stronger contrary evidence, and careful
instruction of the burden of proof keeps that type of evidence in check. The Court concluded by noting that
“[t]hese conventional devices, rather than wholesale exclusion under an uncompromising ‘general
acceptance’ test, are the appropriate safeguards where the basis of scientific testimony meets the standards
of Rule 702.” Daubert, 509 U.S. at ----, 113 S.Ct. at 2798.
Both parties contend that Daubert supports their position. McKnight argues that Daubert makes expert testimony
more readily admissible because it is no longer subject to the “general acceptance” standard. JCI argues that
Daubert requires the trial judge to be a gatekeeper for expert evidence by making a Rule 104(a) inquiry to determine
whether the foundation has been satisfied and that the district court failed to make these basic findings on the
foundation for Jacobson’s testimony.
[11] We need not reach this issue, however, because JCI failed to object to Jacobson’s *1407 testimony on the basis
that he was not qualified as an expert or that he lacked a scientific basis for his opinions. “Without an objection and
a proper request for relief, the matter is waived and will receive no consideration on appeal absent plain error.”
Owen v. Patton, 925 F.2d 1111, 1115 (8th Cir.1991). JCI argues strenuously that it did object to Jacobson’s
qualifications as an expert and the scientific basis for his opinions. The record does not support JCI’s assertions.
[12] JCI argues that it objected to both Jacobson’s qualifications and the scientific basis for his opinions in the
following statement:
If the Court please, the objection to this testing and the opinions concerning this testing goes to the foundation for
the testimony. The witness has said that the two batteries are substantially similar. And I submit to the Court that
when the witness is attempting to prove what he’s attempting to prove with these tests, and that is the exact fit of
plugs and caps in the holes, that the foundation must be more than that. What he’s trying to do here is to use a test
on a battery, for which a foundation hasn’t been laid sufficiently, to prove the ultimate issue in this case, and that
is a defect that gaps exist between the plugs and the walls. And I submit to the Court that a sufficient foundation
to use this battery in that way has not been laid in this case.
(Tr.Vol. III at 73.) This objection fails to raise any question about the scientific validity of the principles and
methodology underlying his testimony. See Daubert, 509 U.S. at ----, 113 S.Ct. at 2797. Likewise, this objection
fails to raise any question about whether his tests were the type relied upon by experts in the field to indicate JCI
was objecting to his testimony under Rule 703. An objection on one ground does not allow a party to argue on
appeal that the evidence should have been excluded on different grounds. Hale v. Firestone Tire & Rubber Co., 756
F.2d 1322, 1333-34 (8th Cir.1985) (Hale I ).
To the extent that JCI is arguing that the district court was required to exercise its gatekeeping authority over expert
testimony without an objection, we disagree. We have previously rejected a similar argument in United States v.
Bartley, 855 F.2d 547, 552 (8th Cir.1988). We find that the principles of Bartley apply equally in this case, and
accordingly we reject JCI’s argument as unpersuasive.
The only remaining question is whether the district court committed plain error in allowing this evidence into the
record. JCI has not argued for, nor do we find, plain error.”
courts_rules_of_court_operation_effect_in_general_digest.doc

**Hormel v. Helvering, 61 S.Ct. 719
106 COURTS
106II Establishment, Organization, and Procedure
106II(F) Rules of Court and Conduct of Business
106?85 Operation and Effect of Rules
106k85(1) k. In general.
U.S.,1941
Rules of practice and procedure are devised to promote the ends of justice,
not to defeat them, and orderly rules of procedure do not require sacrifice
of the rules of fundamental justice.Copr. (C) West 2008 No Claim to Orig.
U.S. Govt. Works

**Schacht v. U.S., 90 S.Ct. 1555
U.S.Tex.,1970
Procedural rules adopted by the Supreme Court for orderly transaction of its
business are not jurisdictional and can be relaxed by Court in exercise of
its discretion when ends of justice so require. 18 U.S.C.A. § 3772 ; ?
Fed.Rules Crim.Proc. rule 37, 18 U.S.C.A .Copr. (C) West 2008 No Claim to
Orig. U.S. Govt. Works

**Amsler v. U.S., 381 F.2d 37
C.A.9.Cal.,1967
If there is conflict between statutes and rules of court, statutes must
prevail.Copr. (C) West 2008 No Claim to Orig. U.S. Govt. Works
courts_rules__of_court_modification_amendment_suspension_or_disregard_of_rules_dige
st.doc

U.S. v. Ohio Power Co., 77 S.Ct. 652
U.S.,1957
The interest in finality of litigation must yield where interests of justice
would make unfair, strict application of Supreme Court’s rules.Copr. (C) West
2008 No Claim to Orig. U.S. Govt. Works

Southern Pac. Co. v. Johnson, 69 F. 559
C.A.9.Nev.,1895
Rules of court prescribing the time for presenting bills of exceptions may be
dispensed with, in the discretion of the judge.Copr. (C) West 2008 No Claim
to Orig. U.S. Govt. Works

Yturbide’s Executors and Heirs v. U.S., 63 U.S. 290
U.S.Cal.,1859
The court may under peculiar circumstances avoid an act of injustice by
suspension of its rules.Copr. (C) West 2008 No Claim to Orig. U.S. Govt. Works

Yturbide’s Executors and Heirs v. U.S., 63 U.S. 290
U.S.Cal.,1859
The court may suspend its rules to avoid an injustice only where the
discretion of the court may fairly be exercised.Copr. (C) West 2008 No Claim
to Orig. U.S. Govt. Works

**American Farm Lines v. Black Ball Freight Service, 90 S.Ct. 1288
106 COURTS
106II Establishment, Organization, and Procedure
106II(F) Rules of Court and Conduct of Business
106?85 Operation and Effect of Rules
106k85(2) k. Construction and application of rules in general.

U.S.Wash.,1970
It is always within discretion of court or administrative agency to relax or
modify its procedural rules adopted for orderly transaction of business
before it, when, in given case, the ends of justice require it, and such
action is not reviewable except on showing of substantial prejudice to the
complaining party.Copr. (C) West 2008 No Claim to Orig. U.S. Govt. Works

**Torres v. Oakland Scavenger Co., 108 S.Ct. 2405
U.S.Cal.,1988
If litigant files papers in fashion that is technically at variance with
letter of procedural rule, court may nonetheless find litigant has complied
with rule if litigant’s action is functional equivalent of what rule
requires. F.R.A.P.Rule 2, 28 U.S.C.A .Copr. (C) West 2008 No Claim to Orig.
U.S. Govt. Works

Allen v. U. S. Fidelity & Guaranty Co., 342 F.2d 951
C.A.9.Alaska,1965
It is for court in which case is pending to determine, except as it is bound
by precedents set by higher authority in its own judicial hierarchy, what
departures from statutory prescription or rules of court are so slight and
unimportant that the sensible treatment is to overlook them.Copr. (C) West
2008 No Claim to Orig. U.S. Govt. Works

**Concrete Mixing & Conveying Co. v. Great Western Power Co. of California,
46 F.2d 331
N.D.Cal.S.Div.,1928
Court of equity will not permit court rules to be belatedly invoked or to
operate to inequitable ends.Copr. (C) West 2008 No Claim to Orig. U.S. Govt.
Works

Stickney v. Wilt, 90 U.S. 150
U.S.Ohio,1874
**The rules of practice are established to promote the ends of justice and
where it appears that a given rule will have the opposite effect, appellate
courts are inclined to regard the case as one of an exceptional character,
not falling within operation of the rule.Copr. (C) West 2008 No Claim to
Orig. U.S. Govt. Works
Since opinion evidence was admitted, since there was no evidence to disprove, that
evidence is deemed true.
The report establishes that Forenseic Document Examiner Eva Salzer used standard
forensic document examiner priniciples, methods and procedures
Board Certified Document Examiners apply ASTM methods and procedures, as Forensic
Document Examiner, Ms. Eva Salzer apply
based on an application of the methodologies promulgated by the American

Society for Testing and Materials ("ASTM").
U.S. v. Yagman, 2007 WL 4409618 (C.D.Cal.,May 22, 2007)
*3 Similarly, the government asserts that Beal’s conclusions are based on

analysis of approximately seventy documents known to have been written by
Defendant. (Govt.’s Opp. at 10.) Beal testified that her analysis is based on
an application of the methodologies promulgated by the American Society for
Testing and Materials ("ASTM").
Although the opinions of other district courts are not binding, the Court
recognizes that some district courts have adopted this approach. See, e.g.,
United States v. Rutherford, 104 F.Supp.2d 1190 (D.Neb.2000) (permitting
expert testimony about similarities in the handwritings but prohibiting
ultimate conclusions); United States v. Santillan, 1999 WL 1201765
(N.D.Cal.1999) (permitting expert testimony about similarities in the
handwritings but prohibiting ultimate conclusions); United States v. McVeigh,
1997 WL 47724 (D. Colo. Pre-Trial Trans. Feb 5, 1997) (permitting testimony
about "similarity in strokes and all of that sort of thing" but not
permitting an opinion about the identification of the handwriting unless the
Court has a "hearing about the validity of the science of handwriting
comparison to make an identification of the writer.").
The Court finds the approach of these district courts unpersuasive because
every circuit court to have considered the issue of handwriting testimony has
held that the expert’s ultimate opinion was admissible. See United States v.
Prime 431 F.3d 1147, 1154 (9th Cir.2005) (permitting ultimate opinion that
the defendant authored the note in question); United States v. Crisp, 324
F.3d 261, 269-70 (4th Cir.2003) (allowing ultimate opinion that defendant
authored the note); United States v. Mooney, 315 F.3d 54, 63 (1st Cir.2002)
(same); United States v. Jolivet, 224 F.3d 902, 906 (8th Cir.2000) (allowing
opinion that it was "likely" that the document contained the defendant’s
handwriting); United States v. Paul, 175 F.3d 906, 911 (11th Cir .1999)
(permitting expert testimony that the defendant wrote the extortion note);
United States v. Jones, 107 F.3d 1147, 1161 (6th Cir.1997) (allowing
testimony that signatures on various documents were the defendant’s).
Hospital and Medical Records admissible under the Business Records Exception To The
Hearsay Rule under Federal Rules Of Evidence 803
Joint tenancy deed under Federal Rules of Evidence 901(b)(7) Public Records or
Reports; Rule 44 of the Federal Rules of Civil Procedure
In re Cloud Nine, Ltd., 3 B.R. 202, 1 Collier Bankr.Cas.2d 445, 5
Bankr.Ct.Dec. 1377 (Bankr.D.N.M. Jan 31, 1980)
51 Bankruptcy
51k2425 k. Individual Debt Adjustment Cases. Most Cited
Cases
(Formerly 51k217(6), 51k217.5(3))
Automatic stay would not be lifted so as to allow creditors to proceed in
pending state court suit against debtor; however, automatic stay applied only
to those formal or informal efforts of creditors set forth in Bankruptcy Code
and directed against creditors’ assets, but did not preclude creditor actions
against other parties who had not filed proceedings in the bankruptcy court.
Bankr.Code, 11 U.S.C.A. §§ 362, 1301.
Cite case which explains the definition of a parallel proceeding being a complaint
filed as an adversary proceeding in the bankruptcy case. In re General Carriers.
Property in Chapter 13 is necessary for effective reorganization, point to

testimony where this was stated. And Chapter 13 plan which states that rental
income from property is necessary to fund the Chapter 13 plan.
The Supreme Court has explicitly instructed,
Circumstantial evidence of hospital records shows that Soon Chey was incapable of
signing the document. She was present in a locked medical facility. There were
no visitor’s passes issued for a visitor to visit her. There were no visitor’s
signed in authorized and noting their presence at the hospital [list the hospital
address at Artesia California] noted in the hospital visitation log, according to
the strict visitation policy. There were no day passes requested for and issued
that would allow her to leave the gravely disabled treatment facility didn’t have a
visitor’s pass. And the declaration by the notary states that it is signed at
Irvine, California.
There was no objection to the truth of the evidence
steal: 1a: to take or appropriate without right or leave and with intent to keep or
make use of wrongfully. b: to take away by force or unjust means.
To take away without the authority of law.
1: to take or appropriate without permission, dishonestly, or unlawfully.
lessor: on that conveys property by lease.
A person who gives a lease; landlord
The owner of real or personal property, an interest in which is granted by

lease.
Chapter 13 necessity of residence to effective reorganization.
In In re Elmore, 94 B.R. 670, 677, (Bankr.C.D.Cal. Dec 14, 1988), the court stated,”
A debtor’s principal residence in a Chapter 13 case is virtually always necessary to an

effective reorganization. The vast majority of Chapter 13 cases filed in this district
are filed by debtors like Elmore who are trying to save their homes. If the home is not
saved, the Chapter 13 reorganization is not effective. Thus a secured creditor rarely
qualifies for relief from stay under section 362(d)(2) in a Chapter 13 case.FN10”
In re Avila, 311 BR 81, 83, (Bankr ND Cal. 2004), the court held that for a chapter 13
petitioner, the property is necessary for effective reorganization if it provides income
to fund a chapter 13 plan.
“[5] The property is also necessary to an effective reorganization. The

debtor relies on the income from the property to fund her chapter 13 plan, so
relief on this basis is also inappropriate.”
In In re Elmore, 94 B.R. 670, (Bankr.C.D.Cal. Dec 14, 1988)
C. Section 362(d)(2)
Section 362(d) provides two separate grounds upon which relief from stay may be sought. If relief from stay is not
available under section 362(d)(1), it may be sought on the alternative grounds provided in section 362(d)(2). To
obtain relief from stay under section 362(d)(2), a creditor must present evidence to make a prima facie case that (1)
the property is overencumbered, and (2) it is not necessary to an effective reorganization.
A debtor’s principal residence in a Chapter 13 case is virtually always necessary to an effective reorganization. The
vast majority of Chapter 13 cases filed in this district are filed by debtors like Elmore who are trying to save their
homes. If the home is not saved, the Chapter 13 reorganization is not effective. Thus a secured creditor rarely
qualifies for relief from stay under section 362(d)(2) in a Chapter 13 case.FN10
FN10. In the rare case where confirmation of the Chapter 13 plan is delayed for an extended period of time,
a secured creditor may qualify for relief from stay under section 362(d)(2) on the grounds that no effective
reorganization is in prospect within a reasonable period of time. See United Savings, 108 S.Ct. at 632.
In consequence, the Court is not usually called upon in a Chapter 13 relief from stay motion to consider whether the
debtor has any equity in the property. If an effective reorganization is in prospect, a Chapter 13 debtor is permitted
to keep the automatic *678 stay as to the residence or any other real property even though the debtor has no such
equity,FN11 unless there is cause to lift the stay.
FN11. The lack of equity may have an impact, however on whether an effective reorganization is possible,
or what shape it should take.
Lomas has not sought relief from stay under section 362(d)(2) in this case.
D. Other “Cause”
In addition to the lack of adequate protection, section 362(d)(1) permits relief from stay for other “cause”. Such
other cause is not defined in the Bankruptcy Code.FN12 This cause should provide the usual basis for relief from stay
in a Chapter 13 case after the confirmation of a plan.
FN12. The House Report for the Bankruptcy Code suggests several circumstances, apart from the lack of
adequate protection, that may provide cause for relief from stay:
[A] desire to permit an action to proceed to completion in another tribunal may provide another cause.
**Other causes might include the lack of any connection with or interference with the pending
bankruptcy case. For example, a divorce or child custody proceeding involving the debtor may bear no
relation to the bankruptcy case. In that case, it should not be stayed. A probate proceeding in which the
debtor is the executor or administrator of another’s estate usually will not be related to the bankruptcy
case, and should not be stayed. Generally, proceedings in which the debtor is a fiduciary, or involving
postpetition activities of the debtor, need not be stayed because they bear no relationship to the purpose
of the automatic stay, which is debtor protection from his creditors.
H.R.Rep. No. 595, 95th Cong., 1st Sess. 343, reprinted in 1978 U.S.Code Cong. & Admin.News 5963,
6300. The report further notes, “The facts of each request will determine whether relief is appropriate
under the circumstances.” Id.
In re Elmore
Automatic stay hearings are not like unlawful detainer hearings where issue of
title are not litigated.
mortgagee: the lender or creditor extending the loan involved in a mortgage.
In re Bialac, 694 F.2d 625, 7 Collier Bankr.Cas.2d 899, 9 Bankr.Ct.Dec.

1354, Bankr. L. Rep. P 69,010 (9th Cir. Dec 13, 1982)
11 U.S.C. 362(d)
In re Bialac, 694 F.2d 625, 627, (9th Cir. Dec 13, 1982), the court stated,
“Bialac misunderstands the nature of a § 362(d) hearing. It is true that ‘the desired
expedition of stay litigation ... may not always be conducive to any final determination
of questions going to the merits which are so serious, substantial, difficult and
doubtful as to make them fair ground for litigation and thus for more deliberative
investigation.’ United Companies Financial Corp. v. Brantley, 6 B.R. 178, 187
(Bkrtcy.N.D.Fla.1980) (Citations omitted). When a debtor’s affirmative defenses and
counterclaims, however, directly involve the question of the debtor’s equity, they
should be heard in the stay proceeding.”
In United Companies Financial Corp. v. Brantley, 6 B.R. 178, 185, (Bankr.N.D.Fla.,Sep

18, 1980) the court stated,”
[7] The key determination as to whether or not any matter, claim or circumstance should
bear upon the amount of the creditor’s claim (and hence trigger resulting effects upon
the debtors’ equity, probable harm to and adequate protection for a creditor, as well
as, probable successful plan formulation) is whether such matter, claim or circumstance
directly or only indirectly relates to the amount of such creditor’s claim. If it
directly relates it should enter into the determination of the court in the exercise of
its discretion whether or not the injunction should be maintained or vacated or
modified.”
And,
“those based upon such matters as alleged violations of the statute of frauds which
would bar any recovery whatsoever on the specific debt itself; non-perfection of a
security interest which would bar any lien enforcement whatsoever on the debt itself; or
usury which would bar any recovery either to some extent or totally on the debt itself
depending upon the circumstances. Other such counterclaims or defenses might be based
upon a lack of consideration altogether, as distinguished from a failure of
consideration, or some circumstances of unconscionability which would bar recovery upon
the specific debt itself. These latter defenses or counterclaims strike at the very
heart of the specific debt amount itself which the creditor seeks to enforce by way of
his lien or the validity of the lien itself.” (United Companies Financial Corp. v.
Brantley, supra, 6 B.R. at p.185)
United Companies Financial Corp. v. Brantley, 6 B.R. 178, 6 Bankr.Ct.Dec.

932 (Bankr.N.D.Fla.,Sep 18, 1980)
Creditor sought relief from automatic stay. The Bankruptcy Court, N. Sanders
Sauls, J., held that: (1) when affirmative defenses or counterclaims are
asserted which strike at the heart of the amount of the creditor’s claim or
the validity of the lien, court should give consideration to them in
determining whether or not the stay should remain in effect; (2) prohibition
against modification of a plan with respect to the terms of mortgage was not
applicable where the debt was secured by an assignment of a life insurance
policy as well as by the mortgage; and (3) interim rule providing for
expiration of the automatic stay 30 days after the holding of the hearing on
the stay is invalid.
Order accordingly.
228 Judgment
228XIV(C) Matters Concluded
228k723 Essentials of Adjudication
228k728 k. Incidental and Collateral Matters. Most
Cited Cases
Although the existence of affirmative defenses and possible counterclaims
could be raised and considered by court in exercising its discretion as to
whether to vacate or modify the automatic stay, no res judicata determination
of those collateral claims on the merits could result from the hearing on the
application for relief from the automatic stay. Bankr.Code, 11 U.S.C.A. § 362.
[2] Bankruptcy 51 2430.5(1)
51 Bankruptcy
51k2430.5 Particular Creditors or Claimants
(Formerly 51k2430, 51k217.6(1), 51k217(7))
If, by reason of an alleged violation of a statute of frauds, usury,
unconscionability, lack of consideration, or other similar circumstances,
debt is unenforceable against the debtor, either in whole or in part, then,
to that extent, claim is not allowable and, to the extent it is not
allowable, it will not be a secured claim and thus will not require adequate
protection under the automatic stay provision of the Bankruptcy Code.
Bankr.Code, 11 U.S.C.A. §§ 362, 502(b)(1).
51 Bankruptcy
51k2435 Proceedings
51k2441 k. Discretion. Most Cited Cases
(Formerly 51k217.6(1), 51k217(7))
Key determination as to whether any matter or claim should bear upon the
amount of the creditor’s claim and thus have an effect on the debtor’s
equity, probable harm to an adequate protection for the creditor, and the
probable successful plan formulation, is whether the matter or claim directly
or only indirectly relates to the amount of the creditor’s claim; if it
directly relates, then it should enter into the determination of the court in
the exercise of its discretion as to whether the automatic stay should be
vacated or modified; if it is only indirectly related, it should not enter
into that consideration. Bankr.Code, 11 U.S.C.A. § 362.
51 Bankruptcy
51k2435 Proceedings
51k2436 k. Set-Off and Counterclaim; Affirmative
Defenses. Most Cited Cases
(Formerly 51k217.5(5), 51k217(6))
Affirmative defenses or counterclaims based or grounded upon them, not
directly related to the specific debt should not be the subject of
consideration in determining whether relief from the automatic stay should be
granted; defenses and counterclaims related directly to the specific debt in
question should be the subject of appropriate consideration and stay relief
determinations. Bankr.Code, 11 U.S.C.A. § 362.
51 Bankruptcy
51k2431 k. What Constitutes, in General. Most Cited
Cases
(Formerly 51k217.6(1), 51k217(7))
When affirmative defenses or counterclaims are asserted which strike at the
heart of the amount of the creditor's claim or the validity of his lien,
those defenses or counterclaims directly effect the issue of equity and thus
the issues of harm and adequate protection for the creditor, as well as the
reasonable probability of any plan of reorganization, and the court should
give consideration to them in determining whether the stay should remain in
effect. Bankr.Code, 11 U.S.C.A. § 362.
51 Bankruptcy
51k2435 Proceedings
(Formerly 51k2435, 51k217.5(1), 51k217(6))
Debtor has several options available in stay relief litigation when there are
substantial questions directly related to the amount of creditor's debt or
the validity of the lien; debtor may either object to the creditor's claim,
if he has filed a claim, or may file a complaint for determination of the
extent and validity of the creditor's debt and lien or may file a
counterclaim or affirmative defense directly related to the specific debt or
may seek to remove from state court any pending foreclosure proceeding.
Bankr.Code, 11 U.S.C.A. § 362.
[7] The key determination as to whether or not any matter, claim or

circumstance should bear upon the amount of the creditor’s claim (and hence
trigger resulting effects upon the debtors’ equity, probable harm to and
adequate protection for a creditor, as well as, probable successful plan
formulation) is whether such matter, claim or circumstance directly or only
indirectly relates to the amount of such creditor’s claim. **If it directly
relates it should enter into the determination of the court in the exercise
of its discretion whether or not the injunction should be maintained or
vacated or modified.
And,
those based upon such matters as alleged violations of the statute of frauds
which would bar any recovery whatsoever on the specific debt itself; non-
perfection of a security interest which would bar any lien enforcement
whatsoever on the debt itself; or usury which would bar any recovery either
to some extent or totally on the debt itself depending upon the
circumstances. Other such counterclaims or defenses might be based upon a
lack of consideration altogether, as distinguished from a failure of
consideration, or some circumstances of unconscionability which would bar
recovery upon the specific debt itself. These latter defenses or
counterclaims strike at the very heart of the specific debt amount itself
which the creditor seeks to enforce by way of his lien or the validity of the
lien itself.
At p. 187,
“To be sure, the desired expedition of stay litigation under the new law may
not always be conducive to any final determination of questions going to the
merits which are so serious, substantial, difficult and doubtful as to make
them fair ground for litigation and thus for more deliberative investigation.
1 Moore's Manual, s 10.07(2) (1979); 7 Moore's Federal Practice, P 65.04.
This, however, should not cause any undue consternation when such questions
are raised for the matter should proceed as any other injunction proceeding
under the established precepts relating to injunctive relief in federal
courts in accordance with Rule 65 of the Federal Rules of Civil Procedure. In
fact, the system is designed to follow the established federal pattern under
Rule 65. As stated in the legislative history to the new law (H.Rep. 95-595,
p. 344; S.Rep. 95-989, p. 55, U.S.Code Cong. & Admin.News 1978, pp. 5841,
6300):
“The filing of the petition which gives rise to the automatic stay is
similar to a temporary restraining order. The preliminary hearing is similar
to the hearing on a preliminary injunction, and the final hearing and order
is similar to a permanent injunction. The main difference lies in which
party must bring the issue before the court. While in the injunction
setting, the party seeking the injunction must prosecute the action, in
proceedings for relief from the automatic stay, the enjoined party must
move. The difference does not, however, shift the burden of proof.
Subsection (g) leaves that burden on the party opposing relief from the stay
(that is, on the party seeking continuance of the injunction) on the issue
of adequate protection.
At the expedited hearing under subsection (e), and at all hearings on relief
from the stay, the only issue will be the claim of the creditor and the lack
of adequate protection or existence of other cause for relief from the stay.
This hearing will not be the appropriate time at which to bring in other
issues, such as counterclaims against the creditor on largely unrelated
matters. Those counterclaims are not to be handled in the summary fashion
that the preliminary hearing under this provision will be. Rather, they will
be the subject of more complete proceedings by the trustees to recover
property of the estate or to object to the allowance of a claim. (H.Rep. 95-
595, p. 344.).
*188 ... However, this would not preclude the party seeking continuance of
the stay from presenting evidence on the existence of claims which the court
may consider in exercising its discretion. What is precluded is a
determination of such collateral claims on the merits at the hearing.
(S.Rep. 95-989, p. 55.)“
Essentially the same considerations are present in considering whether an

injunction should be initially granted or considering whether an injunction
already in place should be vacated or modified. Under Rule 65, after any
temporary restraining order has been entered, the party obtaining such must
immediately bring on for hearing his motion for a preliminary or temporary
injunction. The Rule is designed to weed out those cases where decision may
be made with little or no evidence from those wherein substantial evidence
may be necessary. It is also provided that, where necessary to expedite the
disposition of the case and avoid duplication of effort, the hearing on the
motion for injunction may be consolidated with the trial on the merits. See,
1 Moore's Manual, s 10.07(2), pp. 628-636.
Some matters are capable of assertion as either an affirmative defense or as

a counterclaim. An affirmative defense seeks no other relief other than the
bar of the remedy sought by the plaintiff. A counterclaim seeks additional
relief in addition to the barring of the remedy sought by a plaintiff. When
it is remembered that either could be asserted in a state court action, it
should also be remembered that the entire matter may now be removed. If delay
would be encountered by the assertion of such in a state proceeding, as is
frequently the case, it should not be surprising that such assertions may
also cause some delay in the federal forum.”
In re Gurst, 75 B.R. 575 (Bankr.E.D.Pa.,Jun 30, 1987)
Court to continue automatic stay and motion to remand until complaint, adversary
proceeding, under TILA recission is determined.
In re Mohawk Greenfield Motel Corp., 239 B.R.1, 5, (Bankr.D.Mass. Aug31, 1999)
While giving the debtor some breathing room, the automatic stay also ensures that the
assets of the debtor are not reduced or disturbed and protects the bankruptcy court’s
exclusive jurisdiction over the debtor and its property.

Automatic Stay 4

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automatic stay

Reversed and remanded.

[3] Judgment 228 660.5

[4] Bankruptcy 51 2442

[5] Judgment 228 636

[6] Bankruptcy 51 2002

[7] Judgment 228 634

[9] Judgment 228 650

[10] Judgment 228 650

[11] Bankruptcy 51 2395

Judgment 228 828.21(2)

[12] Judgment 228 828.21(2)

[13] Bankruptcy 51 3374(2)

JELLEN, Bankruptcy Judge:

FN4. Section 523(a)(6) provides:

FN5. Section 362(a)(1) provides:

FN6. Section 108(b) provides:

(2) 60 days after the order for relief.

Turner’s timely appeal followed.

MAKE SURE YOU ATTACH PERTINENT PAGES OF

--- On Sun, 5/3/09, David Chey <davidchey@gmail.com> wrote:

Dear Kareem Salessi:

Your message has

ALSO WHAT IS THE DOCUMENT NOTICE OF COMMENCEMENT OF PROCEEDINGS

[2] Bankruptcy 51 2462

FN1. Section 362 reads in pertinent part:

11 U.S.C. § 362(a)(4)-(6) (citations omitted).

FN1. Section 362 reads in pertinent part:

11 U.S.C. § 362(a)(4)-(6) (citations omitted).

FN2. Section 549 reads in part:

(B) that is not authorized under this title or by the court.

11 U.S.C. § 549(a) (1988).

**Collier on Exceptions to the Stay Involving Certain Residential

December 14, 2007

The stay exception under subsection (b)(22) applies only if the

**Creditor, which had contracted prepetition with Chapter 13 debtor to

**Chapter 13 debtor had equity in mortgaged property and property was

In view of market value of debtors’ home in excess of $20,000,

**Denial of creditor-mortgagee’s motion for stay relief for "cause" to

Mortgagee that had submitted high bid on Chapter 13 debtor-mortgagors’

case defining state of being necessary for effective reorganization.

Enforcement of writ of possession against Chapter 7 debtor-tenants,

**Bankruptcy statute providing for granting of relief from stay upon

In re Fischer, 136 B.R. 819 (D.Alaska,Feb 04, 1992)

FN7. Section 361 provides:

The Bankruptcy Court of the District of Vermont in Rhoades stated:

Rhoades, 34 B.R. at 167 (citations omitted).

Holder of first mortgage on debtor’s property was not entitled to

Matter of Holt County Grain Storage, Inc., 25 B.R. 271, 273,

**Irrebuttable presumption arose that Chapter 13 debtor’s home was

In re Donahue, 231 B.R. 865 (Bankr.D.Vt.,Jun 01, 1998)

[14] Bankruptcy 51 2421

[15] Bankruptcy 51 2439(2)

[14][15] Debtor argues § 362(d) is inapplicable in chapter 13 cases. This is contrary

**Automatic stay would not be annulled, in order to validate post-

Debtor’s residence is necessary to an effective reorganization

**Automobile securing Chapter 13 debtor’s loan was necessary to

**Debtors’ contention that sole motivation for their Chapter 13 filing

**Landlord was properly granted relief from stay in order to proceed

**Real property was not necessary to Chapter 13 debtors’ effective

**Creditor need not allege lack of equity, no possibility of an

**Creditor’s application for order modifying automatic stay would be