Provident Holdings & Invs., LLCv.Cathay Bank

COURT OF APPEAL OF THE STATE OF CALIFORNIA SIXTH APPELLATE DISTRICTDec 4, 2018
H041698 (Cal. Ct. App. Dec. 4, 2018)

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H041698

12-04-2018

PROVIDENT HOLDINGS & INVESTMENTS, LLC, Plaintiff and Appellant, v. CATHAY BANK et al., Defendants and Respondents.


NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Santa Clara County Super. Ct. No. 1-12-CV221277)

Prior to February 2010, Provident Holdings & Investments, LLC (Provident) was the owner of commercial property located at 2157 South 10th Street in San Jose (the Property). Provident purchased the Property in 2005 with a secured loan made by Cathay Bank (the Bank). The next year, using a secured construction loan from the Bank, Provident developed and subdivided the Property into 12 separate office condominium units. In October 2009, the Bank as secured lender instructed the trustee under the first deed of trust, Chicago Title Company, to commence nonjudicial foreclosure proceedings as to seven of the units. (Hereafter, the Bank and Chicago Title are collectively referred to as the defendants.) A trustee's sale took place on February 19, 2010, at which time the Bank, as the sole bidder, purchased the seven units through a credit bid.

Over two years later, Provident filed a wrongful foreclosure suit against the Bank and Chicago Title. It claimed, among other things, that the foreclosure was improper because the notice of trustee's sale (Sale Notice) recorded by Chicago Title was defective due to it having listed nine units when the Bank at the time held security interests in only seven units. It is undisputed that the Bank took title through foreclosure to only the seven units in which it had held security interests at the time of the trustee's sale.

Defendants moved separately for summary judgment, asserting that the wrongful foreclosure claim was without merit. They claimed, inter alia, that Provident could not establish the requisite prejudice from the Sale Notice irregularity to maintain a wrongful foreclosure claim. Defendants argued there was no prejudice because—contrary to what Provident alleged in its third amended complaint—there were no ready, willing, and able prospective buyers who, but for the irregularity, would have made a bid that would have resulted in the disbursement of excess sales proceeds to Provident. The trial court granted summary judgment in favor of both defendants, and Provident appeals from the judgment entered on that order.

In actuality, the Bank filed a motion for summary judgment, or, in the alternative, a motion for summary adjudication of three causes of action of the third amended complaint. For simplicity, we will refer to the Bank's alternative motions as a motion for summary judgment.

On appeal, Provident contends that the overinclusion of units in the Sale Notice constituted a material irregularity. It disputes that it was required to show prejudice in the form of a ready, willing, and able buyer who would have bid at the trustee's sale absent the irregularity. Further, Provident argues—asserting a legal position not raised below—that even if it were only a slight irregularity, coupled with "a gross inadequacy of price," as was the case here, the foreclosure was wrongful under the law. Lastly, Provident contends—in an argument raised for the first time in its reply brief, thereby precluding defendants from addressing it—that the Sale Notice irregularity rendered the trustee's sale void, and thus Provident was not required to show prejudice or that it had tendered the indebtedness as generally required for a challenge to a trustee's sale.

We conclude the trial court properly found that there was no triable issue of material fact as to Provident's wrongful foreclosure claim. Accordingly, because the wrongful foreclosure claim against defendants was not viable—and because two derivative claims against the Bank were thus not maintainable—the court properly granted both summary judgment motions. We will therefore affirm the judgment.

I. STATEMENT OF RELEVANT FACTS

The underlying facts in this case, as developed in the papers filed below in support of and in opposition to defendants' motions for summary judgment, are largely undisputed and are presented below.

Provident in 2005 obtained a $3,850,000 loan (first loan) from the Bank to purchase the Property. This first loan was memorialized by a promissory note (first note) and was secured by a deed of trust (first place deed of trust). In 2006, Provident obtained a second loan from the Bank in the amount of $9,430,000, evidenced by a note (second note) secured by a deed of trust (second place deed of trust). Provident used this second loan to subdivide and develop the Property into 12 office condominium units (unit Nos. 1-12). After developing the Property, in April 2008, Provident sold three of the units (unit Nos. 1, 4, and 5). And in March 2009, Providence refinanced the Property as to unit Nos. 6 and 8 by obtaining a loan from Evertrust Bank. Thus, as of that time, there were seven units within the Property for which the Bank continued to hold security interests (i.e., unit Nos. 2, 3, 7, 9, 10, 11, and 12).

Provident was in default as of October 2009 with respect to payments due under the first note and second note. As a result, Chicago Title, as trustee, recorded a notice of default under the first place deed of trust on October 19, 2009. Provident did not cure its default, and on January 25, 2010, Chicago Title recorded the Sale Notice under the first place deed of trust, noticing the sale for February 19, 2010. Although the Bank had previously released its security interests in unit Nos. 1, 4, 5, 6, and 8, the Sale Notice included unit Nos. 6 and 8 in the description of the property to be sold at the trustee's sale. The Sale Notice also included a statement that the property to be sold consisted of "all right, title and interest conveyed to and now held by [the Bank] under said [first place] Deed of Trust." On or about February 16, 2010, Provident advised Chicago Title—by contacting its local San Jose branch escrow office—that the Sale Notice was overinclusive because it had identified unit Nos. 6 and 8 in the description of the property that would be sold. Although the Sale Notice contained contact information for Chicago Title's foreclosure department located in San Bernardino, California, Provident never contacted that department to advise of the perceived defects in the Sale Notice. Chicago Title never notified the Bank of the Sale Notice irregularity or that Provident had advised Chicago Title of the irregularity.

Chicago Title conducted the trustee's sale as noticed on February 19, 2010. The Bank was the successful bidder, making a full credit bid of $2,767,060.55. The Bank took title to the seven units in which it had held security interests at the time of the trustee's sale. There were no other prospective bidders at the trustee's sale. And there were no ready, willing and able buyers who, but for the irregularity in the Sale Notice, would have bid an amount sufficient to have resulted in the disbursement of excess sales proceeds to Provident.

II. PROCEDURAL BACKGROUND

A. Superseded Pleadings

Provident filed its initial complaint on March 23, 2012. It named the Bank, Chicago Title, and LandAmerica Commonwealth as defendants. The court sustained Chicago Title's demurrer to this pleading with leave to amend.

The three complaints that preceded the operative third amended complaint were filed on behalf of Provident and Michael Luu, its member/manager. The court sustained without leave to amend the Bank's demurrer to the second amended complaint as it concerned Luu on the ground that he lacked standing to sue. The operative pleading, the third amended complaint, named Provident only as plaintiff. And the appeal was taken on behalf of Provident only. Acknowledging Luu's early participation in the case, for simplicity, we will refer to Provident as the plaintiff filing the four complaints herein.

Provident filed a request that this court take judicial notice of (1) the complaint it filed on March 23, 2012, and (2) a grant deed recorded March 20, 2012, in which the Bank conveyed the seven foreclosed units to a third party, Scott Cooley. The two documents are already part of the record. Accordingly, Provident's request for judicial notice is denied.

The demurrer was also asserted by LandAmerica Commonwealth. LandAmerica Commonwealth does not appear as a defendant in the subsequent complaints filed by Provident

On November 9, 2012, Provident filed a verified first amended complaint. It alleged, inter alia, that the incorrect information in the Sale Notice would have resulted in the Bank's being unjustly enriched because it "could justifiably get more monies out of the foreclosure sale if more of the units were available in the 'package' sale." Provident alleged further that "9 units being available instead of 7, would make the industrial complex looks [sic] more desirable to a future buyer."

Provident on January 3, 2013, filed a second amended complaint. The court sustained with leave to amend the Bank's demurrer as to each of the 12 causes of action of the second amended complaint.

B. Third Amended Complaint

On July 5, 2013, Provident filed its third amended complaint (hereafter, the Complaint). Provident alleged twelve causes of action: (1) wrongful foreclosure; (2) conversion; (3) violation of Business and Professions Code section 17200; (4) wrongful foreclosure (based upon violation of one-form-of-action rule); (5) breach of covenant of good faith and fair dealing (wrongful foreclosure); (6) unjust enrichment; (7) breach of written contract; (8) breach of promise implied from written contract; (9) breach of covenant of good faith and fair dealing (based upon releases); (10) promissory estoppel; (11) negligent misrepresentation; and (12) interference with prospective economic advantage. All claims were alleged against the Bank; only the first cause of action was asserted against Chicago Title.

Provident alleged that in 2005, it obtained a purchase money loan from the Bank in the amount of $3,850,000 to purchase the Property. The loan was memorialized by the first place note secured by the first place deed of trust. In 2006, Provident obtained a construction loan in the amount $9,400,000 to improve and subdivide the Property into 12 office condominiums, the loan being memorialized by the second place note secured by the second place deed of trust. Construction work commenced in July 2006 and was substantially completed by August 2007. The final subdivision map was recorded in March 2008, resulting in the creation of 12 units with separate assessor's parcel numbers.

We set forth in this paragraph and in the four paragraphs that follow a summary of Provident's allegations in the Complaint. For simplicity and to avoid repetition, we decline to insert the prefatory "Provident alleged" in describing the matters contained in the pleading.

In April 2008, Provident sold three of the units (unit Nos. 1, 4, and 5); from the sales proceeds, Provident paid and the Bank accepted payments of less than the full indebtedness owed by Provident under the first place note and second place note (approximately $3,750,000 and $1,250,000, respectively), and the Bank issued releases as to those three units. In March 2009, Provident refinanced the loans as to unit Nos. 6 and 8 through another lender, Evertrust Bank; Provident paid and Cathay Bank accepted payments from that refinancing and issued releases as to those two units. After that refinancing, Provident owed a combined amount of approximately $6,000,000 to Cathay Bank on the first place and second place notes.

On October 19, 2009, the Bank, through Chicago Title as trustee, recorded a notice of default declaring that approximately $2,700,000 was due and unpaid on the first place note and deed of trust. On January 25, 2010, the Bank, through Chicago Title, recorded the Sale Notice with a sale date of February 19, 2010. There was a recital in the Notice of Sale that nine units would be sold at the sale, namely, unit Nos. 2, 3, 6, 7, 8, 9, 10, 11, and 12. At the time, however, the Bank held security interests in only seven units of the Property, and unit Nos. 6 and 8, the loans for which had been previously refinanced, were erroneously included in the Sale Notice. Provident alleged that the erroneous Sale Notice "would have [had] a 'chilling effect' on prospective purchasers at the foreclosure sale . . . because any prospective purchaser who did his/her due diligence at the recorder's office would [have] discover[ed] the mismatch between what Cathay [Bank] ha[d] a security interest in and what Cathay [Bank] purport[ed] to be auctioning off at the foreclosure sale. That [would have been] a scenario ripe for litigation and all legitimate prospective purchasers would [have] back[ed] off and fail[ed] to make their bids."

On or before February 16, 2010, Provident, through its member/manager, Michael Luu, advised Chicago Title that it had erroneously identified in the Sale Notice two units for which the Bank did not hold security interests. Chicago Title and the Bank failed to address the problem, and they proceeded with the trustee's sale on February 19, 2010. The Bank purchased the seven units through a credit bid of $2,767,060.55, which Provident characterized in the Complaint as "a grab of over $12,000,000.00 equity—based upon a defective Notice of Trustee's Sale that did 'chill' prospective purchasers from making a fair market bid."

In the first cause of action for wrongful foreclosure asserted against both defendants, Provident alleged that "[t]he foreclosure was wrongful due to an irregularity in the Notice of Trustee's Sale that had a chilling effect on ready, willing and able prospective bidders at the sale who would have bid but for the defect." The irregularity concerned the identification of nine units, when the Bank held security interests in only seven units. The value of the seven units deeded to Cathay Bank at the trustee's sale was more than $14,800,000, while the Bank acquired title "at the tainted foreclosure sale" for approximately $2,767,000.

C. Demurrer to Third Amended Complaint

Cathay Bank demurred to each of the 12 causes of action of the Complaint. Chicago Title likewise demurred to the first cause of action of the Complaint—the only claim alleged against it. The court sustained without leave to amend the Bank's demurrer to the Complaint as to the second, third, fourth, seventh, eighth, ninth, tenth, eleventh, and twelfth causes of action. It overruled the Bank's demurrer to the first, fifth, and sixth causes of action. And the court overruled Chicago Title's demurrer to the first cause of action of the Complaint.

Provident does not challenge on appeal the court's order sustaining the Bank's demurrer without leave to amend as to the second through fourth, and seventh through twelfth causes of action. Accordingly, it has abandoned any such challenge. (Tiernan v. Trustees of Cal. State University & Colleges (1982) 33 Cal.3d 211, 216, fn. 4 (Tiernan) [appellate court treats as abandoned arguments made at trial level that are not asserted on appeal].)

D. Motions for Summary Judgment

In May 2014, Chicago Title filed a motion for summary judgment. It asserted three basic contentions: (1) Provident was not prejudiced as a result of any irregularity in the Sale Notice because there were no ready, willing, and able prospective buyers who, but for the irregularity, would have paid a higher auction price that would have yielded excess proceeds to be disbursed to Provident; (2) Provident did not tender the indebtedness to the Bank prior to foreclosure, a prerequisite to asserting its wrongfulness; and (3) Provident cannot show that there was an illegal, fraudulent, or willfully oppressive sale necessary for a finding of wrongful foreclosure.

In July 2014, the Bank filed a motion for summary judgment or, alternatively, a motion for summary adjudication as to the three remaining claims in the Complaint (the first, fifth, and sixth causes of action). The Bank argued, inter alia, that Provident could not establish its wrongful foreclosure claim (first cause of action) because it suffered no prejudice from any procedural irregularity in the Sale Notice, i.e., Provident could not establish there were any ready, willing, and able prospective buyers who, but for the irregularity, would have paid a higher auction price at the trustee's sale. The Bank contended further that the fifth (breach of implied covenant) and sixth (unjust enrichment) causes of action were without merit because they were entirely derivative of the meritless wrongful foreclosure cause of action.

Provident opposed both summary judgment motions. It asserted that because the Sale Notice erroneously included two units for which the Bank no longer held a security interest, the trustee's sale based upon that notice was void. It argued further that because it was seeking damages for wrongful foreclosure, rather than to set aside the trustee's sale, set-aside cases relied on by defendants were inapplicable. Provident also contended that the rule requiring the trustor's tender of indebtedness had no application, because the trustee's sale in this instance was void, rather than voidable. And, Provident argued, although the plaintiff challenging a voidable trustee's sale must show harm or prejudice, no prejudice need be shown if the sale is void.

After hearing argument, the court granted both motions for summary judgment. It concluded that if Provident could not present evidence there was a ready, willing and able buyer who, but for the Sale Notice's irregularity, would have submitted a bid that would have resulted in excess sales proceeds to Provident, its claim of damages was speculative. Since, the court concluded, it was undisputed there was no such prospective buyer, Provident had not shown prejudice from the error in the Sale Notice. The court held: "This is dispositive as it means [Provident's] damages are speculative." The court also held that the claims for breach of implied covenant of good faith and fair dealing and unjust enrichment, which were based upon the wrongful foreclosure claim, also failed. The court entered judgment in favor of defendants on October 1, 2014. Provident filed a timely notice of appeal.

III. DISCUSSION

A. Summary Judgment and Standard of Review

"The purpose of the law of summary judgment is to provide courts with a mechanism to cut through the parties' pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute." (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843 (Aguilar).) As such, the summary judgment statute, Code of Civil Procedure section 437c, "provides a particularly suitable means to test the sufficiency of the plaintiff's prima facie case and/or of the defendant's [defense]." (Caldwell v. Paramount Unified School Dist. (1995) 41 Cal.App.4th 189, 203.)

All further statutory references are to the Code of Civil Procedure unless otherwise stated.

The moving party "bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law." (Aguilar, supra, 25 Cal.4th at p. 850, fn. omitted.) A defendant moving for summary judgment must " 'show[ ] that one or more elements of the cause of action . . . cannot be established' by the plaintiff." (Id. at p. 853, quoting § 437c, subd. (o)(2).) A defendant meets its burden by presenting affirmative evidence that negates an essential element of the plaintiff's claim. (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 334 (Guz).) Alternatively, a defendant meets its burden by submitting evidence "that the plaintiff does not possess, and cannot reasonably obtain, needed evidence" supporting an essential element of its claim. (Aguilar, supra, at p. 855; see also Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 780.)

Since summary judgment motions involve pure questions of law, we review independently the granting of summary judgment to ascertain whether there is a triable issue of material fact justifying the reinstatement of the action. (Wiener v. Southcoast Childcare Centers, Inc. (2004) 32 Cal.4th 1138, 1142.) In doing so, we "consider[] all of the evidence the parties offered in connection with the motion (except that which the court properly excluded) and the uncontradicted inferences the evidence reasonably supports. [Citation.]" (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476.) We need not defer to the trial court and are not bound by the reasons in its summary judgment ruling; we review the ruling of the trial court, not its rationale. (Kids' Universe v. In2Labs (2002) 95 Cal.App.4th 870, 878 (Kids' Universe).)

B. Deeds of Trust and Nonjudicial Foreclosure

Our Supreme Court has described the nature of deeds of trust and the nonjudicial foreclosure process as follows: "There are three parties in the typical deed of trust: the trustor (debtor), the beneficiary (lender), and the trustee. [Citation.] The trustee holds a power of sale. If the debtor defaults on the loan, the beneficiary may demand that the trustee conduct a nonjudicial foreclosure sale. [Citation.] . . . [¶] Civil Code sections 2924 through 2924k . . . govern nonjudicial foreclosure sales pursuant to a power of sale contained in a deed of trust. 'The purposes of this comprehensive scheme are threefold: (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.]' [Citation.]" (Biancalana v. T.D. Service Co. (2013) 56 Cal.4th 807, 813-814; see also Moeller v. Lien (1994) 25 Cal.App.4th 822, 830.)

"The trustee starts the nonjudicial foreclosure process by recording a notice of default and election to sell. [Citation.] After a three-month waiting period, and at least 20 days before the scheduled sale, the trustee may publish, post, and record a notice of sale. [Citations.] If the sale is not postponed and the borrower does not exercise his or her rights of reinstatement or redemption, the property is sold at auction to the highest bidder. [Citations.] Generally speaking, the foreclosure sale extinguishes the borrower's debt; the lender may recover no deficiency. [Citation.]" (Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 927, fn. omitted (Yvanova).)

" '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.]' [Citation.]" (Melendrez v. D & I Investment, Inc. (2005) 127 Cal.App.4th 1238, 1250 (Melendrez).)

"A nonjudicial foreclosure sale is accompanied by a common law presumption that it 'was conducted regularly and fairly.' [Citations.] This presumption may only be rebutted by substantial evidence of prejudicial procedural irregularity. [Citation.] . . . It is the burden of the party challenging the trustee's sale to prove such irregularity and thereby overcome the presumption of the sale's regularity. [Citation.]" (Melendrez, supra, 127 Cal.App.4th at p. 1258.)

C. Summary Judgment of the Wrongful Foreclosure Claim Was Proper

1. Introduction

Wrongful foreclosure is a common law tort taking the form of either "an equitable action to set aside a foreclosure sale, or an action for damages resulting from the sale, on the basis that the foreclosure was improper. [Citation.]" (Sciarratta v. U.S. Bank National Association (2016) 247 Cal.App.4th 552, 561.) The elements of such a claim—whether it is an equitable set-aside action or an action for damages—are "(1) the defendants caused an illegal, fraudulent, or willfully oppressive sale of the property pursuant to a power of sale in a mortgage or deed of trust; (2) the plaintiff suffered prejudice or harm; and (3) the plaintiff tendered the amount of the secured indebtedness or was excused from tendering. [Citation.]" (Chavez v. Indymac Mortgage Services (2013) 219 Cal.App.4th 1052, 1062 (Chavez); see also Miles v. Deutsche Bank National Trust Company (2015) 236 Cal.App.4th 394, 408 (Miles).)

As discussed below, the court properly concluded that Provident's wrongful foreclosure claim failed because of the absence of a showing of prejudice (the second element identified, ante). But because an appellate court considers the correctness of the trial court's ruling on summary judgment regardless of its rationale (Kids' Universe, supra, 95 Cal.App.4th at p. 878), we will also consider whether Provident's claim lacked merit because of the absence of a showing supporting the first element (illegal, fraudulent or oppressive sale), and the third element (tender of indebtedness).

We will also address two further arguments made by Provident in support of reversal. The first argument—one that Provident did not raise in the trial court and improperly raises for the first time on appeal—is that it established wrongful foreclosure by showing the Bank's credit bid was grossly inadequate as compared with the aggregate value of the seven units, because "gross inadequacy of price [paid at the foreclosure sale] coupled with even the slightest irregularity is sufficient to set aside the foreclosure." Provident's second argument—which is also improper because, although it was made below, it was presented for the first time in this court in Provident's reply brief, thereby precluding defendants from addressing it in their appellate briefs—is that the trustee's sale was void, not merely voidable, and therefore Provident was not required to establish prejudice or tender.

2. Illegal , Fraudulent or Oppressive Trustee's Sale

"A beneficiary or trustee under a deed of trust who conducts an illegal, fraudulent or willfully oppressive sale of property may be liable to the borrower for wrongful foreclosure. [Citations.]" (Yvanova, supra, 62 Cal.4th at p. 929.) One instance in which a foreclosure is deemed wrongful is when it is "initiated by one with no authority to do so." (Ibid.; see also Dimock v. Emerald Properties LLC (2000) 81 Cal.App.4th 868, 874-876 (Dimock) [because only current trustee is authorized to proceed with trustee's sale, foreclosure was void where it was conducted by former trustee after successor trustee was substituted].) Another example of a trustee's sale being deemed illegal, fraudulent, or willfully oppressive is where two potential bidders had conspired to depress the purchase price at the trustee's sale. (Lo v. Jensen (2001) 88 Cal.App.4th 1093, 1097- 1098; see also South Bay Building Enterprises, Inc. v. Riviera Lend-Lease, Inc. (1999) 72 Cal.App.4th 1111, 1122 (South Bay Building) [senior lienor's actions toward junior lienor held wrongful, where senior lienor postponed two sale dates to prevent available third parties from bidding, and knowingly permitted trustee to overstate amount in default].)

But minor procedural irregularities in the foreclosure process generally will not furnish grounds for challenging the foreclosure sale unless the plaintiff shows resulting prejudice. (Knapp v. Doherty (2004) 123 Cal.App.4th 76, 94 (Knapp); see also California Trust Co. v. Smead Inv. Co. (1935) 6 Cal.App.2d 432, 435 [irregularity will not invalidate "a trustee's sale in the absence of a claim that the irregularity operated to the injury of the owner"].) As has been explained by a leading authority of California real property law: "As a general rule, a mere procedural irregularity that does not cause prejudice to the trustor is not grounds for setting aside a completed sale, in the absence of some other basis for avoiding the sale. A mere inadequacy of price, without a showing of some procedural irregularity that contributed to the inadequacy or otherwise injured the trustor, is insufficient grounds to set aside a foreclosure sale. A procedural irregularity that actually or presumptively prejudices the trustor (such as a failure to inform the owner of its statutory right to redeem in the unique context of a sale by an owner's association in a common interest development) is a basis for overturning the sale. Conversely, a procedural irregularity that causes no harm or prejudice to the trustor will not justify setting aside a sale. Usually, the trustor is unable to show prejudice where it fails, despite every opportunity to do so, to tender payment of the debt when it is due. A debtor who admittedly failed to pay a debt when due usually cannot avoid a foreclosure sale by raising technical arguments about matters that do not cause him or her actual injury, such as infirmities in the chain of assignments or documentation designating the trustee or beneficiary to conduct a foreclosure sale." (5 Miller & Starr, Cal. Real Estate (4th ed. 2017) § 13:254, pp. 13-1074 to 13-1075, fns. omitted.)

Thus, for instance, a panel of this court held that a minor procedural irregularity—the premature service of the notice of sale—without a showing that plaintiffs were harmed thereby, did not justify setting aside the trustee's sale. (Knapp, supra, 123 Cal.App.4th at pp. 92-97.) This court concluded: "There was no prejudicial procedural irregularity. Likewise, there was no evidence that the premature service of the Sale Notice had any impact on the ultimate sales price." (Id. at p. 94, original italics.) Other nonprejudicial procedural irregularities that appellate courts have held to be insufficient to support a challenge to the trustee's sale include (1) the erroneous recital in the notice of default of the date of default where the trustor was not misled, the error did not contribute to the loss of the property, and the default notice otherwise correctly stated the nature and amount of the default (id. at pp. 98-99); (2) the failure to properly serve the trustor's attorney with the notice of default, where the attorney actually received the notice (Crummer v. Whitehead (1964) 230 Cal.App.2d 264, 267-268); and (3) the service of the notice of sale to the incorrect address, where the trustor knew of the impending sale and made attempts to delay it (Lehner v. United States (9th Cir. 1982) 685 F.2d 1187, 1190-1191). As one court has explained, "mere technical violations of the foreclosure process will not give rise to a tort claim; the foreclosure must have been entirely unauthorized on the facts of the case." (Miles, supra, 236 Cal.App.4th at p. 409.)

Citing the Ninth Circuit Court of Appeals decision in In re Worcester (9th Cir. 1987) 811 F.2d 1224 (Worcester), Provident contends that "[i]ncluding extra property in the notice of sale is a material irregularity." Worcester does not stand for the proposition that the inclusion of additional property in a notice of sale is, ipso facto, a material irregularity. And, even if Worcester so held, California law is to the contrary. (See T-Mobile W. LLC v. City & County of San Francisco (2016) 3 Cal.App.5th 334, 354 [California appellate courts "are not bound by the Ninth Circuit's opinion on matters of state law"].)

In its opposition to summary judgment below, Provident did not cite Worcester, supra, 811 F.2d 1224 in support of its position that its wrongful foreclosure claim had merit.

Crist v. House & Osmonson (1936) 7 Cal.2d 556 (Crist) is the only California case identified by the parties that concerned the inclusion of additional property in a notice of sale and its impact upon a trustee's sale. In Crist, the trustee erroneously included in the notice of sale an approximate 312-square-foot strip of land that had been previously released. (Id. at p. 557.) The Supreme Court examined out-of-state authorities, noting that they "recognize[d] the rule that such inaccuracies [misdescription of property being sold] which are not calculated to mislead or work injury or prejudice are to be disregarded. [Citations.]" (Id. at p. 559.) The high court, affirming the trial court's conclusion that the trustee's sale should not be invalidated, concluded that it was "sufficiently well settled that in the absence of any evidence that actual prejudice was suffered the misdescription by the inclusion of property theretofore released must be of such a substantial nature that prejudice is likely to result to the trustors." (Ibid.)

Out-of-state cases have likewise concluded that the erroneous inclusion of property in a default notice or a notice of sale where the error is not misleading or prejudicial is an insufficient basis to invalidate the foreclosure sale. (See, e.g., Baca v. Chavez (N.M. 1927) 252 P. 987, 990 [possibility of prejudice from notice of sale irregularity in failing to inform public that only a two-thirds interest in property was involved, rather than the whole interest, held remote]; Diversified Developers, Inc. v. Texas First Mortg. Reit (Tex. Civ. App. 1979) 592 S.W.2d 43, 45 [erroneous inclusion of 34 acres of previously released property in notice of sale did not invalidate trustee's sale where there was no evidence of resulting prejudice to mortgagor; "sole bidder had no intention to purchase the released property . . . bid price was not affected by the inclusion of such released property [and] . . . no evidence that any prospective bidder was prevented or deterred in any manner"]; Koegel v. Prudential Mut. Sav. Bank (Wash. Ct. App. 1988) 752 P.2d 385. 388 [trustee's erroneous inclusion in notice of default of previously released property "was nonprejudicial and the debtor could have invoked judicial protection prior to the sale but failed to do so"].)

Contrary to Provident's urging, Worcester does not stand for the proposition that the erroneous inclusion of additional property in a notice of sale necessarily constitutes a material irregularity justifying setting aside a trustee's sale. Rather, Worcester, supra, 811 F.2d 1224 held that the materiality of a sale irregularity is determined de novo (id. at p. 1229), and under the circumstances presented there, the irregularity was, in fact, a material one (id. at pp. 1229-1230).

Worcester is, in any event, distinguishable. There, the trustee, in addition to properly identifying in the notice of sale a residence and a surrounding four-acre parcel, erroneously included an adjacent 40-acre parcel (including royalties and oil rights) owned by the trustor that was not subject to a secured loan. (Worcester, supra, 811 F.2d at pp. 1226-1227.) Significantly, the trustee's deed also erroneously included the 40-acre parcel. (Id. at p. 1232.) The property was purchased by a third party at the trustee's sale, and 17 days later, he resold the property for nearly nine times the auction price. (Id. at p. 1227.) The Ninth Circuit observed that the bankruptcy court had found the inclusion of the 40-acre parcel in the notice of sale could have resulted in confusion among bidders, "and that this confusion was likely to have dissuaded bidders seeking to purchase only single family residences from attending the trustee's sale of the 4-acre parcel. [Citation.]" (Id. at p. 1229, fn. omitted.) Based upon this set of facts—which differ significantly from the facts here—the Ninth Circuit held that the irregularity was a material one. (Id. at p. 1230.)

There was appraiser testimony that the property was worth $240,000, and thus, the auction price ($14,975) was approximately six percent of property's value. (Worcester, supra, 811 F.2d at p. 1227.)

Although not relevant to the discussion here regarding the materiality of the irregularity, Worcester is also factually distinguishable because the trustor there had expressed a willingness to tender the indebtedness; the Ninth Circuit determined that the tender "was 'effective' since she had the ability under California law to perform according to her offer." (Worcester, supra, 811 F.2d at p. 1230.) There is no evidence here that Provident tendered the indebtedness to the Bank.

In contrast, the only procedural irregularity upon which Provident bases its wrongful foreclosure claim is that the Sale Notice included two units (unit Nos. 6 and 8) that were not subject to security interests by the Bank. But it was undisputed that the Sale Notice also included a statement that the property to be sold consisted of "all right, title and interest conveyed to and now held by [the Bank] under said [first place] Deed of Trust." (Italics added.) Thus, notwithstanding the ambiguity, the Sale Notice was capable of being read as presenting for sale only the seven units in which the Bank then held security interests. There was also no dispute that the property conveyed at the trustee's sale included only the seven units in which the Bank at the time held security interests. And there was no evidence presented in opposition to the summary judgment motions that the inclusion of unit Nos. 6 and 8 in the Sale Notice caused or contributed to Provident's loss of the seven units. In fact, it was undisputed that (1) there were no prospective bidders at the trustee's sale other than the Bank, and (2) there were no ready, willing and able buyers who, but for the Sale Notice irregularity, would have bid an amount sufficient to have resulted in a disbursement of excess sales proceeds to Provident.

Moreover, Provident's claim that the Sale Notice irregularity was material appears directly tied to its position, as enunciated in its opening brief, that "potential bidders would be 'chilled' from showing up due to the irregularity," as the "irregularity would cause anybody that did their homework [sic] . . .to stay away from the sale." In the face of its admissions in opposing summary judgment that the Bank was the only prospective bidder and there were no ready, willing and able buyers who, but for the irregularity, would have bid an amount that would have yielded excess proceeds to Provident, this position is based upon speculation that cannot defeat summary judgment. (See Horn v. Cushman & Wakefield Western, Inc. (1999) 72 Cal.App.4th 798, 807 [triable issue of fact must be based upon conflict of evidence, not "by speculation or conjecture"]; Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 163 [in opposing summary judgment, "responsive evidence that gives rise to no more than mere speculation" is not substantial evidence].)

Under these circumstances, we conclude that defendants in their summary judgment motions negated the first element of a wrongful foreclosure claim. The nature of the Sale Notice irregularity here is similar to the procedural irregularities with respect to the notice of default and service of the notice of sale that a panel of this court found insufficient to support a challenge to the trustee's sale. (See Knapp, supra, 123 Cal.App.4th at pp. 92-99.) This was not an instance in which "the foreclosure [was] entirely unauthorized on the facts of the case." (Miles, supra, 236 Cal.App.4th at p. 409.) Simply stated, the undisputed facts fail to support a potential finding that "[the] beneficiary or trustee under a deed of trust . . . conduct[ed] an illegal, fraudulent or willfully oppressive sale of property." (Yvanova, supra, 62 Cal.4th at p. 929.) Although not the stated rationale for the trial court's conclusion that Provident's wrongful foreclosure claim was without merit, we nonetheless confirm the correctness of the court's ruling on this basis. (Kids' Universe, supra, 95 Cal.App.4th at p. 878.)

3. Showing of Prejudice or Harm

The second element of a wrongful foreclosure claim is prejudice, which was the focal point of the decision by the court below. As a general rule, an action to set aside foreclosure or seek damages for wrongful foreclosure based upon sale irregularities will be unsuccessful absent a showing that "the alleged imperfection in the foreclosure process was prejudicial to the plaintiff's interests." (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 272 (Fontenot), disapproved on other grounds in Yvanova, supra, 62 Cal.4th at p. 939, fn. 13.) As we have noted above, minor procedural irregularities in the nonjudicial foreclosure process that do not cause harm to the trustor do not furnish grounds for challenging the trustee's sale. (Knapp, supra, 123 Cal.App.4th at pp. 92-97.) Thus, "[p]rejudice is not presumed from 'mere irregularities' in the process. [Citation.]" (Fontenot, supra, at p. 272.)

Provident argued below in opposition to summary judgment that it was not required to show prejudice in the form of a ready, willing, and able prospective buyer who would have bid at the trustee's sale but for the Sale Notice irregularity: "Ours is not a 'set aside' case. Ours is not [an equitable action] for recovery of the property. Ours is for damages based upon a void sale. No ready, willing and able buyer is required." (Emphasis in original.) Provident on appeal reiterates—without explaining the significance of the statement—that it sought damages for wrongful foreclosure, rather than having brought an equitable set-aside action. It is unclear whether, on appeal, Provident (as it did in opposing summary judgment) contends it need not show prejudice because it has sued for damages rather than for equitable relief. Assuming that is still Provident's position, it is without merit.

It is true that many courts holding that prejudice is a required element have done so in the context of reviewing an equitable claim to set aside a foreclosure sale. (See, e.g. Lona v. Citibank, N.A. (2011) 202 Cal.App.4th 89, 112, 104 (Lona); Melendrez, supra, 127 Cal.App.4th at p. 1258.) But courts have likewise recognized that a showing of prejudice is required in claims for damages for wrongful foreclosure. (See, e.g., Ram v. OneWest Bank, FSB (2015) 234 Cal.App.4th 1, 18 (Ram); Chavez, supra, 219 Cal.App.4th at p. 1062; Debrunner v. Deutsche Bank National Trust Co. (2012) 204 Cal.App.4th 433, 443.)

Here, Provident pleaded prejudice in the Complaint. It alleged not only that the erroneous inclusion of unit Nos. 6 and 8 in the Sale Notice "would have [had] a 'chilling effect' on prospective purchasers at the foreclosure sale"; (italics added) it averred that the irregularity "did 'chill' prospective purchasers from making a fair market bid." (Italics added.) In opposing the summary judgment motions, however, Provident admitted there were no ready, willing, and able buyers who, but for the irregularity, would have bid an amount sufficient to have caused a disbursement of excess sales proceeds to Provident. It therefore failed to present evidence of prejudice required for its wrongful foreclosure claim.

The evidence submitted in support of the summary judgment motions included Provident's response to a special interrogatory propounded by the Bank: "[Provident is u]nable to identify any such ready, willing, and able buyers because although it is believed they exist, [Provident] does not have any contact information on them at this time. Discovery and investigation are continuing." The evidence also included Provident's response to a request for admission propounded by the Bank: "[Provident a]dmit[s] there were no ready, willing and able buyers, who, but for the irregularity in the [Sale Notice], would have bid enough at the TRUSTEE'S SALE to result in a disbursement of excess sale proceeds to Provident." (Emphasis in original.)

FPCI RE-HAB 01 v. E&G Investments, Ltd. (1989) 207 Cal.App.3d 1018 (FPCI RE-HAB), relied on by defendants, supports this conclusion. There, after its security interest was extinguished at a trustee's sale initiated by the senior lienholder, the junior lienholder (RE-HAB) sued for damages, alleging that the defendants "conspired to conduct the sale in a manner calculated to 'chill the bidding' and permit [the defendants] to purchase the property at lower than market value and to cause RE-HAB to lose its security interest." (Id. at p. 1020.) It alleged the irregularities were that the trustee erroneously (1) advertised that cash was required to cure the default, and (2) advertised the total indebtedness due, rather than the secured amount that was in default. (Id. at pp. 1020-1021.) RE-HAB appealed after summary judgment was entered in favor of the defendants. (Id. at pp. 1119-1020.)

The Court of Appeal affirmed, concluding that RE-HAB had failed to present evidence in opposition to summary judgment showing that any irregularities had caused it damage. (FPCI RE-HAB, supra, 207 Cal.App.3d at p. 1024.) The court held: "In order to prove it was damaged by the irregularities in the foreclosure sale which dissuaded or prevented a higher bid, the junior lienor would have to produce a ready, willing and able buyer who would have paid the higher price but for the wrongful conduct. Otherwise, damages alleged would be speculative." (Id. at p. 1023; see also Park v. First American Title Co. (2011) 201 Cal.App.4th 1418, 1426 [following FPCI RE-HAB, upholding summary judgment where plaintiff failed to show existence of prospective buyer who was ready, willing, and able to purchase property at trustee's sale]; South Bay Building, supra, 72 Cal.App.4th at pp. 1122-1123 [following FPCI RE-HAB, concluding trial court erred in granting directed verdict where plaintiff presented damages, i.e., a prospective buyer present at trustee's sale with cashier's check].)

Provident argues that FPCI RE-HAB has no application here. It contends the appellate court rejected REHAB's claim that the sale was irregular because the trustee misstated the amount in default by stating the total indebtedness, rather than the secured amount that was in default. (See FPCI RE-HAB, supra, 207 Cal.App.3d at p. 1023 ["the notice of amount due at the foreclosure sale was correct"].) Provident argues that in FPCI RE-HAB, "there was no irregularity in the foreclosure process!" (Emphasis in original.) Provident contends that in contrast to FPCI RE-HAB, where there was no irregularity that resulted in the chilling of prospective bidders, here, there was an irregularity that would have " 'chilled' [buyers] from showing up [because a]ny potential bidder that [sic] did his homework would see the bidding is on an advertised nine units but the trustee [sic] only owns seven units—a lawsuit waiting to happen." Provident's argument seeking to distinguish FPCI RE-HAB is unpersuasive. Regardless of the nature of the claimed irregularity in FPCI RE-HAB, the case stands for the proposition that, in order to prevail, a party asserting a legal claim for wrongful foreclosure must provide evidence of proximately caused damages that are not speculative. (FPCI RE-HAB, supra, 207 Cal.App.3d at p. 1023; see Fontenot, supra, 198 Cal.App.4th at p. 272 [wrongful foreclosure plaintiff must show irregularity "was prejudicial to the plaintiff's interests"].) Provident failed to provide such evidence.

We note and address briefly three additional arguments made by Provident in asserting the inapplicability of FPCI RE-HAB. First, it asserts that the ready, willing, and able buyer requirement was "created" by the FPCI RE-HAB court, and that requirement has been applied only in RE-HAB, and in South Bay Building, supra, 72, Cal.App.4th 1111. Provident does not explain why this circumstance warrants not following FPCI RE-HAB and we perceive of no such reason. Second, Provident in its reply brief argues that because the trustee's sale in this case was void, which was not the case in FPCI RE-HAB, Provident need not show "that someone would have bid more," but for the irregularity. Since, as we discuss, post, we reject Provident's contention that the trustee's sale was void, we likewise find no merit to this attempt to distinguish FPCI RE-HAB. Third, Provident argued below that FPCI RE-HAB was distinguishable because it was "a sold-out junior lienholder case" (emphasis in original), rather than a plaintiff-trustor suing for wrongful foreclosure. Provident does not repeat this argument on appeal, and we therefore treat it as abandoned. (Tiernan, supra, 33 Cal.3d at p. 216, fn. 4.)

Based upon the foregoing, we conclude that Provident failed to present any evidence in support of the element of prejudice that was required to maintain a wrongful foreclosure claim. (Ram, supra, 234 Cal.App.4th at p. 18.) The court properly granted summary judgment on this basis.

4. Tender of Indebtedness

The third element of tender is also at issue here. Generally, a borrower seeking to set aside a trustee's sale based upon irregularities in the sale must allege that he or she offered to pay the full amount of the secured indebtedness. (See, e.g., Arnolds Management Corp. v. Eischen (1984) 158 Cal.App.3d 575, 580; Karlsen v. American Sav. & Loan Assn. (1971) 15 Cal.App.3d 112, 117.) This rule is based upon the principle that the defaulting borrower must do equity to invoke the court's equitable powers to set aside the trustee's sale. (Lona, supra, 202 Cal.App.4th at p. 112.) Although based upon equitable principles, the requirement that the borrower tender the amount of the indebtedness is not limited to equitable set-aside actions; it has also been found applicable to legal claims for damages for wrongful foreclosure. (See, e.g., Chavez, supra, 219 Cal.App.4th at p. 1062; Shuster v. BAC Home Loans Servicing, LP (2012) 211 Cal.App.4th 505, 512; Abdallah v. United Savings Bank (1996) 43 Cal.App.4th 1101, 1109.) Thus, although Provident argued below on multiple occasions that the tender requirement applied only to equitable set-aside actions and not to wrongful foreclosure claims seeking damages, that position is incorrect. The tender rule applies equally to damage claims.

The Supreme Court expressly did not decide whether the borrower challenging a foreclosure sale as void must allege tender. (Yvanova, supra, 62 Cal.4th at p. 929, fn. 4.)

The element of tender is not required in at least four discrete situations, namely, where (1) the challenge is to the validity of the underlying indebtedness, (2) the person challenging the sale is asserting a counterclaim or setoff against the beneficiary, (3) it would be inequitable to impose the condition, or (4) the trustee's deed of sale is void. (Lona, supra, 202 Cal.App.4th at pp. 112-113). The first three exceptions have no application here. Further, although there is no tender requirement where the trustee's sale is void, rather than merely voidable (Dimock, supra, 81 Cal.App.4th at pp. 877-878), there was no allegation in the Complaint here that the trustee's sale was void. Moreover, as we discuss, post, although Provident has argued belatedly in its reply brief that it was not required to tender the indebtedness because the trustee's sale was void, we reject the contention.

Provident made no assertion below that it had tendered the indebtedness. To the contrary, it alleged in the Complaint that it "could not and did not tender payment to [the Bank] before the foreclosure sale." Because Provident did not satisfy this third element, summary judgment was proper on this ground even though it was not a stated basis for the trial court's ruling. (Kids' Universe, supra, 95 Cal.App.4th at p. 878.)

In response to Chicago Title's separate statement of undisputed material facts, Provident did not dispute that it had made this allegation in the Complaint. Rather, it objected on the basis that it was "[i]rrelevant because tender [is] not necessary."

5. Gross Inadequacy of Price Argument

Citing Worcester, supra, 811 F.2d 1224, Provident argues on appeal that "[e]ven when there is only slight irregularity, if it is coupled with a gross inadequacy of price, it makes for a wrongful foreclosure." [Citation.]" (Hereafter, this claim is referred to as the price inadequacy argument.) Provident contends this supposed legal principle applies here because the trustee's sale yielded a price that was between approximately $3.3 million and $5.8 million less than the fair market value of the foreclosed property.

Initially, we acknowledge and agree with defendants' observations that Provident's price inadequacy argument appears nowhere in the record below. Notwithstanding the fact that Provident—in opposition to several demurrers and defendants' summary judgment motions—had multiple opportunities below to articulate this argument, it failed to do so. Provident's belated assertion of this argument in support of its challenge to the trial court's decision is improper.

"Ordinarily the failure to preserve a point below constitutes a waiver of the point. [Citation.] This rule is rooted in the fundamental nature of our adversarial system: The parties must call the court's attention to issues they deem relevant. . . . [¶] The same policy underlies the principles of 'theory of the trial.' 'A party is not permitted to change [its] position and adopt a new and different theory on appeal. To permit [it] to do so would not only be unfair to the trial court, but manifestly unjust to the opposing party.' [Citation.] The principles of 'theory of the trial' apply to motions [citation], including summary judgment motions. [Citation.] . . . It would be manifestly unjust to the opposing parties, unfair to the trial court, and contrary to judicial economy to permit a change of theory on appeal." (North Coast Business Park v. Nielsen Construction Co. (1993) 17 Cal.App.4th 22, 28-29 (North Coast).) Relying on North Coast, another appellate court declined to consider the appellant's position not raised below in challenging the granting of summary judgment, "under general principles of forfeiture and theory of the trial." (Saville v. Sierra College (2005) 133 Cal.App.4th 857, 872 (Saville).) The Saville court explained: "[I]f this were permitted procedure, parties opposing and losing summary judgment motions could attempt to embed grounds for reversal on appeal into every case by their silence." (Id. at p. 873.)

As noted, Provident did not assert below the price inadequacy argument it raises here. Thus, defendants were not afforded the opportunity to address it, and the trial court was unable to consider it, in deciding whether summary judgment was proper. This is the archetypal case which, under North Coast, supra, 17 Cal.App.4th at pages 28-29 and Saville, supra, 133 Cal.App.4th at pages 872-873, forfeiture and theory of the trial principles preclude consideration of a belatedly raised argument.

But even were we to consider its merits, Provident's price inadequacy argument fails. In the passage of Worcester relied on by Provident, the Ninth Circuit—quoting Whitman v. Transtate Title Co. (1985) 165 Cal.App.3d 312, 323 (Whitman)—stated: "Under California law, 'gross inadequacy of price coupled with even slight unfairness or irregularity is a sufficient basis for setting the sale aside.' [Citations.]" (Worcester, supra, 811 F.2d at p. 1228.) But neither Whitman nor the cases it relied on support Provident's position.

Initially, we observe that the legal principle of "slight unfairness or irregularity" stated by the court Whitman, supra, 165 Cal.App.3d at page 323 is not based on the language of the Supreme Court upon which Whitman relied. In identifying the principle, the Whitman court cited Winbigler v. Sherman (1917) 175 Cal. 270 (Winbigler), where the California Supreme Court held that "notwithstanding the rule that mere inadequacy of price is insufficient to warrant setting aside the [foreclosure] 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.' " (Id. at p. 275, quoting Odell v. Cox (1907) 151 Cal. 70, 73 (Odell), italics added.) Thus, the principle as initially enunciated by the California Supreme Court was that "very slight additional evidence of irregularity or unfairness" was required (Odell, supra, at p. 73, italics and bold added), not, as stated by Whitman, supra, at page 323, "even slight unfairness or irregularity." (Italics added.) Thus, the rule as enunciated by the Supreme Court focuses on the quantity of the evidence of irregularity or unfairness, rather than—as presented by the Whitman court—the quality of the irregularity or unfairness.

Moreover, Whitman is factually distinguishable because the procedural irregularity there concerned the trustee's denial of the owner's request for a one-day postponement of the trustee's sale, which, the Whitman court found, constituted a denial of "a substantial statutory right." (Whitman, supra, 165 Cal.App.3d at p. 322.) This circumstance was clearly more than "slight unfairness or irregularity." (Id. at p. 323.) We therefore regard the Whitman court's statement that "even slight unfairness or irregularity is a sufficient basis for setting the sale aside" if coupled with a grossly inadequate price (ibid.)—albeit not a statement of the law using the language of earlier Supreme Court decisions—to be dictum. (Stockton Theatres, Inc. v. Palermo (1956) 47 Cal.2d 469, 474. [obiter dictum need not be followed by appellate courts].)

We also observe that the three cases cited by Whitman, supra, 165 Cal.App.3d at page 323 were not based on the proposition that "even slight unfairness or irregularity is a sufficient basis for setting the sale aside" if coupled with a grossly inadequate price. Rather, the holdings in each of the three cases were based upon the existence of a substantial irregularity in the proceedings. Winbigler, supra, 175 Cal. 270 involved substantial irregularity in the trustee's sale, namely, the trustor's unawareness of the sale date; the beneficiary misleading the trustor into believing that foreclosure proceedings might be, but had not been commenced (when, at the time of the beneficiary's representation, proceedings had already commenced with a sale date one month away); and the beneficiary's refusal to grant the trustor a postponement when he learned the true facts on the morning of the trustee's sale. (Id. at pp. 274-275.) The Supreme Court concluded that these circumstances "savored of oppression and unfairness and an apparent desire to acquire the property of [the trustor] for a mere pittance." (Id. at p. 277.) Lopez v. Bell (1962) 207 Cal.App.2d 394—in which a demurrer had been sustained without leave to amend—involved the substantial irregularity of the beneficiary's acceptance without objection of seven payments by the trustor after their maturity, furnishing a basis for the allegation that the beneficiary waived conditions in the trust deed concerning forfeiture and time. (Id. at pp. 398-399.) And in Foge v. Schmidt (1951) 101 Cal.App.2d 681, the substantial irregularity concerned the trustee's refusal to suspend the trustee's sale for 10 to 15 minutes to permit the trustor's agent, who possessed a blank check, to obtain cash from a nearby bank. (Id. at p. 682.)

Furthermore, even assuming Whitman correctly stated the law and that the statement was not dictum, Provident did not demonstrate that there was a gross inadequacy of price. It argues on appeal that it established through evidence presented in opposition to summary judgment that the actual aggregate value of the seven foreclosed units at the time of the trustee's sale was either $12,512,000 (according to Provident's representative, Luu), or $9,966,667 (according to the Bank's "own internal paperwork"). This evidence cannot be considered here.

In Luu's declaration in opposition to summary judgment, he opined that the seven units had an aggregate value of $12,512,000. This figure was based upon an appraisal in which unit No. 3, as of September 4, 2009, was determined to have had a fair market value of $1,630,000, or, based upon unit No. 3's total square footage being 9,600, $169.79 per square foot. Luu then simply multiplied the total square footage of the seven units (73,600) by $170 to arrive at his opinion that the seven units had a value of $12,512,000.

Any concerns about the methodology of arriving at this opinion notwithstanding, we may not consider this evidence for the simple reason that objections to it were sustained by the trial court. Both Chicago Title and the Bank filed written objections to the evidence submitted in the Luu declaration on this subject. The trial court sustained defendants' objections. Although our review of the record on appeal from a grant of summary judgment is de novo, that review is based upon a " 'consider[ation of] all the evidence set forth in the moving and opposition papers except that to which objections have been made and sustained.' [Citation.]" (Reid v. Google, Inc. (2010) 50 Cal.4th 512, 534 (Reid), quoting Guz, supra, 24 Cal.4th at p. 334, italics added.) Thus, we may not consider this valuation evidence submitted in the Luu declaration. Moreover, Provident does not challenge this evidentiary ruling on appeal, and any such potential challenge is therefore forfeited. (Lopez v. Baca (2002) 98 Cal.App.4th 1008, 1014-1015.)

These concerns include the valuation date having been over five months before the trustee's sale, and Provident's assumption without explanation that it was appropriate to assign an identical value per square foot to each of the other six units.

Although both defendants highlighted in their appellate briefs that Provident had not challenged the trial court's evidentiary rulings, Provident, in its reply brief, again cited to its valuation evidence without discussion of the evidentiary objections to it that were sustained.

Provident also submitted in opposition to summary judgment a memorandum from the Bank dated February 22, 2010 (Bank memorandum). Provident asserted—incorrectly, as we note below—that the Bank's "internal paperwork [the Bank memorandum] shows the 'seven remaining units of retail condos' value at $9,966,667.00 on February 22, 2010, three days after the [trustee's] sale." In fact, it was noted in the Bank memorandum that the "[d]ate of value [was] 6/20/09 (new appraisal should be in this week) (*no more than six months old*)." Thus, the appraisal date, was eight months prior to the trustee's sale, not three days after the sale as represented by Provident. And Provident repeats this incorrect characterization of the memorandum in its opening brief.

In its reply brief, Provident fails to address its having misstated in the opening brief the appraisal date identified in the Bank memorandum. --------

Chicago Title submitted written objections to this evidence (i.e., the Bank memorandum) on grounds of hearsay, lack of personal knowledge, opinion testimony by an unqualified witness, and lack of authentication. The court sustained the objections, a ruling that Provident does not challenge on appeal. We therefore may not consider this evidence (Reid, supra, 50 Cal.4th at p. 534), and any challenge to the evidentiary ruling by Provident is forfeited (Lopez v. Baca, supra, 98 Cal.App.4th at pp. 1014-1015).

For all of the reasons stated, we reject Provident's price inadequacy argument in challenging the granting of the summary judgment motions.

6. Voidness Argument

Provident in its reply brief provides a lengthy argument in which it asserts that the trustee's sale, as a result of the inclusion of the two released units in the Sale Notice, was void (hereafter, the voidness argument). After stating its legal position as to why it believes the trustee's sale was void, Provident then proceeds to argue that, as a consequence of this voidness, (1) it need not present a ready, willing and able buyer, (2) it need not show that it tendered the indebtedness, and (3) the measure of damages is its lost equity in the foreclosed property, which it reiterates (based upon excluded evidence) was between $3.3 to $5.8 million. The problem with this detailed and extensive argument is that it appears nowhere in Provident's opening brief.

As a general rule, the appellant may not raise a contention for the first time in its reply brief. (People v. Peevy (1998) 17 Cal.4th 1184, 1206.) "The California Supreme Court long ago expressed its hostility to the practice of raising new issues in an appellate reply brief." (Reichardt v. Hoffman (1997) 52 Cal.App.4th 754, 764-765 (Reichardt) [citing Hibernia Sav. and Loan Soc. v. Farnham (1908) 153 Cal. 578, 584; and Kahn v. Wilson (1898) 120 Cal. 643, 644.) Absent the appellant's showing of good cause for failing to raise the matter in its opening brief, the appellate court will not consider an argument belatedly raised in the reply brief. (In re Marriage of Ackerman (2006) 146 Cal.App.4th 191, 214.) The rationale for this principle is obvious: A contrary rule permitting an appellant without good cause to reserve substantial arguments until its reply would sanction the appellant's obtaining a tactical advantage over the respondent who would have no opportunity to address the contention, and would lead to delays in the resolution of appeals. (See Reichardt, supra, at pp. 764-765.)

Provident presented the voidness argument in the trial court below. Indeed, it was the cornerstone of its opposition to the summary judgment motions. Therefore, if Provident believed that the voidness argument was a significant basis for claiming the trial court erred in granting summary judgment—which belief seems apparent, based upon the fact that it has included 13 pages of such argument in its reply brief—it was constrained to present the argument in its opening brief. Having been furnished no justification for Provident omitting the voidness argument in its opening brief, we need not address it here. (See Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1542 ["[t]here is absolutely no sound reason this issue could not have been raised in the [appellants'] opening brief"].)

Even were we to consider Provident's belatedly raised voidness argument, we would conclude, as did the trial court, that it lacks merit. Provident cites no authority for the proposition that the inclusion of released property in a notice of sale renders the subsequent trustee's sale void. And, as we have noted above, there is no California rule that overinclusion of property in a notice of sale renders the subsequent trustee's sale per se invalid. In the sole California case brought to our attention by the parties addressing the inclusion of released property in a notice of sale, the Supreme Court held that, absent a showing of actual prejudice resulting from the error, or that the error was "of such a substantial nature that prejudice is likely to result to the trustors," the error does not justify invalidating the trustee's sale. (Crist, supra, 7 Cal.2d at p. 559.) This holding is directly contrary to Provident's claim that the inclusion of released property in a notice of sale renders the trustee's sale void.

B. Summary Judgment of the Remaining Claims Was Proper

In the fifth cause of action of the Complaint for breach of the implied covenant of good faith and fair dealing, Provident alleged that "[b]y wrongfully foreclosing the seven units, . . . [the Bank] violated the covenant of good faith and fair dealing implied into the first place note and second place note and all related documents." Similarly, in the sixth cause of action for unjust enrichment, Provident alleged that "[b]y wrongfully foreclosing the seven units, . . . (1) [the Bank] received a benefit by obtaining title to the seven units and (2) was enriched by unjustly retaining the amount of inherent equity in those seven units as of the date of the foreclosure sale at the expense of Provident."

Provident's fifth and sixth causes of action, being wholly derivative of its wrongful foreclosure claim for which summary judgment was properly granted, are without merit. The court correctly found that there was no triable issue of material fact as to those claims. (See Price v. Starbucks Corp. (2011) 192 Cal.App.4th 1136, 1147 [because underlying claims failed, summary judgment was also proper for the derivative claim of violation of the Unfair Competition Law].) Provident does not argue to the contrary. In fact, it does not address the propriety of the court's order as to the fifth and sixth causes of action. Provident has thus forfeited any such challenge. (See Reyes v. Kosha (1998) 65 Cal.App.4th 451, 466, fn. 6 [although review of summary judgment is de novo, appellate court will not address issues that have not been adequately raised and addressed in appellant's brief].)

IV. DISPOSITION

The judgment entered on defendants' motions for summary judgment is affirmed.

/s/_________

BAMATTRE-MANOUKIAN, J. WE CONCUR: /s/_________
GREENWOOD, P.J. /s/_________
GROVER, J.