Palm Woodlake, LLC v. City of Los Angeles CA2/3

INTRODUCTION

Plaintiff and Appellant Palm Woodlake, LLC, appeals from the trial court’s finding that Defendant and Respondent City of Los Angeles’s lien on the property pursuant to Government Code section 54988 survived Woodlake’s foreclosure sale of the property. Palm Woodlake asserts that its deed of trust on the property had priority over the City’s lien, and foreclosure on the deed of trust extinguished the City’s lien. We agree and reverse the judgment of the trial court. We conclude that the City’s lien had the priority of a judgment lien pursuant to statute, and as a junior encumbrance, was extinguished by Palm Woodlake’s foreclosure sale.

FACTS AND PROCEDURAL BACKGROUND

Hilario F. Espinosa purchased a 32-unit apartment building located at 5119 Avalon Boulevard, Los Angeles, California, in 2009 with a loan for $1.2 million from Mid Valley Services, Inc. As consideration for the loan, Espinosa executed a promissory note secured by a deed of trust for the property, recorded on July 9, 2009. On July 21, 2009, Mid Valley assigned its interest in the Espinosa note and deed of trust to a group of individual investors in exchange for $1.2 million. The individual investors…