Opinion
No. C 01-00883 WHA
November 2, 2001
INTRODUCTION
In this action challenging a foreclosure sale, this order: (1) DENIES plaintiffs motion for voluntary dismissal; (2) DENIES plaintiff's motion for a continuance; and (2) GRANTS defendant's motion for summary judgment in its entirety.
STATEMENT
This case is but one of several suits between the parties concerning a parcel of property in San Francisco purchased by plaintiff four years ago for five dollars. At present count, the property has become entangled in three bankruptcy cases, two lawsuits, and five appeals. The lion's share of this litigation, including all of the appeals, has been initiated by plaintiff, in an attempt to forestall or set aside defendant's foreclosure on the property.
By all accounts, the story begins in August 1990, when two individuals, Donald Manning and Charles James, negotiated a $1,000,000 loan with the Money Store Investment Corporation. This loan was secured by a deed of trust on the property at issue in this case, located on Innes Street in the Bayview-Hunter's Point district of San Francisco. The deed of trust was promptly recorded. A Small Business Administration guaranty for the loan was also executed at that time (Pl. Exh. A; Bean Decl. Exh. 4).
Manuel has objected to much of Shipyard holdings' request for judicial notice as being inappropriate for notice under FRE 201. This objection is overruled, since most of the request (all previously filed materials in either this case or Manuel's bankruptcy) have been introduced to show steps taken by the parties in Manuel's bankruptcy case. The "facts" to be judicially noticed — the fact of filing and/or what the parties said and did at different steps — is easily capable of ready and accurate determination by resort to the proper court record. Patrick Bean's declaration, also objected to, is based on his personal knowledge, and is appropriate for summary judgment purposes.
In March 1993, Manning and James failed to pay the Money Store the monthly amount due under the note. The Money Store exercised an acceleration clause in the note. Later that year, James filed for bankruptcy. The Money Store filed a proof of claim in that bankruptcy (Pl. Exh. A). The James bankruptcy court approved a reorganization plan on January 11, 1995. The plan provided that the Innes Street property would be sold within six months, with the proceeds being used to first pay off the Money Store's Allowed Class A claim, with any excess then going to the EPA. The Money Store's claim was classified as an allowed Class A claim under the plan, meaning that the company retained its lien on the Innes Street property. The plan also provided that "[h]olders of liens securing Allowed Claims will retain the lien pending performance under the Plan and may not foreclose their security interest provided there is no material default under the terms of this Plan by Debtors" (Def. Exh. 6).
The Innes Street property was never sold pursuant to the plan, allegedly because of environmental contamination on the site (Pl. Exh. L). Rather, Manning and James sold the property to Manuel for five dollars in 1997. The October 2000 final distribution report filed by the trustee in the James bankruptcy confirms that the Money Store received nothing under the plan (Def. Exh. 10).
On September 6, 2000, the Money Store assigned and transferred to Shipyard Holdings all of its rights, title and interest in the note and deed of trust (Def. Exh. 12). At about that time, Manuel filed for bankruptcy (Manuel Decl. ¶ 10). On September 28, 2000, Shipyard Holdings filed a proof of claim in Manuel's bankruptcy, based on the note and deed of trust. The proof of claim was for $1,530,008.95, an amount allegedly equal to the outstanding principal and interest on the note, plus certain other fees and costs. The stated basis of the claim was a "loan by claimant's predecessor in interest to debtor's predecessor's in interest of $1,000,000 secured on debtor's property at 900 Innes Avenue" (Pl. Exh. H).
On September 27, 2000, Shipyard Holdings moved to terminate the stay applicable to Manuel's estate so that it could foreclose on the Innes Street property (Def. Exh. 13). The trustee did not oppose this motion (Def. Exh. 14). On March 12, 2001, the bankruptcy court granted the motion, terminating the stay so that Shipyard Holdings could foreclose on the property (Def. Exh. 16). Manuel appealed this order to the Bankruptcy Appellate Panel, which denied his request for an emergency stay in March and, on October 16, rejected his appeal en toto (Def. Exh. 20, Romeo Supp. Decl. Exh. 3).
Manuel also sought refuge in the district court from the bankruptcy court's imminent lifting of the stay. He brought the instant action on February 28, 2001. His complaint sought injunctive relief that would prevent Shipyard Holdings from foreclosing upon the Innes Street property. Manuel alleged that the foreclosure violated rights guaranteed him by the Fifth and Fourteenth Amendments; that Shipyard Holdings had violated the Fair Debt Collection Practices Act; that its claim had been waived and/or canceled by the Money Store; and that the sale was barred by the statute of limitations, estoppel, laches, the California single-action rule, and/or Manuel's alleged adverse possession of the subject property. Manuel also sought a declaratory judgment finding the note and deed of trust invalid and unenforceable, as well as attorney's fees and costs.
On March 9, 2001, Judge Charles Legge of this Court, to whom this case originally had been assigned, denied Manuel's motion for a temporary restraining order. On April 2, 2001, Shipyard Holdings completed a non-judicial foreclosure of the property and acquired title to same by trustee's deed upon sale. On April 9, 2001, Manuel's renewed motion for a temporary restraining order to prevent the allegedly wrongful foreclosure was denied.
Not long afterward, Manuel unsuccessfully moved for default, failing to note that Shipyard Holdings had in fact timely answered his complaint. On May 18, 2001, Manuel's request for a preliminary injunction was denied. Shipyard Holdings then moved for dismissal, later converted to summary judgment, addressing Manuel's claims on the merits.
In July 2001, this case and one other involving the parties was reassigned to the undersigned, to whom a bankruptcy appeal filed by Manuel had already been assigned, upon the retirement of Judge Legge. Hearing on Shipyard Holdings' motion was continued. After a hearing concerning different issues in this case held on August 9, 2001, one action, No. C 01-1672 WHA, was dismissed as duplicative. On August 10, 2001, Manuel's motion to dismiss Shipyard Holdings' proof of claim was dismissed for lack of jurisdiction. Hearing on Shipyard Holdings' summary judgment motion, meanwhile, was delayed again by almost one month as a result of Manuel's request to extend the briefing schedule in a related case, his appeal from a bankruptcy court order. This request was made the same day that Manuel's appellate brief was due; nevertheless it was granted.
This case was next reassigned to Judge Martin Jenkins, then shortly thereafter transferred to the undersigned.
Notwithstanding the extension, Manuel missed the September 13 deadline for filing his opposition to Shipyard Holdings' summary judgment motion. He instead moved one week later for voluntary dismissal of this action under FRCP 41. Manuel was informed that his request would not be granted prior to hearing and argument, and that hearing was scheduled to occur contemporaneously with that on Shipyard Holdings' summary judgment motion. Manuel subsequently filed an opposition to Shipyard Holdings' motion. Along with his opposition, filed on October 11, 2001, Manuel requested a continuance of the hearing on the summary judgment motion so that he can conduct discovery in this and in other cases.
Manuel's dismissal and continuance requests have been consolidated with Shipyard Holdings' summary judgment motion. All are now before the Court.
ANALYSIS
1. Voluntary Dismissal.
First, Manuel has moved for voluntary dismissal of this action without prejudice. Since Shipyard Holdings had already filed its motion for summary judgment by the time Manuel made his dismissal request, the Court must apply FRCP 41(a)(2) in determining whether or not to grant Manuel's request.
Rule 41(a)(2) provides that an "action shall not be dismissed at the plaintiffs instance save upon order of the court and upon such terms and conditions as the court deems proper." Unless otherwise specified in the order, a dismissal under Rule 41(a)(2) is without prejudice. Motions under Rule 41(a)(2) are freely granted unless a defendant can show that it will suffer some plain legal prejudice as a result. "Legal prejudice" means prejudice to some legal interest, claim or argument; the mere cost of having to defend a second lawsuit generally does not suffice. Westlands Water Dist. v. United States, 100 F.3d 94, 97 (9th Cir. 1996). Ninth Circuit caselaw intimates that a district court may refuse to grant dismissal under Rule 41(a)(2) when exceptional circumstances suggest bad faith and/or vexatious tactics on the part of the plaintiff, and that the defendant may suffer the "legal prejudice" of never having claims resolved. See In re Exxon Valdez, 102 F.3d 429, 432 (9th Cir. 1996). See also Williams v. Ford Motor Credit Co., 627 F.2d 158, 160 (8th Cir. 1980) (holding that rejection of a Rule 41(a)(2) motion is proper when a party seeks voluntary dismissal only to avoid adverse summary judgment).
This is but one of many cases and appeals concerning the Innes Street property currently pending in or before federal district court, bankruptcy court, the Bankruptcy Appellate Panel, and/or state court. Several of these actions have come before the undersigned. None of these actions have had any merit. One (No. C 01-1672) was duplicative; another (No. C 01-1434) moot; another (part of this case) requested the dismissal of a proof of claim in an ongoing bankruptcy proceeding, a jurisdictionally improper step. The present complaint was framed to seek injunctive as well as declaratory relief. This relief has been denied at several junctures, and the Innes Street property has been foreclosed upon. Manuel chose not to dismiss this case without prejudice soon after foreclosure, as would have been his right under FRCP 41(a)(1). Instead, he waited until after the known deadline for filing an opposition to Shipyard Holdings' summary-judgment motion, then submitted his request. He filed his request for a continuance even later than that.
The totality of the circumstances dictate that Manuel's motion be denied. The multiplicity of actions and appeals filed by Manuel in this and other courts with regard to the Innes Street property; his delay in filing for voluntary dismissal; the suspicious timing of his request; his multiple opportunities to be heard in this case; his failure to abide by this Court's deadlines in this case; and Shipyard Holding's legitimate need for finality all weigh in favor of rejecting Manuel's request. Furthermore, at hearing on this motion Manuel's attorney, who filed his notice of appearance one day earlier, could not provide the Court with an amended complaint or any other indication that Manuel would make other, more cogent claims in any subsequent suit he might file. It is time to address Shipyard Holdings' summary judgment motion on the merits. Manuel's request for voluntary dismissal is DENIED.
2. Continuance.
Manuel has also requested that the hearing on Shipyard Holdings' summary judgment motion be continued so that he can conduct discovery in this and in other cases, and bring that discovery to bear in the present action (Opp. 13). This is construed as a motion under FRCP 56(f).
Such a motion may be granted or denied in a court's discretion. Byrd v. Guess, 137 F.3d 1126, 1135 (9th Cir. 1998). This motion is suspiciously situated. First, Manuel has had ample opportunity for discovery in related actions, and has availed himself of those opportunities (Manuel Decl. Exh. F). The facts of this case, and the record of other actions before both this and other courts, reveal that Manuel has often attempted to introduce new evidence in an untimely manner (Romeo Suppl. Decl. Exh. 1). Manuel has had several chances to have his arguments heard in this case. Shipyard Holdings has had its lone motion postponed time and time again. Several of Manuel's other cases are appeals from adverse judgments, in which the time for discovery has passed. Furthermore, Manuel has not specified exactly what discovery he would undertake, only that "[s]aid discovery is expected to reveal additional evidence of Shipyard's knowledge regarding the Note, Deed of Trust and satisfaction thereof, as well as elements of fraud committed by Shipyard" (Opp. 13-14). At hearing, as discussed above, Manuel's counsel could not say how his complaint would be improved if re-filed after discovery.
The timing of Manuel's request is also inappropriate. Shipyard Holdings filed its motion for summary judgment several months ago. Hearing was originally scheduled for July 2001; it was then postponed due to the retirement of the judge originally assigned to this case. The hearing was rescheduled for October 4, 2001, only to be rescheduled again in mid-September due to Manuel's request for an extension in the briefing schedule for his bankruptcy appeal. Manuel was to have submitted his opposition to Shipyard Holdings' motion no later than September 13, 2001. He did not. He instead moved one week later to voluntarily dismiss this action without prejudice. Manuel was advised that his request for voluntary dismissal would be heard alongside Shipyard Holdings' summary judgment motion on November 1, 2001. Manuel was permitted to file opposition materials to the summary judgment motion, subject to consideration whether to accept them, no later than October 11, 2001. Manuel made such a filing on October 11, 2001, though Shipyard Holdings contends it was not served with these papers until days later. This filing does not excuse a failure to more timely inform all parties involved of his desire to continue the hearing on the summary-judgment motion, however. This record of malingering is persuasive grounds for denying Manuel's Rule 56(f) motion. See Qualls v. Blue Cross, 22 F.3d 839, 844 (9th Cir. 1994) (movant must have diligently pursued prior discovery opportunities and show how additional discovery would preclude summary judgment).
Under L.R. 7-7(d), October 11, 2001, was the deadline for filing oppositions for motions scheduled to be heard on November 1, 2001.
An additional, prudential reason exists for rejecting Manuel's request. Scheduled for hearing alongside this motion is Manuel's appeal from an order of the bankruptcy court that allowed the Innes Street property to be abandoned from his bankruptcy estate. The appellees in that case contend that Manuel's appeal is moot. The bankruptcy mootness rule only applies, however, when no state-law grounds exist for setting aside the sale. In his appeal, Manuel only sets forth two possible bases for setting aside the sale. Here, he asserts several. Were Manuel's stay request granted, the appeal found to be moot, but it later determined that Manuel has in this case set forth alternate grounds for setting aside the sale, this order and that in the bankruptcy appeal would be fundamentally inconsistent with one another.
This order therefore concludes it would be far better to decide both actions at the present time. Manuel has not stated what specific facts exist that would stave off summary judgment. He has had ample opportunity to produce facts sufficient to avoid summary judgment, if such facts exist. Many of these facts are or would be in his exclusive control. His opposition has abandoned the few plausible claims raised in his complaint that require information possessed only by Shipyard Holdings or third parties. There is already a multiplicity of litigation over the Innes Street property, at which Manuel has had an opportunity to be heard. The parties have produced a record ripe for ruling. Decision on the merits, now, is appropriate. Plaintiffs motion for a continuance is DENIED.
3. Summary Judgment.
Shipyard Holdings seeks summary judgment on all of Manuel's claims. Manuel contends that by filing a proof of claim in his bankruptcy, Shipyard Holdings violated his civil rights. He also asserts that Shipyard Holdings' actions have violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692. Manuel's other claims are based on state law. He contends that: (1) Shipyard Holdings is estopped and/or barred by laches, the statute of limitations, and California's "one action" rule from exercising the power of sale under the deed of trust; (2) Shipyard Holdings' predecessor-in-interest waived its foreclosure rights under the note and deed of trust; (3) the note and deed of trust have been canceled; and (4) he has adversely possessed the property for the statutory period. This order addresses each of his arguments.
a. Legal Standard.
Summary judgment is granted when no genuine issue of material fact exists, and no reasonable trier of fact could find other than for the moving party. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). The moving party "has both the initial burden of production and the ultimate burden of persuasion on a motion for summary judgment." Nissan Fire Marine Ins. Co. vs. Fritz Cos., Inc., 210 F.3d 1099, 1102 (9th Cir. 2000).
b. Violation of the Fifth and Fourteenth Amendments.
Manuel's first contention is that by filing its proof of claim in his bankruptcy case, Shipyard Holdings violated his rights under the Fifth and Fourteenth Amendments, "including, but not limited to, due process and equal protection" (Compl. at 5).
State action is the sine qua non of a Fifth or Fourteenth Amendment violation. For a private party to be liable for a violation of federal civil rights, it must be "jointly engaged" with the state. Merely resorting to the courts and being on the winning side of a lawsuit does not suffice. Dennis v. Sparks, 449 U.S. 24, 28 (1980). Manuel has not introduced any facts that even hint at a "conspiracy" between Shipyard Holdings and the bankruptcy court; indeed, he does not even refer to his civil-rights claim in his opposition to Shipyard Holdings' motion for summary judgment. A non-moving party may not defeat summary judgment in the absence of significant probative facts tending to support his theory. THI-Hawaii v. First Commerce Fin. Corp., 627 F.2d 991, 994 (9th Cir. 1980). Shipyard Holdings' motion for summary judgment as to Manuel's civil rights claim is therefore granted.
c. Fair Debt Collection Practices Act.
Manuel also asserts that Shipyard Holdings' activities have violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692. Specifically, he argues that Shipyard qualifies as a "debt collector" under the Act, and that as such Shipyard is liable under the Act for a raft of allegedly abusive practices (Compl. 9; Opp. 12).
For a party to be liable under the Fair Debt Collection Practices Act, it must be attempting to collect the sort of "debt" covered by the Act. Subsection 1692a(5) of the Act defines "debt" as follows:
(5) The term "debt" means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such an obligation has been reduced to judgment ("emphasis added).
As evidenced by the Small Business Administration guaranty, Manning and James took out their loan from the Money Store primarily for business purposes. The FDCPA does not apply to business loans. Bloom v. I.C. Systems, 972 F.2d 1067, 1068 (9th Cir. 1992). Manuel asserts that after acquiring the property, he made it his home. But the relevant inquiry is into the purpose for which the loan was acquired, not Manuel's unilateral, unratified, after-the-fact actions. See Slenk v. Transworld Syst., Inc., 236 F.3d 1072, 1075 (9th Cir. 2001). Shipyard Holdings' motion for summary judgment as to Manuel's FDCPA claim is granted.
d. Statute of Limitations.
Manuel also contends that Shipyard Holdings' foreclosure was performed outside the limitations periods provided by California Civil Code Section 2911 and California Civil Procedure Code Section 337. The former provides, in pertinent part, that:
A lien is extinguished by the lapse of time within which, under the provisions of the Code of Civil Procedure, either:
1. An action can be brought upon the principal. . . .
Under California Civil Code Section 337, the statute of limitations for suing upon a written contract, such as the note involved in this case, is four years. Manuel's argument therefore has some facial appeal. But it ignores the fact that this limitations period does not apply to a power of sale exercised under a deed of trust. Until California's passage of the Marketable Title Record Act in 1982, a trustee could exercise the power of sale even after the applicable statute of limitations barred action on the underlying debt, under the theory that the power of sale was "never outlawed." Curry v. United States Small Bus. Admin., 679 F. Supp. 966, 971 (N.D.Cal. 1987); In re Sukhu, 107 B.R. 729, 730 (Bankr. N.D. Cal. 1989). The enactment of the Act and its Section 882.020 abrogated the "never outlawed" rule by limiting when the power of sale could be exercised. Section 882.020 provides as follows:
(a) Unless the lien of a mortgage, deed of trust, or other instrument that creates a security interest of record in real property to secure a debt or other obligation has earlier expired pursuant to Section 2911, the lien expires at, and is not enforceable by action for foreclosure commenced, power of sale exercised, or any other means asserted after, the later of the following times:
(1) If the final maturity date or the last date fixed for payment of the debt or performance of the obligation is ascertainable from the record, 10 years after that date.
(2) If the final maturity date or last date fixed for payment of the debt or performance of the obligation is not ascertainable from the record, or if there is no final maturity date or the last date fixed for payment of the debt or performance of the obligation, 60 years after the date the instrument that created the security interest was recorded. . . .
The Section's language appears to carve out an exception for liens that "earlier expired pursuant to (Civil Code) Section 2911," subjecting those liens to even shorter limitation periods. Courts interpreting the section have ascertained from its legislative history that it does not alter the "never outlawed" rule so drastically, however. To the contrary, the ten- or sixty-year limitations periods under the Section are the only statutory time limits on the exercise of the power of sale. See Sukhu, 107 B.R. at 731; Miller v. Provost, 26 Cal.App.4th 1703, 1708 (1994).
Here, the Manning-James note was issued in 1990 and had a 25-year term (Pl. Exh. A). Foreclosure occurring in 2001 was well within the statutory period. Summary judgment therefore must issue on Manuel's statute of limitations claim.
e. Waiver.
Manuel's fourth argument is that either Shipyard Holdings or its predecessor-in-interest waived its rights under the note. In his complaint, Manuel asserts that Manning and James tendered the subject property to the Money Store, only to be rebuffed. This order need not consider the legal implications of that tender under California Civil Code Section 1501, since Manuel has not introduced any declarations from his predecessors-in-interest or other evidence in connection with his waiver theory showing that such a tender was made, and that the Money Store raised no objections to it. As discussed earlier, Manuel cannot defeat summary judgment in the absence of significant probative facts tending to support his theory. THI-Hawaii, 627 F.2d at 994.
In addition, Manuel's request for further discovery does not claim that he would pursue further discovery on this topic.
In his opposition brief, Manuel changes course and does not refer to the waiver theory advanced in his complaint. He asserts instead that the relevant "waivers" were the Money Store's failure to object to the confirmation order issued in the James bankruptcy, and the alleged fulfillment of the SBA guaranty. Both, he claims, extinguished the lien on the Innes Street property.
These late-arising claims also fail on the merits. The James bankruptcy plan did not extinguish the Money Store's lien, but confirmed it. It provided that the Innes Street property was to be sold, with the proceeds going first to satisfy the Money Store's claim. In the interim, the plan provided that "[h]olders of liens securing Allowed Claims will retain the lien pending performance under the Plan" (Def. Req. For Jud. Notice 6 at 10). The property was never sold "under the plan." The final disbursement report filed by the trustee in the James bankruptcy shows that the Money Store received nothing not even the $5 Manuel paid for the property (Pl. Exh. K). These events do not give rise to a "waiver."
As to the SBA guaranty, the Court takes notice of the SBA guaranty authorization form, filed in connection with Shipyard Holdings' opposition to Manuel's April request for a preliminary injunction. That authorization reveals that the guaranty covers only 75 percent of the loan (Bean Decl. Exh. 4). Fulfillment of the guaranty would not fully extinguish the Money Store or its successor-in-interest's lien.
Summary judgment is granted as to Manuel's waiver claim.
f. Laches.
Manuel also maintains that Shipyard Holdings' exercise of the power of sale was barred by laches. Prior to the enactment of Section 882.020, the "never outlawed" rule effectively foreclosed arguments like the one Manuel now makes. See Hohn v. Riverside County Flood Control and Water Conservation Dist., 228 Cal.App.2d 605, 614 (1964); Welch v. Security-First Nat'l Bank of Los Angeles, 61 Cal.App.2d 632, 635 (1943). With the "never outlawed" rule abolished, however, under exceptional circumstances it might be possible that laches could provide grounds for setting aside a sale.
The existence or non-existence of laches is generally an issue of fact. It is also generally raised as an affirmative defense, not a claim or cause of action. Here again the Court encounters a difficulty arising from Manuel's failure to timely dismiss a complaint that originally sought injunctive relief. In any event, however, Manuel has failed to introduce facts going to laches' two indispensable elements: unreasonable delay and prejudice. First, Manuel has not shown how either Shipyard Holdings or the Money Store unreasonably delayed foreclosure. Although the fact that foreclosure occurred well within the statute of limitations is not controlling, see Conti v. Board of Civil Service Commissioners, 1 Cal.3d 351, 359 (1960), given the peculiar history of the "never outlawed" rule and the legislature's expressly limited override of that rule, the timeliness of the foreclosure strongly suggests that their actions were reasonable. Furthermore, over almost all of the period of asserted "delay," the property was part of two bankruptcy estates and embroiled in controversy over its environmental conditions. These considerations obviously hindered the Money Store's and Shipyard Holdings' power to foreclose. Finally, the circumstances surrounding the sale to Manuel (including the fact that Manuel was on constructive notice of the deed of trust) belie his allegations of prejudice. All considered, Manuel has not made a sufficient showing of either laches element to avoid summary judgment.
g. Estoppel.
Manuel's sixth claim is that Shipyard Holdings is, or should have been, estopped from exercising the power of sale. The four necessary elements to an estoppel claim are: (1) the party to be estopped must be apprised of the facts; (2) the party to be estopped must intend that their conduct shall be acted upon, or he must act so that the party asserting estoppel has the right to believe that it was so intended; (3) the other party must be ignorant of the true state of the facts; and (4) the other party must rely upon the conduct to his detriment. Strong v. Santa Cruz County, 15 Cal.3d 720, 725 (1975).
Manuel does not specifically allege what, if any, assertions Shipyard Holdings or its predecessor made that induced reliance on his part. His opposition states that Shipyard Holdings' "assertion" was the proof of claim it filed in his bankruptcy, but he does not in any way show how he relied on this assertion (Opp. 9). His complaint, by contrast, suggests that the "assertion" in question was the lack thereof, namely, that the Money Store was not actively "asserting" its ownership over the subject property at the time Manuel purchased it. In his complaint, Manuel asserted that he "had no knowledge of who Defendant was or of the existence of the Note and Deed of Trust on which its claim was based prior to this case" (Compl. 8). Regardless of this allegation's veracity, Manuel was on constructive notice of the Money Store's recorded interest in the property. Under fundamental principles of equity, he cannot invoke estoppel. See Sunguansak v. Myers, 178 Cal.App.3d 110, 117 (1986) (holding that a party who failed to read a promissory note could not invoke equitable estoppel).
h. Single-Action Rule.
Manuel contends that Shipyard Holdings was barred from foreclosing on the Innes Street property by California's single action rule. Under California Civil Procedure Section 726, "[t]here can be but one form of action for the recovery of any debt . . . secured by a mortgage upon real property." The Money Store's filing of a proof of claim in the James bankruptcy, Manuel asserts, constitutes a prior action for the purposes of this rule.
The purpose of the single-action rule is to prevent double recoveries by a creditor. Simply instituting an action on a debt does not waive one's right to later foreclose on security for the debt. Rather, invocation of the single-action rule requires a money judgment in the first action. In re Tidrick, 105 B.R. 584, 587 (Bankr. C.D. Cal. 1989); Brice v. Walker, 50 Cal.App. 49, 54 (1920). Furthermore, the prior action must be an "action" within the meaning of California Code of Civil Procedure Section 22. Shin v. Superior Court, 26 Cal.App.4th 542, 549 (1994). Section 22 provides that an action is "an ordinary proceeding in a court of justice by which one party prosecutes another for the declaration, enforcement, or protection of a right, the redress or prevention of a wrong, or the punishment of a public offense."
From the foregoing, it follows that the foreclosure was not barred by the single-action rule. Even if bankruptcy proceedings were considered actions for purposes of the rule, the Money Store's filing of a proof of claim never led to a judgment in its favor. Summary judgment is therefore granted on the single-action claim.
i. Cancellation.
Manuel's eighth argument is that the Money Store "canceled" its note and deed of trust. He has introduced as evidence of the alleged cancellation a photocopy of a tax-related document issued by the Money Store to Donald Manning, one of the Innes Street property's original owners, canceling a debt of $499,915.84 as of September 27, 2000 (Manuel Exh. G). No reasonable jury could conclude that this document somehow canceled, or reflected the cancellation of the lien. The Money Store had transferred its interest in the note and deed of trust to Shipyard Holdings weeks before the tax document was issued (Bean Exh. E). A Money Store executive swears that the document was given to Manning for tax purposes only (Bean Decl. ¶ 8). The amount canceled does not cover the full amount of the note. Even construing the evidence presented by Manuel in a light most favorable to him, the Court concludes that it does not even amount to a scintilla of support for his argument. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (party seeking to avoid summary judgment bears a heavier burden if its claim is economically implausible).
j. Adverse Possession.
Manuel's final argument for setting aside the sale is that he acquired title to the subject property through adverse possession. To establish title by adverse possession, a party must show that for a continuous and uninterrupted period of five years they openly and notoriously used or possessed property in a manner hostile to the true owner and under a claim of title. The party asserting adverse possession must also show that they paid taxes on the property. Gilardi v. Hallam, 30 Cal.3d 317, 321 (1981); Cal Civ. Proc. Code § 325.
Manuel has not provided any evidence that he has paid taxes on the subject property, nor that his predecessors-in-interest also fulfilled the requirements for adverse possession. It appears certain that they did not. Cf., Harvey v. Nurick, 268 Cal.App.2d 213, 215 (1968) (holding that when a mortgagor stays in possession of property, the period of adverse possession begins to run only upon foreclosure and delivery of the trustee's deed). In light of Manuel's inability to present facts that would support essential elements of his allegation, summary judgment must issue on his adverse possession claim.
CONCLUSION
For the foregoing reasons, Manuel's request for voluntary dismissal or a continuance is DENIED. Shipyard Holdings' motion for summary judgment is GRANTED as to all claims. These claims are dismissed with prejudice. The clerk SHALL close the file.
IT IS SO ORDERED.