Pro Value Properties, Inc. v. Quality Loan Service Corp.

Quality Loan Service Corp. (QLS) appeals the trial court’s ruling regarding the interest rate to be applied to its monetary obligation to respondent Pro Value Properties, Inc. (Pro Value). We conclude that the trial court erred in its finding that QLS’s obligation to Pro Value was contractual in nature, resulting in the accrual of interest at the annual rate of 10 percent. Rather, QLS’s obligation to Pro Value was statutory in nature, from which it follows that the proper rate of interest is 7 percent.

FACTUAL AND PROCEDURAL BACKGROUND

At the request of the beneficiary of a deed of trust on a residence (the Property), QLS instituted nonjudicial 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…

I concur.

In Residential Capital v. Cal-Western Reconveyance Corp. (2003) 108 Cal.App.4th 807 [ 134 Cal.Rptr.2d 162 ] (Residential Capital), the trustee in a nonjudicial foreclosure action accepted the bidder’s bid at auction but refused to issue the trusee’s deed because, unbenownst to the trustee, the trustor and beneficiary had agreed to postpone the sale. (Id. at p. 811.) The trustee refunded the purchase price plus interest (at an unspecified rate), (id. at p. 813.) The bidder sued for, among other things, breach of contract, arguing that the acceptance of its bid created a purchase-sale contract that, although voidable because of the defect in the foreclosure proceedings, was not void, and that the bidder was therefore entitled to contract damages measured by the difference between the bid and the fair market value of the property. (Id. at pp. 813-817.) The Court of Appeal rejected the bidder’s argument, reasoning that nonjudicial foreclosure proceedings are “comprehensively regulated by the detailed statutory scheme set forth in section 2924 et seq., which is not based on common law contract principles.” (Id. at p. 821.) It would be inconsistent with the policies…

McCarthy & Holthus and Daniel J. Goulding for Cross-defendant and Appellant.

No appearance for Cross-complainant and Respondent.

ARMSTRONG, J.

Quality Loan Service Corp. (QLS) appeals the trial court's ruling regarding the interest rate to be applied to its monetary obligation to respondent Pro Value Properties, Inc. (Pro Value). We conclude that the trial court erred in its finding that QLS's obligation to Pro Value was contractual in nature, resulting in the accrual of interest at the annual rate of 10 percent. Rather, QLS's obligation to Pro Value was statutory in nature, from which it follows that the proper rate of interest is 7 percent.

At the request of the beneficiary of a deed of trust on a residence (the Property), QLS instituted nonjudicial 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…