Dimock v. Emerald Properties

In Dimock v. Emerald Properties (2000) 81 Cal.App.4th 868, a note and deed of trust were purchased by the defendant, Bankers Trust Company. (Dimock, supra, 81 Cal.App.4th at p. 871.) The trustee was Commonwealth Trust Deed Services, whose agent, T.D. Service Company, prepared and recorded a notice of default. (Id. at pp. 871-872.) Thereafter, the plaintiff entered into a forbearance agreement, under which Bankers agreed to hold off on foreclosure. After the plaintiff failed to pay in accordance with the agreement, Bankers recorded a substitution of trustee, replacing Commonwealth with Calmco Trustee Services. (Id. at p. 872.) T.D. filed another notice of default. (Ibid.) It then abandoned that notice and acted under the previously recorded notice, but it never vacated the substitution to Calmco. (Ibid.) The Court of Appeal held that under the statutory provisions governing substitution of trustees, once the substitution of Calmco was recorded, that gave it the sole power to convey the property. (Id. at pp. 875-877.) As a result, Commonwealth had no power to convey the property and its conveyance to the purchaser at the foreclosure sale was void, not merely voidable. (Id. at pp. 876-878.) The court further held that since the plaintiff was not relying on the court's equity powers to attack a voidable deed, the usual requirement of tender did not apply. (Ibid.) The Court found that the deed was void on its face because it was undisputed that the bank had recorded a document that substituted Calmco as trustee under the deed of trust in place of former trustee Commonwealth, and given this recording, only Calmco had the power to conduct a trustee's sale of the property. (Dimock v. Emerald Properties, supra, 81 Cal.App.4th at p. 874.) Therefore, the deed executed by Commonwealth purporting to convey the property was void on its face, and Dimock "could rely on the face of the record to show that the Commonwealth deed was void." (Id. at p. 878.) The court held that where a deed is not void on its face, "a trustor then bears the burden of showing that there are grounds for equitable relief from the deed, such as fraud or that the buyer was not a bona fide purchaser for value, and that there were also defects in notice." (Id. at p. 877.) The Court held: "In the context of overcoming a voidable sale, the debtor must tender any amounts due under the deed of trust. . This requirement is based on the theory that one who is relying upon equity in overcoming a voidable sale must show that he is able to perform his obligations under the contract so that equity will not have been employed for an idle purpose. ." (Dimock v. Emerald Properties, supra, 81 Cal.App.4th at pp. 877-878.)