Solomon Aflalo borrowed funds to buy a home. Placer Foreclosure, Inc. was the trustee under the deed of trust used to secure the loan. When Aflalo defaulted on the loan, Placer conducted a foreclosure sale. Pro Value Properties, Inc. bought the property through the foreclosure sale. After payment of the fees and costs of the sale as well as the obligations on the loan, the transaction resulted in a surplus of funds to the amount of $974,786.81.
Aflalo filed a wrongful foreclosure action against Placer and Pro Value in an attempt to invalidate the foreclosure sale and to quiet title the property. Placer responded with an interpleader complaint. An interpleader is when there is a dispute over funds from a real estate transaction and the parties hand the money over to the court for the court to decide who gets what funds. At the end of an interpleader, the court releases the funds directly to any party awarded the funds. Aflalo filed a demurrer to the interpleader complaint without leave to amend. The court granted Aflalo's demurrer to the interpleader. Aflalo then filed an application for a judgment of dismissal and for the court to release the interpleaded surplus funds to Aflalo. The Trial Court entered a judgment of dismissal but denied Aflalo's request to release the interpleaded funds to him. Placer appealed the decision.
During the appeal process, Aflalo and Pro Value entered into a settlement agreement where Pro Value agreed they had no claim to the interpleaded funds and that they should be released to Aflalo. Since it appeared there was no longer any dispute over who should receive the funds, Aflalo requested the appeal be dismissed because the interpleader complaint was now moot. The Appellate Court disagreed that the complaint was moot.
The interpleader complaint was not deemed moot because Placer requested attorney's fees, a discharge from liability, and dismissal from the wrongful foreclosure action. The Appellate Court determined that the interpleader was properly dismissed by the Trial Court, but Placer is not entitled to their attorney fees, discharge from liability, or an order of dismissal from the wrongful foreclosure action.
Under statute, Placer was supposed to release the surplus funds to Aflalo. They did not because Pro Surplus (the new Buyer) could have made a claim to the funds. However, the statute is very clear and the funds were supposed to go to the Trustor, which is Aflalo. Therefore, the Appellate Court remands to the Trial Court to release the funds to Aflalo. The judgment of dismissal is affirmed. Placer is denied attorney fees and Aflalo is awarded costs on appeal.