In Capon v. Monopoly Game, LLC et al, the California Court of Appeal protected the rights of a homeowner in foreclosure against poachers attempting to rip him off during his financial despair. In 1991, plaintiff purchased a house in Hillsborough, California for $1,310,000. Plaintiff lived at the Property with his two sons and wife. Plaintiff encountered financial difficulties that ultimately resulted in a default on a second mortgage on the Property. In October 2003, a notice of trustee’s sale was recorded, setting November 14, 2003 for the date of sale.
On October 28, 2003, defendants became aware of the scheduled trustee’s sale of the Property. Thereafter, plaintiff was approached multiple times by some of the defendants, who said they were familiar with plaintiff’s situation and offered to help him seek refinancing. Then, on the morning of the trustee’s sale, Defendants visited the plaintiff at the Property. Plaintiff agreed to sell the equity interest in the Property for $100,000, plus $50,000 if they moved out by December 15. Defendants instructed plaintiff to go to Alliance Title Company in San Jose to complete the paperwork for the transaction. Plaintiff and his wife signed a one-page “Agreement to Sell Real Property” (Agreement), a grant deed in favor of Monopoly Game (Deed), and a document entitled “Estoppel Affidavit.” The Agreement was backdated to October 29, 2003.
The Deed purported to convey real property located in the “City of San Mateo,” did not contain a street address or other description of the Property, and referenced a parcel number that is not the correct parcel number for the Property. Subsequently, the Deed was altered to change a reference from “San Mateo” to “Hillsborough” and to attach a new second page describing the Property (Altered Deed). Neither plaintiff nor his wife consented to the alterations. The Altered Deed was recorded on December 3, 2003. Subsequently, Monopoly Game, the purchaser, sold the Property for over $1.5 million; the sale netted Monopoly Game over $300,000.
At some point after sale of the Property to Monopoly Game, one defendant suggested to plaintiff’s wife to apply for a restraining order against plaintiff and even had his lawyer provide help to the wife. On December 10, 2003, two police officers came to the Property and told plaintiff he had to leave. He was unable to take his personal property, and despite promises to return his things, they were not returned. When the new owners took over possession after December 15th, they got rid of and donated plaintiff’s personal items.
As a result, Plaintiff filed suit, asserting 12 causes of action: (1) rescission under Home Equity Sales Contract Act (“HESCA”); (2) damages for violation of HESCA; 5 (3) declaratory relief; (4) quiet title; (5) breach of contract; (6) fraud; (7) deceit; (8) conversion; (9) unjust enrichment; (10) civil conspiracy; (11) unfair business practices within the meaning of Business and Professions Code section 17200; and (12) injunctive relief. The trial court ruled in favor of plaintiff on the causes of action for declaratory relief, unjust enrichment, and unfair business practices, finding the Altered Deed was void ab initio because it lacked a legally sufficient property description when executed and was rendered a forgery when it was altered. As restitution, the trial court awarded plaintiff $306,880.48, the profits from the resale of the Property. The trial court also ruled in favor of plaintiff on the cause of action for conversion, finding that defendants had taken and disposed of plaintiff’s personal property without his consent; the court awarded damages of $353,745. With respect to the claim for damages under section 1695.7 of HESCA, the court found the Property was a “residence in foreclosure” and the Agreement failed “to comply with the Act in a variety of respects.” However, notwithstanding the fact that Monopoly Game acquired title to the Property, the trial court found applicable an exception from the requirements of HESCA, holding that Monopoly Game was not an “equity purchaser” because Gladney, the owner of Monopoly, intended to use the Property as a “personal residence.”
On appeal, the Court upheld the rulings in favor of the plaintiff. Moreover, it reversed the ruling for defendants regarding a violation of HESCA. The Court of Appeal held that the trial court erred in rejecting plaintiff’s HESCA claim. It found that the exception was inapplicable because although the trial court found defendant Gladney intended to live in plaintiff’s house, the buyer was defendant Monopoly Game, not Gladney. The Alter Ego doctrine did not apply to allow Gladney and Monopoly to act as one and the same. Based on this, the Appellate Court ruled that in addition to the damages already awarded, the plaintiff was entitled to attorneys’ fees.
If you have been deceived or defrauded when trying to buy or sell your home, you should immediately seek legal advice.
For more information, or if you need legal assistance, please contact the Wagner Legal Group, P.C. at (310) 857-5293 or fill out our contact form on the website.