In May 2009, the United States Congress enacted the Protecting Tenants at Foreclosure Act of 2009 (PTFA or Act) (Pub.L. No. 111-22, div. A, tit. VII, §§ 702-704 (May 20, 2009) 123 Stat. 1660) and, in 2010, the Congress amended it (Pub.L. No. 111-203, tit. XIV, § 1484 (July 21, 2010)
Subsequent to a nonjudicial foreclosure sale of residential property in August 2009, tenants Rosario Nativi (Nativi) and her son Jose Roberto Perez Nativi (hereinafter Jose Perez or Perez) were displaced from the property's converted garage unit, which they had been renting for several years. At the time of the foreclosure sale, appellants' operative lease provided for a one-year term through June 1, 2010. Deutsche Bank National Trust Company as trustee for "the American Home Mortgage Assets Trust 2007-5 Mortgage-Backed, Pass-Through Certificates, Series 2007-5" (Deutsche Bank or Bank) was the beneficiary under the deed of trust and the purchaser at the foreclosure sale. Appellants sued respondents Deutsche Bank National Trust Company (in its nontrustee capacity), Deutsche Bank (as trustee), and American Home Mortgage Servicing Inc. (AHMSI).
The trial court granted respondents' motion for summary judgment based on its determination that the foreclosure sale extinguished the lease under California law and, therefore, the immediate successor in interest did not step into the shoes of the landlord. The court concluded that the federal PTFA merely required the Bank, as the immediate successor in interest, to give a 90-day notice to vacate the premises to appellants and it imposed no affirmative duty on the Bank to assist such tenants in recovering possession of the leased premises. The court further found that appellants could not establish that the Bank excluded them from the property or put their belongings in the backyard.
Appellants now challenge the trial court's interpretation of the PTFA. They assert that the Act created a landlord-tenant relationship between the Bank and them for the duration of their lease. The appeal raises difficult questions regarding the proper interpretation of the PTFA and the potential liability of an immediate successor in interest in foreclosed residential real property for breach of the implied covenant of quiet enjoyment and wrongful eviction under California law. The parties have not raised any contention regarding the validity of the PTFA or asserted that Congress exceeded its authority in enacting it. An amicus curiae brief was filed on behalf of the National Housing Law Coalition, National Law Center on Homelessness and Poverty, the AARP, the National Fair Housing Alliance, and the California Reinvestment Coalition in support of appellants. The American Legal and Financial Network filed an amicus curiae brief that supports respondents' position.
We conclude that the trial court's analysis was mistaken and respondents were not entitled to summary judgment. Accordingly, the judgment will be reversed.
Appellants also challenge the trial court's order granting respondent AHMSI's motion for a protective order. We find the order was not within the trial court's discretion and reverse.
On November 25, 2009, appellants Nativi and Perez filed a complaint against Deutsche Bank National Trust Company, its assigns and successors, and Does 1 to 10 for "restitution of premises," compensatory and punitive damages, and injunctive relief. The complaint alleged eight causes of action as follows: (1) wrongful eviction in tort, (2) breach of the covenant of quiet enjoyment, (3) breach of implied covenants of quiet enjoyment — tort, (4) illegal entry of landlord (violation of Civ. Code, § 1954), (5) violation of Civil Code section 1940.2, (6) illegal lockout (violation of Civ. Code, § 789.3), (7) violation of the PTFA, and (8) unfair business practices (Bus. & Prof. Code, § 17200).
On December 31, 2009, Deutsche Bank National Trust Company filed a notice of removal that it was removing the action to federal court.
The United States District Court, Northern District of California subsequently determined that, by enacting the PTFA, "Congress did not intend to create a private right of action remedy, but rather intended to provide tenants additional rights which could be used in state court proceedings." (Nativi v. Deutsche Bank National Trust Co. (N.D.Cal., May 26, 2010, No. 09-06096 PVT) 2010 WL 2179885, p. *4.) The court dismissed the seventh cause of action (violation of the PTFA) (2010 WL 2179885 at pp. *1, *4-*5) and "decline[d] to exercise supplemental jurisdiction over the remaining state law
On July 1, 2010, appellants filed a first amended complaint, which alleged additional causes of action. Deutsche Bank National Trust Company demurred to the first amended complaint on a number of grounds, most of which were overruled. The trial court struck the seventh cause of action (violation of the PTFA) because the federal court had dismissed it before remanding the case.
On December 3, 2010, appellants filed a second amended complaint against Deutsche Bank National Trust Company, Deutsch Bank (as trustee), and AHMSI and Does 3-10. It alleged nine causes of action against the named defendants: (1) wrongful eviction in tort, (2) breach of the covenant of quiet enjoyment, (3) breach of implied covenants of quiet enjoyment — tort, (4) illegal entry of landlord (violation of Civ. Code, § 1954), (5) illegal lockout (violation of Civ. Code, § 789.3), (6) unfair business practices (Bus. & Prof. Code, § 17200), (7) conversion, (8) trespass, and (9) declaratory and injunctive relief (Code Civ. Proc., §§ 526, 1060). Respondents filed an answer to that complaint.
In April 2011, respondents filed a motion for summary judgment, supporting declarations, and a separate statement of undisputed material facts. They requested judicial notice of the trustee's deed upon sale, recorded August 12, 2009, in the Santa Clara County Recorder's Office and appellants' second amended complaint.
By order filed June 21, 2011, the court accepted the parties' written factual stipulations for the purposes of all further proceedings in the case.
Appellants filed opposition to respondents' motion for summary judgment, a separate statement of undisputed facts, and supporting declarations. They filed written evidentiary objections to the evidence submitted by respondents in support of summary judgment.
By written order filed November 15, 2011, the trial court granted respondents' motion for summary judgment. The trial court concluded that, under California law, the foreclosure sale extinguished the lease and, consequently, Deutsche Bank did not step into the shoes of the former landlord. It also determined that the obligation to give a 90-day notice was the "only burden" imposed on the Bank by the PTFA.
A judgment in favor of respondents and against appellants was filed on November 15, 2011.
On December 13, 2011, appellants filed a notice of appeal from the judgment and from the order granting the motion for a protective order.
"Title conveyed by a trustee's deed relates back to the date when the deed of trust was executed. (Bank of America v. Hirsch Merc. Co. (1944) 64 Cal.App.2d 175, 184 [148 P.2d 110].) The trustee's deed therefore passes the title held by the trustor at the time of execution. (Hohn v. Riverside County Flood Control etc. Dist. (1964) 228 Cal.App.2d 605, 612 [39 Cal.Rptr. 647].)" (Dover Mobile Estates v. Fiber Form Products, Inc. (1990) 220 Cal.App.3d 1494, 1498 [270 Cal.Rptr. 183] (Dover).) "The law is clear that the trustee's deed conveys to the purchaser the trustor's interest as of the date that the deed was recorded. (Dover Mobile Estates v. Fiber Form Products, Inc.[, supra,] 220 Cal.App.3d 1494, 1498 ...; Sain v. Silvestre (1978) 78 Cal.App.3d 461, 471 [144 Cal.Rptr. 478]; Hohn v. Riverside County Flood Control etc. Dist.[, supra,] 228 Cal.App.2d 605, 612-613 ....)" (Homestead Savings v. Darmiento (1991) 230 Cal.App.3d 424, 437 [281 Cal.Rptr. 367].)
"A lease is generally deemed to be subordinate to a deed of trust if the lease was created after the deed of trust was recorded. (Bank of America v. Hirsch Merc. Co., supra, 64 Cal.App.2d at p. 184; 3 Miller & Starr, Cal. Real Estate (2d ed. 1989) § 8:82, p. 422.)" (Dover, supra, 220 Cal.App.3d at p. 1498.) "Also, there is no dispute that the general rule is that foreclosure of a senior encumbrance terminates subordinate liens, including leases. (Hohn v. Riverside County Flood Control etc. Dist.[, supra,] 228 Cal.App.2d 605, 613....)" (Miscione v. Barton Development Co. (1997) 52 Cal.App.4th 1320, 1326 [61 Cal.Rptr.2d 280]; see Dover, supra, 220 Cal.App.3d at p. 1498 ["A lease which is subordinate to the deed of trust is extinguished by the foreclosure sale. [Citations.]"].) Under traditional California law, "[a] foreclosure proceeding destroys a lease junior to the deed of trust, as well as the lessee's rights and obligations under the lease. (Nelson & Whitman, Real Estate Finance Law [(2d ed. [Lawyer's Ed.] 1985)] § 15.11, p. 1114.)" (Dover, supra, 220 Cal.App.3d at pp. 1498-1499.) "Thus, if the sale of the landlord's
"When a lease is executed and recorded prior to the recordation of the deed of trust, or if the beneficiary of the deed of trust had notice of a prior unrecorded lease at the time the trust deed was recorded, the lien of the trust deed is junior to the estate of the lessee and his or her right to occupy the premises. The title of the purchaser at a foreclosure sale of the junior lien is subject to the lessee's contract right to occupy the premises." (5 Miller & Starr, Cal. Real Estate (3d ed. 2009) § 11:101, p. 11-307 (rel. 9/2009), fns. omitted; see Civ. Code, §§ 1214 [prior recording of subsequent conveyances], 1215 [defining "conveyance"], 1217 ["An unrecorded instrument is valid as between the parties thereto and those who have notice thereof."], 3395 ["Whenever an obligation in respect to real property would be specifically enforced against a particular person, it may be in like manner enforced against any other person claiming under him by a title created subsequently to the obligation, except a purchaser or encumbrancer in good faith and for value...."]; R-Ranch Markets #2, Inc. v. Old Stone Bank (1993) 16 Cal.App.4th 1323, 1327 [21 Cal.Rptr.2d 21] [trustee's sale]; Sumitomo Bank v. Davis (1992) 4 Cal.App.4th 1306, 1314 [6 Cal.Rptr.2d 381] [judicial foreclosure sale]; Dover, supra, 220 Cal.App.3d at p. 1498.)
In the absence of other applicable law providing greater protection to tenants at foreclosure, the purchaser at a foreclosure sale is entitled to recover possession through an unlawful detainer action. (See Code Civ. Proc., § 1161a, subds. (b)(3), (c).)
Code of Civil Procedure section 1161b (§ 1161b) was enacted in 2008, effective July 8, 2008, in the wake of the foreclosure crisis. (Stats. 2008, ch. 69, §§ 1, 6, 10, pp. 224, 230.) As enacted, it provided: "Notwithstanding Section 1161a, a tenant or subtenant in possession of a rental housing unit at the time the property is sold in foreclosure shall be given 60 days' written notice to quit pursuant to Section 1162 before the tenant or subtenant may be removed from the property as prescribed in this chapter." (Italics added; Stats. 2008, ch. 69, § 6, p. 230 [former § 1161b, subd. (a)].) The section did not apply, however, "if any party to the note remains in the property as a tenant, subtenant, or occupant." (Stats. 2008, ch. 69, § 6, p. 230 [former § 1161b, subd. (b)].) The enactment of section 1161b was not "intended to affect any local just-cause eviction ordinance." (Stats. 2008, ch. 69, § 7, p. 230.) The Legislature also declared that "[t]his act does not, and shall not be construed
Section 1161b was amended in 2012 (Stats. 2012, ch. 562, § 3) and the amendment went into effect on January 1, 2013. (See Cal. Const., art. IV, § 8, subd. (c); Gov. Code, § 9600, subd. (a).) As amended, section 1161b, subdivision (a), provides: "Notwithstanding Section 1161a, a tenant or subtenant in possession of a rental housing unit under a month-to-month lease or periodic tenancy at the time the property is sold in foreclosure shall be given 90 days' written notice to quit pursuant to Section 1162 before the tenant or subtenant may be removed from the property as prescribed in this chapter." As amended, section 1161b, subdivision (b), additionally provides that "tenants or subtenants holding possession of a rental housing unit under a fixed-term residential lease entered into before transfer of title at the foreclosure sale shall have the right to possession until the end of the lease term, and all rights and obligations under the lease shall survive foreclosure ...." (Italics added.) A fixed-term residential lease is not entitled to this additional protection, however, where "[t]he purchaser or successor in interest will occupy the housing unit as a primary residence," "[t]he lessee is the mortgagor or the child, spouse, or parent of the mortgagor," "[t]he lease was not the result of an arms' length transaction," or "[t]he lease requires the receipt of rent that is substantially less than fair market rent for the property, except when rent is reduced or subsidized due to a federal, state, or local subsidy or law." (§ 1161b, subd. (b).) Section 1161b does "not apply if any party to the note remains in the property as a tenant, subtenant, or occupant." (§ 1161b, subd. (d).)
In enacting the 2012 amendment of section 1161b, the California Legislature was attempting to bring California law in line with the federal PTFA. An Assembly Floor analysis of the bill amending section 1161b explained: "The PTFA, which is currently scheduled to sunset on December 31, 2014, generally requires the purchaser of a home at a foreclosure sale to honor a bona fide tenant's lease unless the purchaser intends to occupy the home as their primary residence. If there is no lease, if the lease is terminable at will (a month-to-month tenancy), or if the purchaser will occupy the home as their primary residence, the tenant must be provided with a 90-day notice to vacate (unless a longer period is required by state or local law). As a result, currently federal law generally provides greater protection to tenants than state law by providing additional time (90 vs. 60 days) and imposes a requirement that the lease be honored under certain circumstances. [¶] This bill would make the state law provisions described above comparable to federal law by providing that a new owner of a foreclosed property must honor a tenant's lease." (Assem. Cone. Sen. Amends, to Assem. Bill No. 2610 (2011-2012 Reg. Sess.) as amended Aug. 20, 2012, pp. 3-4; see Sen. Rules Com., Off. of Sen.
The PTFA was enacted as part of the "Helping Families Save Their Homes Act of 2009" enacted in 2009. (Pub.L. No. 111-22, div. A, tit. VII (May 20, 2009) 123 Stat. 1632.) The PTFA is a very short act, consisting of only four sections. Section 701 of the PTFA establishes its short title.
Section 702 of the PTFA specifies the protections for bona fide tenants of foreclosed properties. Section 702, subdivision (a), of the PTFA provides: "IN GENERAL. — In the case of any foreclosure on a federally-related mortgage loan or on any dwelling or residential real property after the date of enactment of this title [(May 20, 2009)], any immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to — [¶] (1) the provision, by such successor in interest of a notice to vacate to any bona fide tenant at least 90 days before the effective date of such notice; and [¶] (2) the rights of any bona fide tenant ... — [¶] (A) under any bona fide lease entered into before the notice of foreclosure to occupy the premises until the end of the remaining term of the lease, except that a successor in interest may terminate a lease effective on the date of sale of the unit to a purchaser who will occupy the unit as a primary residence, subject to the receipt by the tenant of the 90 day notice under paragraph (1); or [¶] (B) without a lease or with a lease terminable at will under State law, subject to the receipt by the tenant of the 90 day notice under subsection (1), [¶] except that nothing under this section shall affect the requirements for termination of any Federal- or State-subsidized tenancy or of any State or local law that provides longer time periods or other additional protections for tenants."
Section 702, subdivision (b), of the PTFA, provides that for purposes of this section "a lease or tenancy shall be considered bona fide only if — [¶] (1) the mortgagor or the child, spouse, or parent of the mortgagor under the contract is not the tenant; [¶] (2) the lease or tenancy was the result of an arms-length transaction; and [¶] (3) the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property or the unit's rent is reduced or subsidized due to a Federal, State, or local subsidy."
Section 702, subdivision (c), of the PTFA, states that as used by this section "the term `federally-related mortgage loan' has the same meaning as in section 3 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C.
Section 703, subdivision (2), of the PTFA inserted new language at the end of (o)(7)(F) of United States Code, title 42, section 1437f, which concerns low income housing assistance: "In the case of any foreclosure on any federally-related mortgage loan (as that term is defined in section 2602 of title 12) or on any residential real property in which a recipient of assistance under this subsection resides, the immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to the lease between the prior owner and the tenant and to the housing assistance payments contract between the prior owner and the public housing agency for the occupied unit, except that this provision and the provisions related to foreclosure in subparagraph (C) shall not ... affect any State or local law that provides longer time periods or other additional protections for tenants." (Fn. omitted.)
Under section 704 of the PTFA, a sunset provision, the Act is repealed and its requirements terminate on December 31, 2014.
Appellants assert that the federal statute "created a landlord-tenant relationship for the remaining period of [their] lease, i.e. through June 1, 2010." They argue that the Bank owed at least the same duties to them as any California landlord owes to its tenant.
Respondents maintain that "the PTFA only provides a defense to eviction proceedings in state court." They state that "tenants can contest eviction proceedings (i.e., defend an unlawful detainer action) on the grounds that the post-foreclosure owner has not complied" with the PTFA's requirement to provide notice or permit continued occupancy. They contend there is not a single case in which the PTFA has been asserted as a basis for a tenant's claims against a "post-foreclosure owner." They also suggest that the Act "at most provides only that a bona fide tenant has the right to occupy the premises until the end of the remaining term of the lease" and did not make Deutsche Bank the landlord.
In determining whether section 702 of the PTFA causes a bona fide lease to survive foreclosure despite contrary state law, we begin taking particular note of its phrases "any immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to ...." and "except that a successor in interest may terminate a lease ...." (Italics added.) We also observe that, despite respondents' assertions, the Act does not expressly state that the PTFA's protections may be invoked only as an affirmative defense. The language of section 702 of the Act seems to indicate that a successor in interest takes title in the foreclosed property subject to a bona fide lease for a term because otherwise it would be nonsensical to provide that an immediate successor has the power to "terminate a lease" as specified.
On the other hand, Congress could have been more straightforward. As indicated, section 703, subdivision (2), of the PTFA, which amended existing law to state the effect of foreclosure on housing assistance, contained more direct language: "the immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to the lease between the prior owner and the tenant and to the housing assistance payments contract ..." (42 U.S.C. § 1437f, subd. (o)(7)(F), italics added.) Congress could have also said, as did the California Legislature, that "all rights and obligations under the lease shall survive foreclosure ..." (§ 1161b, subd. (b)).
"To the extent a statutory text is susceptible of more than one reasonable interpretation, we will consider `"a variety of extrinsic aids, including the ostensible objects to be achieved, the evils to be remedied, the legislative history, public policy, contemporaneous administrative construction, and the statutory scheme of which the statute is a part."' [Citation.]" (Elsner v. Uveges (2004) 34 Cal.4th 915, 929 [22 Cal.Rptr.3d 530, 102 P.3d 915], fn. omitted.) Accordingly, we turn to extrinsic aids to determine whether or not Congress intended bona fide leases for a term to survive foreclosure and bind successors in interest.
On May 1, 2009, Senator John Kerry submitted an amendment (Sen. Amend. No. 1036) to add the PTFA, as proposed, to another amendment (Sen. Amend. No. 1018) to a bill (Sen. No. 896, 111 Cong., 1st Sess. (2009)), which was aimed at preventing mortgage foreclosures and enhancing mortgage credit. (155 Cong. Rec. S5029 (May 1, 2009).)
On May 5, 2009, Senator Kerry called up the amendment for consideration. (155 Cong. Rec. S5110 (May 5, 2009.) The senator stated that he was "offering this amendment to address the needs of renters in properties that have been foreclosed." (Ibid.) He argued: "Congress has already taken extraordinary measures to help troubled borrowers in communities where they have abandoned foreclosed properties, but Congress has done very little to help renters who have been paying their rent regularly on time but, unfortunately, they have landlords who are losing their property to foreclosure. So these renters are absolutely blameless victims in the foreclosure catastrophe that has hit the country.... [¶] These renters often have absolutely no idea that their home is about to be foreclosed. Depending on the State they live in, they may be evicted with absolutely no notice. Obviously, this could be particularly difficult for low-income renters who don't have the resources to relocate or even to do so very quickly. [¶] Under this amendment, tenants in any federally related mortgage loan or any dwelling or residential real property with a lease have a right to remain in the unit until the end of the existing lease. If a new purchaser intends to use the property as a primary residence, then the lease may be terminated, but the tenant has to receive 90 days' notice to vacate. [¶] So what we believe is that this provides an appropriate level of protection. It doesn't take away the right of someone who takes over the home in foreclosure to be able to then transition that property or it decides if that person is going to keep the property as a rental property, the person who already has a legitimate lease has a right to be able to stay." (155 Cong. Rec. S5110-S5111 (May 5, 2009).) Senator Kerry declared that "[a] landlord should not be allowed to come in, change the locks, and force out tenants who were there completely legitimately, with an expectation that they were coming home to their same old home." (155 Cong. Rec. S5111 (May 5, 2009).) He explained: "Furthermore, [it] states specifically that none of the provisions here would affect any State and local law that provides a longer time period or other additional protections to renters. So there is nothing here that reduces the protection renters get." (Ibid.)
Senator Kerry gave examples of tenants returning home to find locks changed, utilities turned off, or possessions put out on the street. (155 Cong. Rec. S5111 (May 5, 2009).) He stated: "It is well documented how foreclosure is already overpowering countless numbers of homeowners who are
Senator Dodd offered his comments on the amendment. Among other things, he stated that "the measure requires at least 90-days' notice for all renters in federally related housing, but would honor the full term of any existing lease unless a new owner will occupy the home." (155 Cong. Rec. S5115 (May 5, 2009).) He explained: "What Senator Kerry is saying here, at least for tenants who are in good standing on their properties, they should not be affected because the property ended up in foreclosure through whatever rationale that may have happened to the landlord. It seems to me, putting people out on the street is not what we ought to be doing at a time such as this." (Ibid., some capitalization omitted.)
On May 6, 2009, during further debate, Senator Kerry argued: "[W]e have taken a lot of effort to try to help troubled borrowers in communities that have foreclosed properties. Here is the problem that exists. If you are a renter and living in a property that has been foreclosed on, you have nothing to do with the foreclosure, you are paying rent, you have a lease, but a lot of these people are getting kicked out of their apartments, out of their homes. [¶] What we want to do is provide them with a provision where they will have 90 days — if the people who foreclosed are going to use that residence as a primary residence. If the residence is going to continue to be a multiple-party residence where they have a number of people renting and they will continue to use it as such, we want to leave those leases in effect until the end of the lease. We are protecting legitimate, low- to moderate-income folks in America who do not get protections otherwise from being just booted out on the street, which is literally what has happened in the absence of this protection." (155 Cong. Rec. S5174 (May 6, 2009).)
The legislative history of the enactment of the PTFA strengthens the case that its section 702 was intended to cause bona fide leases for a term to survive foreclosure.
Shortly after the PTFA was enacted, the Department of Housing and Urban Development (HUD) issued a notice, entitled "Protecting Tenants at Foreclosure: Notice of Responsibilities Placed on Immediate Successors in Interest Pursuant to Foreclosure of Residential Property," dated June 24, 2009. (74 Fed.Reg. 30106-30108 (June 24, 2009), boldface omitted.) HUD indicated that it was "directing this notice to entities and individuals that participate in HUD programs or with whom HUD interacts in its HUD programs" but that "these obligations are not limited to FHA-insured or HUD-assisted housing." (74 Fed.Reg. 30106 (June 24, 2009).) The notice announced: "[The PTFA] ... requires that tenants residing in foreclosed residential properties
That June 2009 HUD notice further explained that "Section 703 [of the PTFA] makes conforming changes consistent with the Section 702 requirements to the Section 8 rental voucher assistance provisions of the United States Housing Act of 1937 (1937 Act)" (74 Fed.Reg. 30106 (June 24, 2009).) The notice stated: "Section 8(o)(7) of the 1937 Act is further amended by Section 703 to provide that the successor in interest in the case of any foreclosure of a property in which a voucher recipient resides assumes the interest in the property subject to the lease and HAP [housing assistance payment] contract in place before the foreclosure. This provision confirms that the section 8 tenant's lease is, in effect, a bona fide lease and that the HAP contract survives the foreclosure, just as the lease does." (74 Fed.Reg. 30106, 30107-30108 (June 24, 2009).)
In a September 28, 2009 letter to "FDIC-Supervised Institutions," the Federal Deposit Insurance Corporation (FDIC) explained that, under the PTFA, "[a]ll tenants must receive a 90-day notice before being evicted as the result of a foreclosure."
By notice dated October 28, 2010, HUD provided additional guidance on the PTFA. (75 Fed.Reg. 66385-66386 (Oct. 28, 2010).) The notice addressed "the interplay of the PTFA notice requirements with the notice requirements of [the Federal Housing Administration's] occupied conveyance regulations." (75 Fed.Reg. 66385, 66386 (Oct. 28, 2010).) It reiterated HUD's understanding of the PTFA. (75 Fed.Reg. 66385-66386 (Oct. 28, 2010).) It explained that the "date of notice of foreclosure" had been defined by additional legislation. (75 Fed.Reg. 66385, 66386 (Oct. 28, 2010).) It stated: "To fall under the Act, a bona fide lease must be entered into prior to the date of the notice of foreclosure, which is defined as `the date on which complete title to a property has been transferred to a successor entity or person as a result of an order of a court or pursuant to the provisions in a mortgage, deed of trust, or security deed.'" (Ibid.)
In March 2012, HUD issued a notice providing "further guidance on the relationship between FHA [Federal Housing Administration] regulations and the protections for existing tenants under the PTFA." (77 Fed.Reg. 15379-15382 (Mar. 15, 2012).) HUD again described the PTFA's protections of tenants, including the 90-day notice requirement and preservation of the term of bona fide leases. (77 Fed.Reg. 15379-15382 (Mar. 15, 2012).) It indicated that the "requirements of the PTFA apply with respect to properties secured by FHA-insured mortgages as well as those in the Section 8 program." (77 Fed.Reg. 15379 (Mar. 15, 2012).) As to mortgagee compliance under the PTFA, the notice stated: "Before completion of foreclosure, the mortgagee must confirm the identity of all occupants, determine each occupant's possible rights for continued occupancy under the PTFA and state or local law, and attempt to obtain documentation of existing leases and tenancies." (77 Fed.Reg. 15379, 15380 (Mar. 15, 2012).)
The United States Office of the Comptroller of the Currency (OCC) issued a bulletin, dated December 14, 2011, to "Chief Executive Officers of All National Banks and Federal Savings Associations, Department and Division Heads, and All Examining Personnel" regarding "Guidance on Potential Issues With Foreclosed Residential Properties." (OCC Bulletin, OCC 2011-49, Dec. 14, 2011, boldface omitted, later rescinded and replaced by bulletin 2013-20 <http://www.occ.gov/news-issuances/bulletins/2011/bulletin-2011-49.html> [as of Jan. 23, 2014].) In discussing the obligations of the national banks and federal savings associations (collectively, banks) as the owner of a foreclosed property, the OCC's bulletin warned that "[i]n acquiring title to foreclosed properties, banks assume the primary responsibilities of an owner,
In early 2013, the FDIC provided guidance to assuming institutions regarding the "Cash for Keys" program. (FDIC, RSAM Guidance 2013-G001, Jan. 7, 2013 <http://www.fdic.gov/bank/individual/failed/lossshare/RSAM_Guidance-2013-G001_Cash_For_Keys.pdf> [as of Jan. 23, 2014].) It counseled that bona fide leases are protected under the PTFA: "For tenants under a lease who are current on their rental obligations, PTFA prohibits an eviction prior to the end of their lease terms — the lease survives foreclosure. The new owner must fulfill the landlord[s'] responsibilities under the lease, but he is under no legal obligation to renew or extend the lease. There is an exception to the lease protection: if the new owner intends to occupy the rental property as his primary residence, the new owner can break the lease, but the tenant must be given 90 days from the eviction notice date to vacate the property."
Although respondents insist that the PTFA provides nothing more than an affirmative defense to judicial proceedings to oust a tenant from a foreclosed property, we find no language in the Act suggesting such limitation. Moreover, their position appears untenable when examined in the light of the PTFA's legislative history, the "evils to be remedied," and administrative construction of the Act by federal entities. "The object that a statute seeks to achieve is of primary importance in statutory interpretation. [Citations.]" (Lusardi Construction Co. v. Aubry (1992) 1 Cal.4th 976, 987 [4 Cal.Rptr.2d 837, 824 P.2d 643].) Congress clearly intended the Act to put a stop to self-help measures like blocking bona fide tenants' access, turning off their utilities, or removing the tenants' possessions. If this court accepted the view that the PTFA could be invoked only defensively in court, bona fide tenancies for a term surviving foreclosure only by operation of the Act would be largely unprotected and immediate successors in interest could interfere with tenants' possessory rights with impunity so long as they did not commence eviction proceedings or other legal action in which the Act could be raised as a defense. That result would be completely at odds with the aim of the Act.
Similarly, a conclusion that Congress was merely bestowing the isolated right to occupy the leased premises through end of bona fide tenancies for a term would be inconsistent with the statutory language suggesting that bona fide leases for a term continue in effect ("a successor in interest may terminate a lease") and the protective purposes of the PTFA. Such an interpretation would lead to the absurd result that a bona fide tenant could "occupy" leased premises for the duration of a lease term with no obligation to pay rent as provided by the lease to a successor in interest and a successor in interest in a foreclosed property would not be obligated, by the lease's implied warranty of habitability, "to maintain leased dwellings in a habitable condition throughout the term of the lease. [Citation.]" (Peterson v. Superior Court (1995) 10 Cal.4th 1185, 1204 [43 Cal.Rptr.2d 836, 899 P.2d 905].)
Appellants do not dispute that the PTFA did not create a private cause of action under federal law. (See, e.g., Nativi v. Deutsche Bank National Trust Co., supra, 2010 WL 2179885 at p. *4; see also Logan v. U.S. Bank National Assn. (9th Cir. 2013) 722 F.3d 1163 [PTFA does not create a private right of action].) The lack of federal private cause of action under the PTFA, however, does not determine state law claims in state courts.
Some federal courts have determined that Congress intended tenant rights established by the PTFA to be enforceable under state law. (See, e.g., Ingo v. Deutsche Bank National Trust Co. (D. Utah, Nov. 29, 2011, No. 2:11-cv-812 BCW) 2011 WL 5983340, p. *3 ["... PTFA was intended to allow tenants
Respondents argue that appellants' lease was void as a matter of law because the garage unit was illegal and, therefore, the PTFA did not apply. Respondents did not rely upon evidence of the illegality of the garage unit in moving for summary judgment. Moreover, we see nothing in the language or legislative history of the PTFA exempting leases involving illegal rental units. The essential goal of the federal law is to protect vulnerable tenants at foreclosure. Its protective purpose to prevent abrupt dispossession of tenants as a result of foreclosure would be frustrated if we accepted respondents' argument that the PTFA does not apply to illegal rental units.
In Carter v. Cohen (2010) 188 Cal.App.4th 1038 [116 Cal.Rptr.3d 303] (Carter), a former tenant sued her former landlord for damages for rent overpayments. (Id. at p. 1042.) She had leased a detached guesthouse, which had been constructed without permits, located on a residential property that also contained a house. (Ibid.) She claimed that the rent increases, imposed by her former landlord after he bought the residential property, exceeded the limits set by a municipal rent stabilization ordinance (RSO). (Ibid.) The issue on appeal was whether the former tenant was entitled to recover her excess rent payments even though the guesthouse lacked a certificate of occupancy
The appellate court acknowledged that "[r]ental agreements involving units that were constructed without building permits or lack a certificate of occupancy are ordinarily regarded as unlawful and void. [Citations.]" (Carter, supra, 188 Cal.App.4th at p. 1047.) "Generally, `the courts ... will not enforce an illegal bargain or lend their assistance to a party who seeks compensation for an illegal act.' (Lewis & Queen v. N. M. Ball Sons (1957) 48 Cal.2d 141, 150 [308 P.2d 713] (Lewis & Queen).)" (Ibid.) But the appellate court refused to apply the rule in that case because otherwise public policy would be thwarted. (Id. at pp. 1048-1050.)
Similarly in this case, permitting Deutsche Bank, the immediate successor in interest in the foreclosed property, to invoke the general rule that illegal contracts are unenforceable would allow it to circumvent the PTFA and frustrate its fundamental public policy purpose. At this juncture, we need not resolve whether an immediate successor in interest could lawfully terminate a
A reviewing court "owe[s] the superior court no deference in reviewing its ruling on a motion for summary judgment; the standard of review is de novo. [Citation.]" (Coral Construction, Inc. v. City and County of San Francisco (2010) 50 Cal.4th 315, 336 [113 Cal.Rptr.3d 279, 235 P.3d 947].) Thus, "[w]e review the trial court's decision de novo, liberally construing the evidence in support of the party opposing summary judgment and resolving doubts concerning the evidence in favor of that party. (Yanowitz v. L'Oreal USA, Inc. (2005) 36 Cal.4th 1028, 1037 [32 Cal.Rptr.3d 436, 116 P.3d 1123].)" (State of California v. Allstate Ins. Co. (2009) 45 Cal.4th 1008, 1017-1018 [90 Cal.Rptr.3d 1, 201 P.3d 1147].)
"First, and generally, from commencement to conclusion, the party moving for summary judgment 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.... A defendant bears the burden of persuasion that `one or more elements of the `cause of action' in question `cannot be established,' or that `there is a complete defense' thereto. (Id., § 437c, subd. (o)(2) [(now (p)(2))].)" (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850 [107 Cal.Rptr.2d 841, 24 P.3d 493], fn. omitted.) "There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof." (Ibid., fn. omitted.)
"Second, and generally, the party moving for summary judgment bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact; if he carries his burden of production, he causes a shift, and the opposing party is then subjected to a burden of production of his own to make a prima facie showing of the existence of a triable issue of material fact." (Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 850.) "Third, and generally, how the parties moving for, and opposing, summary judgment may each carry their burden of persuasion and/or production depends on which would bear what burden of proof at trial." (Id. at p. 851.) Thus, where a plaintiff would bear the burden of proof by a preponderance of evidence at trial, a defendant moving for
"[E]ven though the court may not weigh the plaintiff's evidence or inferences against the defendants' as though it were sitting as the trier of fact, it must nevertheless determine what any evidence or inference could show or imply to a reasonable trier of fact." (Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 856.) In ruling on the motion, the court must view the evidence and inferences in the light most favorable to the opposing party. (Id. at p. 843.)
A motion for summary judgment must be granted "if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." (Code Civ. Proc., § 437c, subd. (c).) "In determining whether the papers show that there is no triable issue as to any material fact the court shall consider all of the evidence set forth in the papers, except that to which objections have been made and sustained by the court, and all inferences reasonably deducible from the evidence, except summary judgment may not be granted by the court based on inferences reasonably deducible from the evidence, if contradicted by other inferences or evidence, which raise a triable issue as to any material fact." (Ibid.)
As discussed, we conclude that the trial court erred in its interpretation of the PTFA. Respondents have not identified any legal bar precluding a bona fide tenant whose bona fide tenancy for a term survives foreclosure by operation of the PTFA from seeking state law remedies for violations of the tenant's rights against an immediate successor in interest in a foreclosed property. Appellants assert that the trial court should not have granted summary judgment in favor of respondents because triable issues of material fact exist with regard to their causes of action for breach of the covenant of quiet enjoyment and wrongful eviction.
The pleadings "`set the boundaries of the issues to be resolved at summary judgment.' (Oakland Raiders v. National Football League (2005) 131 Cal.App.4th 621, 648 [32 Cal.Rptr.3d 266]; see generally Ann M. v. Pacific Plaza Shopping Center (1993) 6 Cal.4th 666, 673 [25 Cal.Rptr.2d 137,
In their second amended complaint, appellants generally alleged the following. Appellants became tenants of a two-bedroom unit located at 1156 Stoneylake Court beginning on June 1, 2007. They leased by the year from the former owner, Daisy Cazzali (Cazzali) and the most recent lease commenced on June 1, 2009. Deutsche Bank "purported to foreclose" on the property and, as trustee, took title to it. After it acquired title, the Bank contracted with AHMSI to service the property and AHMSI hired a local real estate company, XL Advisors Inc. doing business as Advisors Real Estate Group (Advisors), to prepare the property for sale and oust its occupants. Advisors was operated by real estate agent Rob Roham and it employed Paulette Diaz. Appellants did not receive any notice from respondents acknowledging their rights as tenants under the PTFA.
Appellants further generally averred the following. All of their "belongings were removed from their home and thrown into the backyard, where the belongings were destroyed." Respondents deprived them of possession of their home by unlawfully evicting them and refusing to allow them to return to the premises. When appellants tried to access their home they were removed from the property by the police at respondents' instruction. Appellant Perez returned from a trip at the end of September 2009 to find all of his and his mother's belongings thrown out into the yard. The police were called to the property and Diaz, acting on behalf of respondents, instructed police to exclude appellant Perez from the property. When Perez called Diaz the following day and asked to be restored to possession, Diaz did nothing to
With respect to the pleaded causes of action for "Wrongful Eviction in Tort" (first cause of action), "Breach of the Covenant of Quiet Enjoyment" (second cause of action), and "Breach of Implied Covenants of Quiet Enjoyment — Tort" (third cause of action), appellants alleged the following. They were "in lawful, peaceable possession of the premises until they were forcibly evicted when [respondents] barred [them] from the premises and refused to reinstate [them] to possession." Respondents violated the PTFA by failing to recognize appellants' lease and engaged in unlawful, extrajudicial self-help eviction. Respondents "acted with malice by barring [appellants] from the property and misrepresenting to police officers that [they] were not tenants, and refusing to allow [them] access to the Property ...." It was further alleged with respect to the second and third causes of action that respondents "breached the covenant of quiet enjoyment embodied in Civil Code section 1927" by the foregoing course of conduct.
It is not necessary to show that the landlord acted with the subjective intent to compel the tenant to leave the property or deprive the tenant of quiet enjoyment. (Pierce v. Nash (1954) 126 Cal.App.2d 606, 613, fn. * [272 P.2d 938].) There is a "presumption that a landlord intends the natural and probable consequences of his acts; and where the acts of the landlord effectively deprive the tenant of the use and enjoyment of the premises, the intent to evict is implied from the character of the acts done. [Citations.]" (Id. at pp. 613-614, fn. omitted.)
"[A] landlord's interference with the tenant's right of ingress and egress may constitute a constructive eviction. [Citation.] ... [L]ittle difference can be found between the act of physical removal and the act of preventing entry." (Donoghue v. Kremmel (1932) 121 Cal.App. 208, 211 [8 P.2d 918].) Thus, "where a tenant is denied entry and this denial is coupled with threats of violence upon attempted entry, which threats are sufficient to cause a reasonable [person] to anticipate and fear bodily conflict or injury, the tenant is justified in treating the denial as an eviction." (Ibid.)
Civil Code section 3300 provides the measure of contract damages for breach of the covenant of quiet enjoyment implied in a lease. (See Standard Livestock Co. v. Pentz, supra, 204 Cal. at p. 642; see also Civ. Code, § 1927.)
In Tooke v. Allen (1948) 85 Cal.App.2d 230 [192 P.2d 804], the trial court found that the landlord, "`together with certain of his employees, acting under his direction, entered upon and carried out a campaign of annoyance designed to force the plaintiff to vacate said apartment by interfering repeatedly with and violating her right to the peaceable possession thereof ....'" (Id. at pp. 232-233.) The landlord claimed that the tenant was improperly "seeking to recover upon many causes of action founded on separate torts" but the court "construed the complaint as stating a single cause of action arising out of a continuous course of conduct on the part of defendant,
A tenant who is wrongfully evicted by his landlord before the expiration of the lease term may maintain a wrongful eviction action for tort damages and punitive damages, if appropriate. (See Stoiber v. Honeychuck (1980) 101 Cal.App.3d 903, 926 [162 Cal.Rptr. 194]; Tooke v. Allen, supra, 85 Cal.App.2d at p. 239; Civ. Code, §§ 3333, 3294.)
The parties stipulated to the following facts. At all relevant times, Deutsch Bank was the owner of the property at 1156 Stoneylake Court in Sunnyvale, California (Stoneylake property), which included both a single-family home and a two-bedroom converted garage unit. At all relevant times, AHMSI acted as Deutsche Bank's agent with respect to the Stoneylake property. At all relevant times, Deutsche Bank "authorized, approved and/or ratified" AHMSI's action with respect to the Stoneylake property and AHMSI's dealings with appellants Nativi and Perez.
The following facts were not disputed in this case. Appellants Nativi and Perez rented a converted garage unit on the Stoneylake property from Cazzali, the former owner. Deutsche Bank was the beneficiary under the deed of trust securing the note on which Cazzali defaulted. The Bank obtained title to the Stoneylake property on August 6, 2009, by purchasing it at the nonjudicial foreclosure sale.
AHMSI was the servicer and was responsible for preparing the property for sale on the open market. AHMSI retained the services of Advisors in San Jose, California, to assist with the sale. At all relevant times, Paulette Diaz and Paul Dougherty were employees of Advisors.
Appellant Nativi was in El Salvador from August 20, 2009, to October 26, 2009. Appellant Perez was in Texas for about two weeks, from approximately September 5, 6, or 7, 2009, until the middle of September. When Perez
When Perez returned home and discovered his belongings had been removed, he knocked on the door of the main house and three people whom he did not recognize came to the door. When he asked why his apartment had been emptied into the yard, the police were called. When the police learned that the house was in foreclosure, Perez was told to leave. Perez has no idea who removed their personal belongings from the garage unit and discarded them in the backyard.
Appellant Nativi first learned what happened on October 24, two days before she returned from El Salvador.
The last of the occupants of the Stoneylake property were evicted in March or April 2010 by way of an unlawful detainer proceeding.
Nativi and her son Jose moved into the garage unit on the Stoneylake property on June 1, 2007. Nativi knew the property owner's daughter, Veronica Cazzali (Veronica). Veronica and her two children lived in the main house. The converted garage had two bedrooms, a living room, a bathroom, and a kitchen. On June 1, 2007, Natavi signed a lease, which provided for monthly rent of $1,600. She signed another lease on June 1, 2008, and a third lease on June 1, 2009.
Natavi is a citizen of El Savador but she has lived in the United States for more than a decade. Nativi's son is Jose Roberto Perez Nativi. At the time of the foreclosure sale, Perez was 20 years old.
The Deutsche Bank National Trust Company is the trustee for "the American Home Mortgage Assets Trust 2007-5 Mortgage-Backed, Pass-Through Certificates, Series 2007-5." The note and deed of trust executed by Veronica and secured by the Stoneylake property was one of the assets of that trust. In its individual capacity, Deutsche Bank National Trust Company "does not have any relationship with or authority to act with respect to loans held in trusts for which it is the trustee" and it "did not act or direct that any actions be taken with respect to the loan and property made a subject of this case."
At all relevant times, AHMSI was servicer and attorney in fact for Deutsche Bank with respect to the note, the deed of trust, and the Stoneylake
Advisors is a real estate company dealing mainly with foreclosures. Foreclosed properties are assigned to Advisors by a servicer, which acts on behalf of banks. The Stoneylake property was assigned to Advisors. AHMSI's Web site indicates whether the servicer wants Advisors to try to work out a "Cash for Keys" arrangement with the occupants.
Diaz had worked for Advisors since February 2008, and, at the time of her deposition in December 2010, she had worked in the real estate industry for 17 years. At the time of his deposition in February 2011, Dougherty had worked for Advisors for about two and a half years.
At the time of her deposition in December 2010, Diaz had not received any training in working with foreclosed properties or eviction law. She had never seen an eviction notice or written a three-day or 90-day notice. She had not consulted any manual when she was dealing with the Stoneylake property. Diaz was not a real estate agent or broker.
Before working for Advisors, Dougherty had been an iron worker. He was not a real estate agent. He had not received any training regarding unlawful detainers.
Dougherty's job involves driving to foreclosed properties, taking photographs of the properties, and contacting the people still living there. Each morning he receives a list of properties to visit after he clocks in. Unless there is a "no contact" instruction, he knocks on doors and attempts to obtain the names and phone numbers of the persons still living on the property.
Dougherty does not speak Spanish. He does not bring an interpreter with him. If persons living on a property do not speak English, they communicate "however they can." Dougherty writes down contact information he obtains and turns it in at the end of the day. Sometimes Dougherty asks the person to write down his or her name if Dougherty does not know the spelling or is unable to understand what the person said. He tries to find out whether the person is a tenant or a former owner. Even if a person says he or she is a tenant, Dougherty does not ask for a copy of the lease. The information that Dougherty obtains is inputted into Advisors's computer system by another employee of Advisors.
Dougherty also provides notices to occupants as directed by the financial institution. Advisors has a standard letter, which explains the property is now owned by the bank, asks occupants to please get in touch with Advisors to
Diaz is a premarketing assistant. Her job is to contact the occupants, notify them of the foreclosure, and determine whether they have a valid lease agreement, the amount of monthly rent, and whether they are related to the previous owner. She does not speak Spanish. She offers relocation assistance to the occupants as instructed by the bank. The bank specifies a dollar amount and timeframe for relocation assistance. If the occupants do not take the assistance offer, Advisors waits for eviction. Once the property is vacant, Diaz orders utilities and makes sure the property is ready to be placed on the market.
Dougherty visited the Stoneylake property a number of times. Diaz never visited the property.
When Dougherty went to the property on August 6, 2009, he filled out a form entitled "REO Initial Inspection Checklist." He recalled seeing several Latino, Spanish-speaking adults and children, walking in and out of the front door of the house. Dougherty recalled speaking to a person who spoke English, a younger woman whose name he believed was Larisa. He was told that the property was tenant occupied. Larisa said that she had rented the main house from a "Veronica Cassalli" and they had just moved in. Dougherty was given the telephone numbers for a few people, including "Veronica Cassalli." Dougherty was told that the former owner's son lived in the garage. Dougherty did not look in the garage unit or go into the backyard. He gave a CFK notice to the occupants of the main house. The checklist form had a check next to "Take CFK letter with you" and a notation on the form that says, "Gave to Larisa G."
After Dougherty reported that people were living in the main house on the Stoneylake property, Diaz spoke by telephone to a female occupant of the main house, a Yessica. The purpose of the call was to offer relocation assistance. Diaz told Yessica that the bank now owned the house and it wanted the property to be vacated. Yessica was confused and upset. Yessica said she had rented the house from the foreclosed owner and given a deposit and she and her family had just moved in the previous Saturday, which Diaz believed was the beginning of August. Diaz believed that she offered $10,000 for vacating the property within 30 days. Yessica told Diaz that there was also a garage unit and that a relative of the foreclosed owner occasionally stayed there but the relative did not reside there. Diaz asked Yessica to speak with the occupants of that unit and let them know about the relocation assistance offer. Every tenant on the property had to leave to be entitled to the money.
The August 18, 2009 checklist reflects that Dougherty made contact with the occupants of the garage and took down a phone number for a Robert Nativi. Diaz telephoned that number and left a couple of messages. When she reached someone and asked for the tenant, Diaz was told she had the wrong number.
Dougherty was not told that Robert planned to be out of town for several weeks. Dougherty never spoke with "Ms. Nativi."
Dougherty did not recall ever asking for a lease from anyone living in either the garage or the main house on the Stoneylake property. He acknowledged that he did not have a way to distinguish between a tenant and a squatter.
On August 20, 2009, Nativi traveled to El Salvador for a gallbladder operation and remained there for about two months.
Diaz spoke with the people living in the main house multiple times. Someone named Yessica told her that two males were in the garage unit. Yessica said that Veronica had decided to return the deposit; Yessica and her family voluntarily left the main house without being paid to relocate.
When Perez left for Texas in early September 2009, the garage unit was fine.
Sometime at the beginning of September 2009, new occupants moved into the main house. Diaz spoke with Luis by telephone. He said that he was living there with his parents. Luis was upset when he learned that Veronica did not own the property and she had no right to rent the main house. Diaz never spoke with Veronica.
Diaz spoke with Luis a number of times. Diaz asked Luis about tenants in the garage. He said that the property was vacant when they moved in but
Diaz was unsure whether relocation assistance was offered to this second set of renters. She might have mentioned to the servicer that the previous owner was recycling tenants and inquired whether to offer relocation assistance but she could not recall getting a response.
When Perez returned to his Stoneylake property on September 22, 2009, he found all their belongings, including appliances and furniture, outside in the yard. He was accompanied by another friend and their girlfriends. The lock to the garage unit had not been changed and he went in. The unit had been emptied of their things. He went to the main house, knocked on the door, and three people whom he did not recognize answered. Perez told them that he lived in the other house and asked why his belongings had been thrown into the backyard; he was told that they were going to call the police. The police arrived. Perez gave Veronica's number to an officer. The officer left for a time and, when he returned, he told Perez that the house was in foreclosure and Perez could not stay there. Perez took some clothes that he could carry with him and he left. At the time of his deposition in May 2010, Perez still had no idea who had put their belongings into the backyard.
Luis left Diaz a message that he had called the police because an unidentified male, who claimed to live in the garage unit, was trying to break into the garage area. Luis was under the impression that he was renting the entire property including the garage.
When Diaz called Luis back, Luis said that he had told the man, "No, you don't [live here]. I live here. I don't know who you are, and I am not letting you in." Luis related telling police that he was renting the property from Veronica, nobody had been living there when he moved in, and he did not know the man. Diaz thought that the police had told the man he had to leave. At Diaz's deposition in December 2010, after she looked at a September 22, 2009 City of Sunnyvale Police Department report, which named Luis Ayala as the reporting party (RP), referred to the Stoneylake property, and stated "RP ... having problem with four subjects, possibly squatters or trespassers," Diaz's memory was refreshed concerning the date Luis told her that he had called the police.
On September 23, 2009, Perez spoke to Veronica, who told him to call Diaz. When Perez telephoned Diaz, she said that she could not help him.
At her deposition, Diaz recalled receiving a call from Robert who said that he had been out of town, he wanted to get back in, and "he wanted to do
Robert was adamant about getting back into the property. Diaz told him, "I don't have a key. I didn't change locks. If you can get back in, I guess you can get back in. At this point in time, I am at a standstill. I can't do anything." Robert said that the occupant of the main house would not let him back in.
Diaz recalled that, at some point, Robert had said, "All of my stuff is in the backyard. Why is it back there? You removed [it]." According to Diaz, she disclaimed touching his "stuff" and told him that the main house tenant said all that stuff was already in the yard when he moved in. Diaz did not know whether Robert and Jose were one and the same person.
Perez did not tell his mother about the situation because she had gone to El Salvador for surgery and he did not want to bother her. Perez had nowhere to stay and no car; he was homeless for a period. He eventually called Nativi's boyfriend, with whom he did not get along, and asked to stay with him.
On October 26, 2009, Nativi returned to the area. On October 29, 2009, Nativi went to the Stoneylake property to try to get into her unit. Nativi called the police and showed the responding officer her paperwork establishing that she had the right to live there. When Nativi saw her belongings outside in the yard, she cried. Her household furnishings and personal items had been removed. Nativi put some things in bags and removed decomposed leaves from a sofa. The officer left and, when he returned about a half an hour later, the officer told her that he had spoken with a tenant, the tenant had given him Paulette's telephone number, and the officer had spoken with Paulette. The officer told her to leave and not come back unless the Bank called.
Naviti never met Diaz or spoke with her directly. Nativi does not speak English and understands very little English.
Diaz recalled speaking with a police officer on the telephone. Diaz was asked by a police officer, "Who has rights to the property?" Diaz remembered telling the officer that she did not know, the property was in foreclosure, her job was to attempt to work out the relocation of the occupants, and, as far as she knew, Luis was the property's occupant. She told the officer that Luis had told her that he had a lease agreement with Veronica and the property was
A police report, dated October 29, 2009, described the incident. It stated that a former renter was present at the property and claimed that the new renters moved her items outside while she was on a two-month trip to South America. It reported that the current renters provided photographs showing that the items were already outside when they moved into the house in August. The report stated that the house was Bank owned and residents have an arrangement with and pay rent to the Bank. The reporting officer stated that he had spoken with Paulette, who works for the Bank, and she had verified the renter's statement. During her deposition, Diaz asserted that the reporting officer had misunderstood what she had said.
According to Diaz, she told the police officer that the property had been foreclosed upon, the previous owner had rented the property to the tenants, and she was in the process of trying to get them removed. She asserted that she would never have said that the Bank was accepting rent from the tenants because that was not true; the Bank did not have any sort of rental agreement with them.
Diaz denied that she instructed the police to exclude Perez from the property at the end of September 2009 and she denied that she instructed the police to exclude Nativi from the property at the end of October 2009.
Diaz received a letter addressed to her from the Bay Area Legal Aid and she forwarded it to AHMSI. Diaz did nothing further. As far as Diaz knew, appellant Nativi and her son had not been allowed back into the property.
Dougherty visited the property on November 17, 2009. The checklist form for that date notes, "No access to garage." At his deposition, Dougherty explained that he could not get though the side gate because it had "several locks and ropes and chains around it." He tried knocking on the car garage door. Dougherty had not put ropes and chains on the gate and he had no idea who did. The checklist form had a check next to "Garbage/junk." Dougherty saw furnishings, clothing, trash in the front and rear yards. There were big piles. He had no idea who put those things there. No one had instructed Dougherty to take the furnishings out of the garage unit and throw them into the yard and he did not do it.
Luis and his family voluntarily moved out.
Dougherty's final December 29, 2009 checklist form for the Stoneylake property notes that the property "requires trash out [and] yard service...."
Advisors did not access the garage unit and remove possessions from it or instruct anyone else to remove them on its behalf. Advisors did nothing to prevent appellants from recovering their possessions out in the yard. Advisors did not deny a request from appellants to retrieve their property from the premises.
Neither AHMSI nor Advisors, nor anyone acting on their behalf, ever rented out the main residence. Neither AHMSI nor Advisors, nor anyone acting on their behalf, ever denied appellants access or changed the locks to the garage unit. Neither AHMSI nor Advisors, nor anyone acting on their behalf, ever entered the garage unit without consent or discarded appellants' personal belongings and furniture in the garage unit. Neither AHMSI nor Advisors, nor anyone acting on their behalf, requested or instructed any of the postforeclosure occupants of the main residence to remove the belongings and furniture from the garage unit.
Nativi first moved into the Stoneylake property in June 2007 and, at that time, Veronica was the owner. Nativi is not related to Veronica.
Nativi's apartment was reached by walking through a gate next to the main house into the backyard where the entrance to the apartment was located. When she tried to access her apartment on October 29, 2009, the gate was padlocked and she could not get into her apartment. She stated, "The police had to get the people in the main house to let me through the main house so that I could get to the door to my apartment." Nativi never gave permission to anyone to remove her furniture and personal belongings from her apartment. Nativi was removed from her home by police. Since she did not have enough money for the first and last month rental payments and security deposit on a new apartment for her son and herself, they slept on the floor of a friend's studio apartment, which was less than 15 feet by 15 feet.
On November 2, 2009, Nadia Aziz, a Bay Area Legal Aid attorney and one of the attorneys of record representing appellants, sent a letter informing Deutsche Bank that appellants had lost possession of premises and demanding that appellants be restored to the property. The letter, which was actually addressed to Diaz at Advisors, indicated that appellants had been tenants at the property for three years, they had rented the converted garage unit, and Nativi had prepaid rent to the former owner for the months of August and
Deutsche Bank responded by letter, dated November 9, 2009. Counsel for Deutsche Bank stated in the letter that it had not rekeyed the property, disposed of appellants' personal property, or taken possession of the property and it had not instructed anyone else to do so. The letter advised that appellants would "have to regain access to the Property, and seek redress for their alleged damages, from the persons responsible." In the letter, counsel asserted that appellants were entitled only to a 90-day notice to vacate, which had been posted on the property on August 25, 2009. The letter warned that if appellants failed to vacate the premises by November 23, 2009, eviction proceedings would be commenced against them to recover possession and to obtain damages for their unlawful detention of the property.
Respondents submitted a supplemental declaration of their attorney Charles McKenna together with a special interrogatory response from Nativi and an excerpt from Nativi's deposition testimony. A special interrogatory asked Nativi to describe the circumstances of her alleged denial of access to her unit. Nativi responded: "On October 29, 2010, the police refused to let [her] into her unit after ... Diaz, who had knowledge of [her] tenancy, told the police officer that [she] had no right to be in the unit. On November 9, 2009, [her] counsel requested that [she] be allowed to regain possession to the unit and [the Bank's] attorneys refused." The deposition testimony was part of the same testimony previously submitted, which indicated that Nativi retrieved some belongings and put some clothing in plastic bags.
Respondents also belatedly submitted the supplemental declaration of Christy Gunvalsen, which was not referenced in their separate statement of undisputed material facts. Gunvalsen stated, "[i]n the course and scope of my employment as Neighborhood Preservation Officer, I have access to and am a custodian of records for the City of Sunnyvale's Department of Public Safety file pertaining to the real property at 1156 Stonylake [sic] Court, Sunnyvale, California." According to Gunvalsen, "[a]t all times, the converted garage
Appellants also submitted the declaration of Madeline Howard, another attorney representing appellants. She indicated that, despite diligent efforts, appellants had been unable to contact Officer Alan Harnett until July 21, 2011, and had not been able to obtain a sworn declaration from him until August 17, 2011. His declaration was attached to her declaration.
Officer Harnett stated that he was a detective for the Department of Public Safety for the City of Sunnyvale, California. On October 29, 2009, he responded to a call at the Stoneylake property in Sunnyvale. When he arrived at the property, Nativi informed him that she was tenant in the garage, she had just returned from an extended trip, people had moved into her home, and her belongings had been removed from her home. He observed personal property, which looked damaged, in the back and side yard. He spoke with the people living in the main house, who told him that they had made arrangements with, and were paying rent to, the Bank, which owned the house. The people said the place was empty when they moved in and showed him "pictures of the personal property in the backyard." He had spoken with a Bank representative, Paulette, who told him that "the people living in the main house were the only ones who had a right to be at the property and that Ms. Nativi had no right to be there." Consequently, Nativi was told she had to leave. The officer's incident report was attached to his declaration.
Attorney Howard's declaration further explained that Walker (AHMSI's assistant vice-president, whose declaration was submitted in support of summary judgment) failed to appear for her noticed deposition on July 28, 2011, and she was not produced until August 11, 2011. Walker acknowledged in her August 11, 2011 deposition testimony that she had never directly talked to anybody at Advisors and she had never been to the property. She indicated that the information in her declaration regarding postforeclosure occupants came from her attorney.
The evidence is uncontroverted that appellants were living in a garage unit on the Stoneylake property under a year-long lease at the time of foreclosure,
Respondents presented evidence that with respect to the Stoneylake property, the Bank was acting through AHMSI, which hired Advisors. The evidence showed that AHMSI, Advisors, and those acting on their behalf with respect to the Stoneylake property, did not take appellants' personal property out of the garage unit or instruct any of the postforeclosure occupants of the main residence or anyone else to do so. Respondents produced evidence that AHMSI, Advisors, and those acting on their behalf, did not change the locks to the garage unit or deny appellants access to the unit. Their evidence showed that neither AHMSI nor Advisors rented the main house to any of the groups of postforeclosure occupants. Respondents also produced evidence showing that Diaz only learned of the September 2009 incident in which Luis had called the police after it occurred and Diaz had not instructed the police to exclude appellant Perez from the property. Further, their evidence indicated that Diaz did not instruct the police to exclude appellant Nativi from the property at the end of October 2009. Accordingly, respondents made a sufficient showing to meet their burden and shift the burden to appellants to produce sufficient admissible evidence to show the existence of a triable issue of material fact. (See § 437c, subds. (d) & (p)(2); Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at pp. 850-851, 853-854.)
On appeal, appellants claim that triable issues of material fact remain with respect to the Bank's liability for breach of the covenant of quiet enjoyment on the following theories: (1) by offering CFK deals to occupants of the Stoneylake property, it was foreseeable that "one of the short-term tenant[s] would do whatever was necessary to secure that prize, including ridding the property of [appellants] and their possessions," (2) failing to reinstate appellants to the premises after appellants tried to enter their rental unit because Diaz knew, or should have known, that appellants had a right to return there and (3) refusing to assist them in regaining possession of the leased premises in response to their attorney's November 2009 demand letter.
Appellants cite Andrews v. Mobile Aire Estates, supra, 125 Cal.App.4th 578 for the principle that a landlord may breach the covenant of quiet enjoyment by failing to take action when a third party disturbs a tenant's quiet enjoyment where the landlord has the ability to rectify the situation but refuses to do so. The case does not stand for this broad proposition.
Although Andrews recognized "[t]he perpetrator of the interference with the tenants quiet enjoyment need not be the landlord personally," it also observed that "an actionable breach" may occur "where the interference is
Unlike the present case, Andrews involved the Mobilehome Residency Law (Civ. Code, § 798 et seq.), which "regulates relations between the owners and the residents of mobilehome parks." (Cacho v. Boudreau (2007) 40 Cal.4th 341, 345 [53 Cal.Rptr.3d 43, 149 P.3d 473].) Andrews observed that the Mobilehome Residency Law "expressly preserves the park owners' ability to secure the quiet enjoyment of mobilehome park tenants by authorizing park owners to pursue eviction or injunctive relief against offending tenants." (Andrews v. Mobile Aire Estates, supra, 125 Cal.App.4th at p. 592.)
The appellate court in Andrews stated: "A mobile home park owner cannot disregard conduct by a tenant upon the park premises that constitutes a substantial annoyance to other homeowners or residents. (Civ. Code, § 798.56, subd. (b).) Faced with such a situation, the covenant of quiet enjoyment requires a reasonable response by the landlord, which may include conducting an investigation and thereafter, taking appropriate action, which may include, inter alia, the issuance of a warning to the offending party, the pursuit of injunctive relief against the tenant to enjoin the violation (id., § 798.88), or, if necessary, the commencement of eviction proceedings (id., § 798.56)."
Respondents take the position that they had no obligation to act, citing Sarina v. Pedrotti (1930) 103 Cal.App. 203, 206-207 [284 P. 472], which stated: "The landlord's covenant of quiet enjoyment and possession of leased premises `is equivalent to a stipulation that the lessee shall not be rightfully disturbed in his possession during the term, not that he shall not be disturbed at all. The lessor is not responsible under the covenant for the acts of a mere trespasser, though the effect of the trespasser's acts may be to deprive the lessee of the benefits of the lease, the latter's remedy being against the trespasser, not against the lessor.' 15 Cal.Jur. 635." That statement accurately conveys the traditional view concerning the extent of a landlord's liability under an express or implied covenant of quiet enjoyment. (See Carty v. Blauth (1915) 169 Cal. 713, 718 [147 P. 949] ["It is a general rule that an express or implied covenant for quiet possession secures the lessee against acts or hindrances of the lessor and persons deriving their title through him, or from a paramount title, but not from the acts of strangers. [Citations.]"]; McDowell v. Hyman (1897) 117 Cal. 67, 70-71 [48 P. 984] ["`This covenant, whether expressed or implied, means that the tenant shall not be evicted or disturbed by the lessor or by persons deriving title from him, or by virtue of a title paramount to his, and implies no warranty against the acts of strangers. It is equivalent to a stipulation that the lessee shall not be rightfully disturbed in his possession during the term, not that he shall not be disturbed at all.' [Citation.]"]; Playter v. Cunningham (1862) 21 Cal. 229, 233 ["The lessor is responsible upon the covenant for his own acts, and for the acts of others claiming by title paramount to the lease, but he is not responsible for the acts of a mere trespasser. The effect of these acts may be to deprive the lessee of the benefit of the lease, but the remedy is against the person by whom the acts were committed, and not against the lessor."]; see also Lost Key Mines, Inc. v. Hamilton (1952) 109 Cal.App.2d 569, 573 [241 P.2d 273].)
Another comment to that Restatement provision states: "Possession of the leased property by a third person, or other conduct thereon by a third person, without the consent of the tenant, will be attributable to the landlord, so that the tenant can invoke the rule of [section 6.1 of the Restatement Second of Property], only if the landlord is a contributing factor to the unauthorized possession or conduct by the third person." (Rest.2d Property, Landlord and Tenant, § 6.1, com. c, p. 225, italics added.) Another comment thereto provides: "The landlord is not in default under the rule of this section unless he fails to eliminate the interference promptly after a request to do so. Prompt elimination means immediately if the interference is the conduct of the landlord himself, and as soon as possible if the conduct which must be stopped is that of a third person that is attributable to the landlord." (Rest.2d Property, Landlord and Tenant, § 6.1, com. e, p. 227.)
Keeping these principles in mind, we now sequentially examine appellants' claims, beginning with the CFK offers. With respect to this theory, appellants argue that the CFK offers provided "a strong financial incentive to rid the Stoneylake property of the Nativis and their possessions." They cite Weirum v. RKO General, Inc. (1975) 15 Cal.3d 40, 43 [123 Cal.Rptr. 468, 539 P.2d 36],
Furthermore, appellants presented no evidence that a CFK offer prompted someone to dispossess appellants by taking all their property out of the garage unit. The trial court ruled that Nativi's statement that an occupant of the main residence told her that the Bank instructed her to remove the items was hearsay. Appellants submitted no other evidence that any postforeclosure occupant understood a CFK offer as an instruction or invitation to remove appellants' property from the garage unit and acted accordingly. The evidence produced indicated that the first two groups of postforeclosure occupants with whom Dougherty or Diaz had contact voluntarily left the property without participating in any CFK offer.
Appellants failed to present sufficient evidence from which a trier of fact could conclude that the dumping of all their property was attributable to the Bank or those acting on its behalf based on a CFK offer proffered by Advisors.
Appellants did not produce admissible evidence that the postforeclosure occupants who prevented appellant Perez from returning to live in the garage unit in September 2009 were claiming as tenants under the Bank.
Respondents' evidence indicated that Diaz subsequently received a telephone call from a male, whom she knew as Robert and who appears to have been appellant Perez. The caller said that he was a tenant in the garage and he wanted to get back in but a person in the main house had not let him on the property. Diaz told him she could not do anything. No evidence was produced that, as of that point in time, the Bank, or anyone acting on its behalf, had interfered with appellants' possession or quiet enjoyment.
We recognize that a successor in interest's failure to reasonably determine whether residential occupants of foreclosed property are bona fide tenants does not in itself amount to constructive eviction or substantial interference with a permissible use of the property. Nevertheless, where a successor in interest in foreclosed property fails to reasonably identify a person as a bona fide residential tenant of the property and, in its dealings with others concerning rightful occupation of the property, unreasonably fails to inform or misinforms a third party as to the bona fide tenant's right to occupy leased premises, such omission or conduct by the successor may, under particular circumstances, constitute a "contributing factor" to that third party's interference with the bona fide tenant's possession and quiet enjoyment and render that interference attributable to the successor in interest. (See Rest.2d Property, Landlord and Tenant, § 6.1, pp. 222-223 & com. c thereto, p. 225.)
Beyond the Bank's letter threatening an unlawful detainer action, however, there was evidence from which a reasonable trier of fact could find that the third party conduct preventing appellant Nativi's return to the garage unit in October 2009 was attributable to Diaz and ultimately to the Bank. The evidence indicated that, with respect to the Stoneylake property, Advisors was responsible for informing the property's occupants of the foreclosure, facilitating their relocation if possible, and preparing the property for resale. The evidence does not show that Advisors took steps to determine whether appellants had the right to remain as tenants of the garage unit through the end of their lease term by operation of the PTFA. In light of all the evidence, we conclude that a triable issue of material fact exists whether the Bank's
Appellants complain that, after the trial court had already ordered AHMSI to produce documents, AHMSI brought a motion for a protective order and the trial court improperly granted it. They assert that AHMSI failed to move promptly for such order or present good cause for its issuance. Appellants maintain that the documents "would be of acute interest to the general public" because they set forth the servicer's "policies and procedures for the disposition of property owned by the banks" and the "public has a keen interest in the ongoing mortgage crisis and how banks are dealing with the properties they foreclose on and the tenants who live there." Appellants state that "[t]he issue is whether the public should have a right to that information as well." They urge us to vacate the protective order for all the foregoing reasons.
Respondents counter that the trial court properly granted their motion for a protective order because there was "no good faith basis for appellants to disseminate respondent AHMSI's proprietary data outside the confines of this lawsuit."
On April 13, 2011, appellants served respondents by mail with their notice of deposition of AHMSI's person most qualified to testify (PMQ) and requested the production of the documents, including AHMSI's policies, procedures, and practices concerning marketing and selling, servicing, or contracting with third parties to manage lender-owned California real estate, effective between January 1, 2009, to the present, at the deposition. AHMSI objected to the request for production of those policies, procedures, and
On June 14, 2011, appellants took the deposition of AHMSI's PMQ and AHMSI's counsel objected to questions on the ground of confidential proprietary information. The deponent did not have the requested documents.
By noticed motion filed on June 29, 2011, appellants moved to compel further responses to requests for admissions, further responses to deposition questions, and production of documents.
On July 22, 2011, the trial court granted in part appellants' motion to compel further discovery. It ordered AHMSI's PMQ to appear for further deposition, answer certain deposition questions, and produce documents in response to three of appellants' requests concerning AHMSI's policies, procedures, and practices regarding marketing and selling, servicing, and contracting with third parties to manage real estate owned by lenders. It ordered such discovery to take place within 20 calendar days.
On August 12, 2011, respondents filed an ex parte application for an order shortening time for notice on a motion for a protective order. In support of the application, respondents filed their counsel's declaration, which stated in part: "There is absolutely
With their application, respondents submitted a sweeping proposed order that provided procedures for designating material as confidential and challenging confidentiality designations, extensive restrictions regarding the use of designated materials in discovery and in court, and provisions for the return and destruction of materials received at the conclusion of the litigation.
The parties stipulated that the documents produced at the August 16, 2011 deposition would be conditionally protected as confidential pending the court's ruling on AHMSI's motion for a protective order.
A notice of motion for a protective order was filed on August 26, 2011. The parties agreed that the ex parte application would be deemed the moving papers.
Appellants opposed the motion on the grounds that it was untimely and AHMSI had not shown that the documents should be protected. They pointed out that the motion was not accompanied by a declaration from any AHMSI
On September 23, 2011, the trial court granted AHMSI's request for a protective order. The court found there had "been a showing that the information is proprietary in nature." The formal order, filed November 15, 2011, adopted the proposed comprehensive protective order.
"Before, during, or after a deposition, any party, any deponent, or any other affected natural person or organization may promptly move for a protective order."
Code of Civil Procedure section 2025.420, subdivision (b), provides a nonexclusive list of permissible directions that may be included in a protective order. (Cf. Code Civ. Proc., § 2031.060, subd. (b).) A protective order may include the direction that "a trade secret or other confidential research, development, or commercial information not be disclosed or be disclosed only to specified persons or only in a specified way." (Code Civ. Proc., § 2025.420, subd. (b)(13); cf. Code Civ. Proc., § 2031.060, subd. (b)(5).)
First, as to the timeliness of the motion for a protective order, the promptness of the request turns on the facts. Appellants' motion for a protective order was not untimely as a matter of law because it was made after the order compelling further deposition and production, especially since it was contesting the dissemination of the documents, not their production. (See Code Civ. Proc., § 2025.420, subd. (a); cf. Stadish v. Superior Court (1999) 71 Cal.App.4th 1130, 1144 [84 Cal.Rptr.2d 350] ["upon a proper showing a party may — even after it has waived its right to object to the production of documents, and has produced most of the documents requested — seek a protective order restricting dissemination of the documents" under Code Civ. Proc., former § 2031, subd. (e)].) Here, within a week of learning that appellants would not agree to a protective order and before the date agreed upon by the parties for the court-ordered deposition and the deponent's production of documents, AHMSI applied for an order shortening the time for notice of a motion for a protective order. It then promptly filed its motion. Appellants have not shown that the court abused its discretion by considering the motion on its merits.
"Parties to civil litigation, recognizing the broad policies favoring discovery, often choose to avoid costly and time-consuming motion practice by entering into stipulations for protective orders that permit production but limit disclosure and use of discovered information deemed by the producing party to contain confidential, proprietary, and/or private information. They thereby defer or obviate the need for specific court determination as to the propriety
Where a party must resort to the courts, "the burden is on the party seeking the protective order to show good cause for whatever order is sought. [Citation.]" (Fairmont Ins. Co. v. Superior Court (2000) 22 Cal.4th 245, 255 [92 Cal.Rptr.2d 70, 991 P.2d 156].) Even assuming California trial courts may in appropriate circumstances issue an umbrella protective order that allows the parties to designate as confidential documents produced in discovery (but see Stadish v. Superior Court, supra, 71 Cal.App.4th at p. 1144 [trial court impermissibly "delegated to the parties the responsibility of determining which items of discovery contained trade secrets"]) and specifies the permissible use of those designated documents, the declaration submitted in support of AHMSI's motion for such a protective order was entirely conclusory and lacked any factual specificity. (See People v. Superior Court (Witzerman) (1967) 248 Cal.App.2d 276, 281-282 [56 Cal.Rptr. 393] [declaration containing mere conclusions insufficient to establish good cause]; cf. In re Roman Catholic Archbishop of Portland in Oregon (9th Cir. 2011) 661 F.3d 417, 424 ["`[b]road allegations of harm, unsubstantiated by specific examples or articulated reasoning, do not satisfy the Rule 26(c) test.' [Citation.]"]; cf. also Fed. Rules Civ.Proc., rule 26(c), 28 U.S.C. ["... The court may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense, including one or more of the following: ... [¶] (G) requiring that a trade secret or other confidential research, development, or commercial information not be revealed or be revealed only in a specified way...."].) AHMSI made no factual showing that (1) the documents that it had been ordered to produce contained confidential commercial information or information in which it had any protectable interest or (2) dissemination of the documents to the public would result in injury.
In addition, the proposed order, which the court adopted in its entirety, went far beyond restricting disclosure of those documents in advance of trial. (See NBC Subsidiary (KNBC-TV), Inc. v. Superior Court (1999) 20 Cal.4th 1178, 1208-1209, fn. 25 [86 Cal.Rptr.2d 778, 980 P.2d 337] ["Numerous reviewing courts ... have found a First Amendment right of access to civil litigation documents filed in court as a basis for adjudication. [Citations.] ... [¶] By contrast, decisions have held that the First Amendment does not compel public access to discovery materials that are neither used at trial nor submitted as a basis for adjudication. [Citations.]"]; Seattle Times Co. v. Rhinehart (1984) 467 U.S. 20, 33 [81 L.Ed.2d 17, 104 S.Ct. 2199] ["restraints placed on discovered, but not yet admitted, information are not a restriction on a traditionally public source of information"]; see also Cal.
The judgment and the trial court's order granting respondent AHMSI's motion for a protective order is reversed. Appellants are entitled to costs on appeal.
Rushing, P. J., and Premo, J., concurred.
