Opinion
NOT TO BE PUBLISHED
Super. Ct. No. 06AS02154
RAYE, J.Plaintiffs Philip Abarquez, who lived in a house and was in default on the payments, and his daughter Jennifer Abarquez, who held legal title and executed a real estate purchase agreement, a seller’s acknowledgments, and a grant deed, appeal a summary judgment entered in favor of defendant Craig Sherman, who purchased the house from Jennifer. The trial court found defendant was entitled to judgment on plaintiffs’ fraud claims because Philip had not justifiably relied on any asserted misrepresentations that the transaction was a loan when all the written documentation was to the contrary. Nor was Philip entitled to recovery under the Home Equity Sales Contract Act (hereafter Act; Civ. Code, § 1695 et seq.). We affirm.
All further statutory references are to the Civil Code unless otherwise indicated.
FACTS
Few of the material facts are disputed. Philip does not dispute that his daughter, Jennifer, held legal title to the house he lived in with his wife and six children. He was unemployed and did not have sufficient credit to qualify for the loan to purchase the house. He made the down payment, however, with the proceeds of the sale of a previous house and made the monthly mortgage payments. Then he defaulted.
Philip contacted defendant for help in curing his default. Because Jennifer held legal title, defendant prepared the purchase agreement for her signature. Philip called Jennifer and instructed her to sign the documents. On January 27, 2004, Jennifer, a college graduate, met with defendant for about an hour, read the documents, and signed the “Real Estate Purchase Contract” as well as the “Seller’s Acknowledgments.” She acknowledged that the “sale is final,” the transaction was “not a loan,” defendant was “entitled to make a profit,” she had “not been promised anything other than what is described in The Agreement,” she was “not under duress,” and “English is [her] primary language.” She was also provided a notice of cancellation giving her until 12:30 p.m. on February 3, 2004, to cancel the transaction. On February 3, Jennifer signed the grant deed conveying title to the property to defendant. Defendant cured the default and gave Jennifer a check for $1,710.33 as agreed.
On February 7, 2004, Philip executed a “Residential Lease/Rental Agreement” to lease the same house from defendant for a term of two years. The agreement included an option to purchase the house. Philip did not exercise his option. At the termination of the lease, he was evicted.
The only disputed fact material to this appeal is whether defendant told Philip the transaction was a loan rather than a sale and conveyance. Philip declared that following the conveyance, defendant told him that the lease was to protect his money.
Plaintiff filed a complaint to quiet title and for damages arising under the Act, a violation of the Mortgage Foreclosure Consultant Act (§ 2945 et seq.), declaratory relief, and breach of contract. The trial court granted summary adjudication of each of the causes of action but denied summary judgment, allowing plaintiffs to file an amended complaint alleging fraud. Plaintiff filed an amended complaint for intentional and negligent misrepresentation, fraudulent concealment, quiet title, and declaratory relief.
The trial court granted defendant’s motion for summary judgment. The court found defendant was entitled to judgment for intentional and negligent misrepresentation and fraudulent concealment “because Plaintiffs had a reasonable opportunity to know the character or essential terms of the real estate contract signed by Plaintiff Jennifer Abarquez. The agreement plainly states in bold at the top of the first page that it is a ‘Real Estate Purchase Contract.’ Furthermore, the ‘Seller’s Acknowledgments’ signed by Plaintiff Jennifer Abarquez state the agreement is ‘not a loan.’” The court also found that defendant was entitled to judgment for intentional and negligent misrepresentation because plaintiffs did not rely on any misrepresentations by defendant. Plaintiffs appeal these rulings and the earlier ruling that the Act does not apply.
DISCUSSION
I
Fraud
A defendant is entitled to summary judgment “if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” (Code Civ. Proc., § 437c, subd. (c).) The defendant can carry this burden by showing that the plaintiff cannot establish at least one element of the cause of action. (Jones v. P.S. Development Co., Inc. (2008), 166 Cal.App.4th 707, 710.) On appeal, we review the record de novo for the existence of triable issues of material fact. (Hill v. State Farm Mutual Automobile Ins. Co. (2008),166 Cal.App.4th 1438, 1469.)
Fraud is not actionable in the absence of reasonable reliance on the misrepresentations. Here the trial court found there was no triable issue that plaintiffs had relied on any misrepresentation made by defendant. We agree with both of the rationales offered by the court.
First, Jennifer was given ample time to review each of the documents, which clearly stated the transaction was a sale, not a loan. As the trial court aptly pointed out, one of the documents was entitled “Real Estate Purchase Contract.” The nature of the transaction could not have been stated more clearly than that. The Seller’s Acknowledgments also expressly stated the transaction was not a loan. Two cases present analogous facts in which a plaintiff alleged he had been defrauded by oral statements directly at odds with the terms of a written agreement he had signed.
In Dore v. Arnold Worldwide, Inc. (2006), 39 Cal.4th 384 (Dore), an employee claimed his former employer had promised him long-term employment as long as he performed competently, in spite of the letter of employment he signed that unambiguously stated his employment was at will and contained no promises of either long-term employment or that termination would be only for cause. Similarly, in Hinesley v. Oakshade Town Center (2005), 135 Cal.App.4th 289 (Hinesley), a commercial tenant alleged the developer of a shopping center had misrepresented who were prospective tenants and when they would occupy the center, facts of extreme importance to him, even though he signed a written lease that expressly stated, “Lessee does not rely on the fact nor does Lessor represent that any specific Lessee of [sic] type or number of Lessees shall during the term of this Lease occupy any space in the Shopping Center.” (Id. at p. 297.) In both cases, the appellate courts affirmed the summary judgments because the plaintiffs could not justifiably rely on alleged statements at odds with the clear and unambiguous agreements they signed.
Philip asserts that defendant told him he was loaning him money to cure the default, not that he was purchasing the property. Jennifer, however, possessed legal title to the property, reviewed the documents, and does not allege that she was given insufficient time or opportunity to either read the documents or to ask questions about what they meant. Not only did she sign the Real Estate Purchase Contract and the Seller’s Acknowledgments, but a week later she signed the grant deed conveying title to defendant. Thus, as the Supreme Court held in Dore and we followed in Hinesley, Jennifer could not justifiably rely on any alleged misrepresentations made by defendant when all the documents she signed clearly and unambiguously disclosed that the transaction was a sale, not a loan.
The trial court also concluded that even if defendant had told him the lease documents were merely to “protect [his] money,” as Philip alleged, and even if that statement were construed to be false, it was not made until after Jennifer had executed the agreement, signed the acknowledgments, and conveyed the property. Thus, we agree with the trial court that Philip did not detrimentally rely on the asserted misrepresentation. In the absence of reliance, defendant was entitled to judgment on the fraud claim.
II
Home Equity Sales Contract
In plaintiffs’ first amended complaint, they asked the court to void the sale and conveyance, and sought treble damages and attorney fees for violation of the Act. Plaintiffs alleged that the transaction was presumed to be a loan under section 1695.12 of the Act, notwithstanding the seller’s acknowledgment to the contrary. They complained that defendant had not given Philip, an equitable owner of the property, notice or the opportunity to sign the Seller’s Acknowledgments. In addition, they claimed defendant had taken “unconscionable advantage of the property owner in foreclosure” by curing the default for approximately $29,000, an amount far below the value of the equity in the house.
The trial court granted summary adjudication of this issue. The court ruled: “The Act does not mention ‘equitable ownership’ of property. Rather, it specifically defines ‘property owner’ as ‘the record title owner of the residential real property in foreclosure.’ CC § 1695.1, subd. (f). It is undisputed that Jennifer, not Philip, was the record title owner. It is also undisputed that Philip, not Jennifer, resided in the property. Therefore, the property does not qualify as a ‘residence in foreclosure.’ The Act does not apply.”
The essence of Philip’s argument is that the Act applies to him even though he is not the property owner with legal title because of his equitable ownership interest in the house. The two cases he cites do not support his argument.
Segura v. McBride (1992), 5 Cal.App.4th 1028 (Segura) is factually and legally inapposite. Mrs. McBride, the equity purchaser, provided the homeowner, Segura, none of the notices, documentation, or protections required by the Act. In fact, they never entered into a written agreement at all. The court wrote: “Segura did not receive one penny for his equity, and eventually McBride’s son was able to turn a handsome profit on the property. There was an understanding that Segura retained a right to reacquire title to the property, whether under conditions (McBride’s story) or not (Segura’s story), yet McBride conveyed the property summarily without notifying Segura. Her son then upped the ‘rent,’ refused Segura’s tender and eventually precipitated his vacating the premises. Segura lost his home and his equity based on agreements and understandings that were never reduced to writing. This is the very situation which the Act intends to prevent.” (Id. at pp. 1037-1038.)
The case does not address equitable ownership of a property in foreclosure. Segura clearly had legal title to the property. While the case cites the unassailable principle that the Act is to be liberally construed to achieve its objectives, it does not even touch on the issues before us. Here defendant provided a written agreement with clear disclosures that he was purchasing the property. He also provided a notice of cancellation. Jennifer did not convey the property until after the time for cancellation had lapsed. Unlike Mrs. McBride, defendant did not transfer the property to a third party in violation of the Act. Thus, this is not a situation like Segura that the Act was intended to prevent.
In re Phelps (2001) 93 Cal.App.4th 451 (Phelps) is discussed by plaintiffs, though they recognize it provides them with no assistance. In Phelps, the court held, consistent with the clear and unambiguous language of the statute, that the Act did not apply because the homeowner did not occupy the property at the time the equity purchaser bought it. Section 1695.1 defines a “[r]esidence in foreclosure” as property “which the owner occupies as his or her principal place of residence.” Applying the literal meaning of the words of the statute as it was required to do, the court concluded there was no way to disregard the unequivocal present tense “occupies” without eviscerating the statute. (In re Phelps, at p. 457.) Thus, the equity purchaser had not committed a crime and was permitted to withdraw his plea of guilty. (Id. at pp. 458-459.)
Here, of course, there were no criminal proceedings. As in Phelps, the person holding legal title did not occupy the property at the time of the sale. But Phelps, like Segura, did not address the question whether an occupant with an equitable interest in the property was protected by the Act.
There is nothing in the express language of the statute to support plaintiffs’ expansive notion that the Act applies to those with an equitable ownership interest. In fact, section 1695.1, subdivision (f) defines “[p]roperty owner” as “the record title owner of the residential real property in foreclosure at the time the notice of default was recorded.” Thus Jennifer, not Philip, was the property owner under the Act.
Nevertheless, Philip urges us to apply the Act to him because in defining a “[r]esidence in foreclosure,” the Legislature referred to “the owner” rather than “the property owner.” Section 1695.1, subdivision (b) states: “‘Residence in foreclosure’ and ‘residential real property in foreclosure’ means residential real property consisting of one- to four-family dwelling units, one of which the owner occupies as his or her principal place of residence, and against which there is an outstanding notice of default, recorded....” Because the Legislature did use the term “property owner,” plaintiffs insist it intended to expand the meaning of owner to include equitable owners as well as occupants who hold legal title. There is nothing in the language of the statute to suggest the Legislature intended an expansive definition at odds with section 1695.1, subdivision (f) and nothing in the case law to support judicial expansion of the meaning of the term “owner.”
We fail to see how plaintiffs could have prevailed under the Act, even if it applied to them. It is true that section 1695.12 creates a presumption affecting the burden of proof that a transaction such as the one entered into here is a loan rather than a conveyance. But that presumption “may be overcome by clear and convincing evidence to the contrary.” (§ 1695.12.) If, as we concluded above, there was no fraud in the execution of the sales agreement and the grant deed, those documents constitute clear and convincing evidence that the transaction was an absolute conveyance, not a loan. As a result, although we find no statutory or judicial support for plaintiffs’ contention that the Act applies to equitable owners, we need not resolve that issue because defendant is entitled to judgment as a matter of law on the fraud claim, and the documents signed and executed by Jennifer, in the absence of fraud, constitute clear and convincing evidence the transaction was a sale.
DISPOSITION
The judgment is affirmed. The parties shall bear their own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(5).)
We concur: SCOTLAND, P. J., SIMS, J.