Filed 5/30/18 CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

PLACER FORECLOSURE, INC.,

Plaintiff and Appellant,

v.

SOLOMON AFLALO,

Defendant and Appellant. 2d Civil No. B 268589 (Super. Ct. No. 56

- 2015

- 00471416

- CU

- OR

- VTA) (Ventura County)

Placer Foreclosure, In c., acting as trustee, conducted a foreclosure sale of property owned by Solomon Aflalo

. The foreclosure sale resulted in surplus proceeds. When Aflalo filed a wrongful foreclosure action against Placer and the third

- party buyer, Pro Value Properties, Inc., Placer filed a complaint in interpleader and deposited the surplus proceeds with the court.

Placer appeals judgment of dismissal after the trial

court su stained Aflalo’s demurrer to th e interpleader complaint
without leave to amend

. In a cross

- appeal

, Aflalo contends: the
trial court erred when it did not direct the clerk of the court to
release the interpleaded fund s to him

. We affirm the judgment of2

d ismissal. We remand with direction s to the trial court to release

t he interpleaded funds to Aflalo

.

FACTUAL AND PROCEDUR AL HISTORY
Afla lo b orrowed funds to buy a home. The loan was secured by a deed of trust. Placer was the trustee under the deed
of tr ust

. Aflalo defaulted on the loa n, and Placer conducted a foreclosure sale

. Pro Value bought t he property

. T he sale
resulted in $974,786.81 in surplus proceeds , after payment of the fees and costs of sale and the obligations on the loan

.

Aflalo filed a wrongful foreclosure action

. He named
Placer and Pro Value as defendants

. He sought to invalidate the
foreclosure sale and quiet title to the property.

Placer responded with the interpleader complaint

. Placer alleged the wrongful foreclosure action ga ve rise to conflicting claims to the surplus funds

. It alleged it has “no interest in the Surplus and is indifferent with respect to which Defendant, or combination of Defendant s , should receive the Surplus. ”
After the trial court sustained Aflalo’s demu rrer to the interpleader complaint without leave, Aflalo filed an application for a judgment of dismissal . He asked the court to release the interpleaded surpl us funds to him.

T he trial court entered a judgment of dismissal of the interpleader complaint and ordered that Placer “may apply to the court for a release of the [surplus] Fu nds deposited with the court.” The trial court denied Aflalo’s request to release the interpleaded funds to him

.3 DISCUSSION 1
Moot ness While this appeal was pending, Aflalo a nd Pro Value entered a settlement agreement in which Pro Value “disclaim[ed] any interest whatsoever in the $974,786. [8]1 of S urplus P roceeds deposited by Placer in the Interpleader Action with the Superior Court.” It declared that it did not “object to t he immediate disbursement by the Superior Court to [ Aflalo ] of the Surplus
Proceeds.” Based on the settlement agreement, Aflalo argues
that the appeal should be dismissed because the interpleader complaint and the appeal are now moot. We disagree

.

Calif ornia courts will decide only “ ‘ j usticiable
controversies. ’ ” (

Association of Irritated Residents v. Department of Conservation (2017) 11 Cal.App.5th 1202, 122 1 .) A moot case is one in which there may have been an actual or ripe controversy at the outset, but due to intervening events, it no longer presents

1 We grant P lacer’s request for judicial noti ce filed on February 7, 2017, which contains ( 1) recorded documents related to the deed of trust and foreclosure sale, (2) pleadings related to Aflalo’s wrongful foreclosure suit, and (3) moving papers related to Aflalo’s motion to dismiss the appeal. (Evid. Code, §§ 452, 459.) We also grant Aflalo’ s request for judicial notice filed on October 6, 2017, which contains (1) the order of dismissal of the interpleader complaint and (2) Aflalo’s complaint filed May 2017 against Placer, including an attached declaration from the president of Pro Value disc laiming any interest in the surplus funds. (Evid. Code, §§ 452, subd. (d), 459.) We deny Placer’s request for judicial notice filed January 10, 2018 , which also contains Aflalo’s May 2017 complaint against Placer, because it is duplicative.4

a context in which the court can grant effect ual relief

. ( Id . at p. 1222.) Although Pro Value and Aflalo’s settlement resolved
the dispute over the surplus proceeds, the appeal is not moot because jus ticiable controversies remain

. Here, Placer’s interpleader complaint request s attorney fees, a discharge from liability

, and dismissal from the underlying wrongful foreclosure
action (Cod e Civ. P roc., §§ 386, 386.6)

. Because the award of attorney fees , d ischarge from liability, and dismissal from th e wrongful foreclosure action are dependent on whether the trial court properly ruled on the demurrer, the appeal is not moot. (See White v. Lieberman (200 2) 103 Cal.App.4th 210, 220 .)

Although w e determine t he appeal is not moot, we will conclude the interpleader was properly dismissed . Placer is
thus not entitled to attorney fees, discharge from liability, or an order of dismissal from the wrongful foreclosure action.

Dismissal of the Interpleader Complain t Placer contends that the trial court erred in sustaining the demurrer without leave to amend and dismissing the interpleader complaint because Aflalo and Pro Value’s competing claims subjected it to multiple liability

.

W e review the order de novo, and independently
decide whether the complaint states a cause of action

, reading it
as a whole

, and deem ing true all material facts properly pled. ( Westamerica Bank v. City of Berkeley (2011) 201 Cal.App.4th 598, 606

- 607 ( Westamerica ) .)

A party “against whom double or multiple claims are
made

, ” that “ may give rise to double or multiple liability, ” may bring an action against the claimants to compel them to interplead and litigate their claims. ( Code Civ. Proc., § 386, subd.5

(b).) The complaint must show that “ ‘ the defendants make conflicting claim s ’ ” to the subject ma tter, and that the plaintiff

“ ‘ cannot safely determine which claim is valid and offers to deposit the money in court . . . . ’ [Citations.] ” ( Wes tamerica

, supra , 201 Cal.App.4th at pp. 607

- 608.) But an interpleader
action may not be maintained “ ‘ upon the mere pretext or suspicion of double vexation. ’ ” ( Id

. at p. 608.)

Placer contends that the interpleader complaint was proper because Placer was faced with liability from Pro Value if it
distribu ted the surplus funds to Aflalo. We reject this contention. Placer could safely distribute the surplus funds to Aflalo as required by statute without any risk of multiple liability.

The trustee’s role in preparing for and conducting a nonjudicial foreclo sure sale is set forth in detail in Civil Code 2 section 2924 et seq., as part of a comprehensive statutory scheme.
The scope and nature of the trustee’ s duties are exclusively defined by the deed of trust and the governing statutes. ( Pro Value Properties , Inc. v. Quality Loan Service Corp. (2009) 170 Cal.App.4th 579, 583 ( Quality Loan Service ).) No other common
law duties exist. ( Ibid

. )

Placer was statuto rily required under section 2924k

to disburse surplus funds to Aflalo

. Section 2924k , subdivision (a) provides that a trustee “shall distribute the proceeds” in the following order of priority: (1) costs and expenses of the sale, (2) payment of the “obligations secured by the deed of trust,” (3) payment to any junior liens or encumbrances, and (4) pay ment “to the trustor.” Placer paid the costs and expenses of the sale
and the encumbrances as directed under section 2924k

,

2 Further u nspecified statutory references are to the Civil Code.6

subdivision (a)(1) through (3)

, including payment to the lender of record, but did not pay the remaining funds to Aflalo, the trust or (§ 2924k, subd. (a)(4) )

. Placer was required to do so.

Placer does not cite to any authority that would prevent it from performing its statutory obligation to disburse the
sale proceeds as directed under section 2924k

. Relying on section 2924j, i t a rgues that it was not required to comply with section 2924k when there are “disputed unresolved claims

. ” Placer’s reliance on section 2924j is misplaced.

Section 2924j does not apply because the confli cting
claims are not between parties who had recorde d interests before
the sale. Section 2924j , subdivision (a) sets forth the procedure for distributing proceeds to “persons with recorded interests in the real property as of the date immediately prior to the trustee’s
sale

. ” It provides that “[o]nce an i nterpleader action has been
filed ” because of disputed unresolved claims

, “ thereafter the provisions of this section do not apply

. ” (§ 2924j, subd. (e)

. ) However, s ection 2 9 24j procedures regarding disputed claims apply to persons who make a claim to the property before the
foreclosure sale such as lienholders, not purchasers at the sale. ( See Banc of America Leasing & Capital, LLC v

. 3 Arch Trustee Services, Inc. (2009) 180 Cal.App.4th 1090, 1104 ; see also Pacific Loan Management Corp. v. Superior Court (1987) 196 Cal.App.3d 1485, 1490 [interpleader proper where junior lienholder and trustor disputed surplus funds] .) The con flicting claims at issue
here are not between lienholders , and Placer admits that Pro
Value ha s no claim to the sale proceeds under section 2 9 24k.
N othing in section 2924j excuses Placer from carrying out its duty of distributing the surplus proceeds in accordance with
section 2924k.7 Citing to Bank of America v. La Jolla Group II (2005) 129 Cal.App.4th 706 and Quality Loan Service

, supra , 170 Cal.App.4th 579, Placer argues that if the foreclosure action
deemed the sale void, Placer “ would not have had the power of
sale

, ” Pro Value would have been “entitled to . . . the return of the purcha se price, plus accrued interest, ” and “an err oneous payment of s ale proceeds ” would have subject ed Placer to liability. It argues the interpleader action was appropriate
because it was mere ly a stakeholder with no obligation to resolve the disputed claim s. ( Cantu v. Resolution Trust Corp. (1992) 4 Cal.App.4th 857 .)

But Placer did not face a valid threat of double
vexation because Pro Value’s claim was against A f l alo, not
Placer

. ( Westamerica

, supra , 201 Cal.App.4th at p. 608.) This
case is like Westamerica , in which a demurrer to a bank’s interpl eader complaint was sustained without leave to amend
because the bank, acting as an escrow agent, faced no threat of
double vexation from the City of Berkeley and a build ing

contractor , who were litigating a contract dispute

. ( Id . at pp.
608

- 613.) The ap pellate court upheld the decision after interpreting an escrow agreement, which tracked a statutory scheme setting forth an escrow agent’s “ specific list of rights and
duties” for the distribution of escrowed funds

. ( Id. at p. 608.)
T he court determined there was no reasonable probability of double vexation because (1) the statutory terms of the escrow agreement clearly instruct ed the bank on how to pay funds (i.e., the bank must pay the c ity at the c ity’s direction and the contractor could not direct pay ment of funds without the c ity’s consent) ; (2) the agreement stated that the bank would be “held harmless” by the parties if it followed the escrow instructions ;8

and (3) even without the hold harmless clause

, the matter would
resolve in the litigation betw een the c ity and the contra c tor
, and the contractor had a statutory remedy against the c ity if distribution of the escrow funds were improper

. ( Id. at pp. 608

- 610.) Here too, the statute directed Placer how to pay the funds, the competing cla ims were to be resolved in the f oreclosure action, and Pro Value had a remedy against Aflalo who would have to return the surplus funds to the buyer if he successfully
set aside the sale in the foreclosure action.

Placer argues that Westamerica is distinguishable
beca use the escrow agreement in that case contained a “hold
harmless” clause

. But, even in the absence of an indemnity
clause protect ing the stakeholder from being sued, there is no
threat of double vexation because there “ would [ be ] little to gain by filing an action against ” the stakeholder. ( Westamerica

, supra , 201 Cal.A pp.4th at p. 610.) If the wrongful foreclosure action invalidated the sale, Pro Value would be entitled to a refund from Aflalo of its purchase proceeds, including the surplus, and would
h ave nothing to gain by an action against Placer. (See id

. at pp.
60 9

- 610.)
T his case is also like City of Morgan Hill v. Brown (1999) 71 Cal.App.4th 1114 , 1123, in which there was no right to an interpleader action where the parties assert ed rights over
different debts owed by different obligors. A n attorney represented the City of Morgan Hill when she was a member of a law firm. When the law firm terminated her, she demanded her share of attorney fees that the c ity owed the law firm. ( Id

. at pp.
1118

- 1119.) The c ity interpleaded the attorney fees. ( Id

. at p. 1119.) The appellate court affirmed the trial court ’s order granting the law firm’s summary judgment of the interpleader9

action and ordering the attorney fees to be released to the firm

, becaus e the parties claimed different debts owed by different obligors. ( Id

. at p p. 1121, 1123.) The firm claimed a debt of attorney fees owed by the c ity; whereas, the attorney claimed a
debt of compensation owed by the firm

. T here was no interpleader action because all that exist ed wa s a “possible eventual right to a judgment that might be satisfied” out of the disputed funds. ( Id

. at p. 1126.)

Aflalo claims a right to collect surplus funds from
Placer under section 2924k. Pro Value has no claim against
Placer. It h as only a “possible eventual right” to a refund of its purchase proceeds from Aflalo in the event that Aflalo succeeds in its wrongful foreclosure lawsuit.

Placer note s that Aflalo ’s counsel initially “refused to accept distribution” of surplu s funds pending the outcome of the
foreclosure lawsuit

. Six months later and after he retained new counsel, Aflalo demanded payment of the surplus funds. To the
extent that Placer is asserting that Aflalo is estopped from claiming his entitlement to the immediate disbursement of surplus funds , we reject the argument

. Regardless of whether Aflalo initially requested that Placer hold the funds

, he subsequently requested the funds under section 2924k , and t here
is no evidence that his earlier request to hol d the funds caused
harm to Placer

. (Contr a, Schafer v. City of Los Angeles (2015) 237 Cal.App.4th 1250 [estoppel appropriate where a party led
another to do what it would not otherwise have done and as a result suffered injury or grave injustice].)
Leave to Amend
Placer contends the trial court should have granted
leave to amend the interpleader complaint

. We review the court’s10

decision to sustain a demurrer without leave to amend for abuse of discretion. ( Westamerica

, supra , 201 Cal.App.4th at p. 613.)

There is no abus e of discretion because Placer does
not meet its burden to demonstrate a reasonable possibility that
the def ect can be cured by amendment. ( Blank v. Kirwan (1985)
39 Cal.3d 311 , 318 ( Blank ) .) “If the plaintiff does not proffer a

propos ed amendment, and does not advance on appeal any proposed allegations that will cure the defect or otherwise state a claim, the burden of proof has not been satisfied.” ( Westamerica

, supra , 201 Cal.App.4th at pp. 613

- 614.)

Placer has not state d any alle gations or facts that would cure the defect in the interpleader complaint. The trial
court did not abuse its discretion when it denied leave to amend. (See Blank

, supra , 39 Cal.3d at p. 318.)

Disbursement of Surplus Funds
On cross

- appeal, Aflalo cont ends that the trial court
erred when it refused to release the interpleaded funds of $974,786.81 to him. While the cross

- appeal was pending, Pro Value and Aflalo settled their dispute. Placer and Pro Value do not object to the di sbursement of funds to Af lalo. We therefore
direct the trial court to order the release of the interpleaded
funds to Aflalo.11 DISPOSITION
We affirm the judgment of dismissal. We remand to
the trial court with direction t o the trial court to release the interpleaded funds of $974,786.81 to Af l alo. The clerk of the trial
court is directed to amend the May 3, 2016

, judgment of dismissa l accordingly . Aflalo is awarded costs on appeal

.

CERTIFIED FOR PUBLICATION.

TANGEMAN, J. We concur:

GILBERT, P. J.

YEGAN, J.Vincent J. O’Neill, Jr., Judge

Superior Court County of Ventura

______________________________

Adleson, Hess & Kelly, Patric J. Kelly, Phillip M. Adleson, Lisa J. Parrella; Law Offices of Kirk Rimmer and Kirk Rimmer, for Plaintiff and Appellant Pla cer Foreclosure, Inc.

Klapach & Klapach, Joseph S. Klapach; Ivie, McNeil & Wyatt, Rickey Ivie and Samuel E. Chilakaos, for Defendant and Appellant Solomon Aflalo.