Ayala v. Dawson

220 Cal. Rptr. 3d 917, 13 Cal. App. 5th 1319, 2017 WL 3326712, 2017 Cal. App. LEXIS 681
CourtCalifornia Court of Appeal, 5th District
DecidedAugust 4, 2017
DocketA142830
StatusPublished
Cited by47 cases

This text of 220 Cal. Rptr. 3d 917 (Ayala v. Dawson) is published on Counsel Stack Legal Research, covering California Court of Appeal, 5th District primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ayala v. Dawson, 220 Cal. Rptr. 3d 917, 13 Cal. App. 5th 1319, 2017 WL 3326712, 2017 Cal. App. LEXIS 681 (Cal. Ct. App. 2017).

Opinion

Streeter, J.

*1321After living for more than a dozen years in a residential unit he claimed he owned, Alfonso Ayala was evicted by the property owner, Randy Dawson, in an unlawful detainer action. Ayala defended by attempting to quash service of summons on the ground he was not a tenant, but instead held equitable title under an oral installment sale contract for the purchase of property. Dawson countered that, in fact, Ayala was a tenant under a written lease, and had breached the lease in various ways, thus justifying his eviction. After an evidentiary hearing on Ayala's motion to quash service, Dawson prevailed and ultimately took a default judgment. Ayala then vacated the premises.

In this case, a separate, concurrent action by Ayala against Dawson for fraud and various other claims, Ayala once again pursues the theory that he *1322holds equitable title under an installment sale contract. He seeks to argue, as he did in the unlawful detainer action, that Dawson, a real estate broker, deceived him into signing the lease, while misrepresenting that the document was simply the memorialization of a preexisting oral contract of sale. The court granted summary judgment for Dawson, ruling that, under the doctrine of collateral estoppel, Ayala is barred from relitigating his fraud-in-the-inducement theory. This appeal is from the ensuing judgment and from an award of attorney fees in Dawson's favor under the prevailing party fee clause in the lease. We affirm.

I. BACKGROUND

In late 1999, Ayala found a five-unit residential property in Vacaville that he wished to buy, but he could not qualify for a mortgage loan, so he sought the assistance of his friend Dawson, a real estate broker. According to Ayala, the two men struck an oral agreement under which Dawson agreed to obtain the required purchase money mortgage loan and buy the property in Dawson's name for a price of $330,000; Ayala agreed to pay the entire down payment of 20 percent and thereafter pay Dawson a $200 per month fee, plus the monthly principal and interest on the mortgage loan; Ayala agreed to maintain the property and not to commit waste; Ayala agreed to contract with a property management company to manage the rental units; and, upon Ayala's payoff of the entire principal and interest due on the mortgage, Dawson agreed to deed the property to Ayala in fee.

The parties executed a written contract provided by Dawson on December 9, 1999, which Ayala-in reliance on Dawson's superior knowledge of real estate transactions-claims he understood merely to confirm an installment contract for the *920purchase of property on terms the two men had previously discussed. After signing and initialing the papers, Ayala moved into one of the units and contends he spent hundreds of thousands of dollars improving the property over the more than 12 years he lived there. Ayala used a "shop" on the property in his business and may have stored equipment in a "barn" on the property. From January 2000 to 2008, he also paid Dawson $2,700 per month, and from 2008 to July 2012, he paid Dawson $2,900 per month. Payments to Dawson apparently were made by the property management company, which used rental income from the property, supplemented by funds provided by Ayala. Unbeknownst to Ayala-who testified he did not read the "pile of documents" presented to him in December 1999 -the contract he executed was a "RESIDENTIAL LEASE WITH OPTION TO PURCHASE (CALIFORNIA SHORT FORM)," not an installment sale contract. According to Dawson, Ayala allowed the purchase option granted under this lease to expire on December 31, 2004, and thereafter Ayala's interest in the property amounted to nothing more than a month-to-month tenancy. As *1323evidence that both parties understood their relationship that way, Dawson points out he raised what he explicitly denominated as the monthly "rent" from $2,700 per month to $2,900 per month in 2008, without protest of any kind by Ayala.

Despite the fact that the option to purchase had expired, in 2011 Dawson offered to sell the property to Ayala for the original price of $330,000, with a credit for the down payment he had paid. Ayala refused the offer, taking the position he should not have to buy property he already owned. By then, according to Dawson, Ayala had fallen into a pattern of late payment of his monthly rent and had allowed the property to fall into a state of disrepair. As a result, Dawson claimed, he was unable to obtain refinancing, which put him in a financial bind because he was in a "negative cash flow" position.1 According to Dawson, the whole idea for the transaction had been to provide, in effect, temporary financing so that Ayala could purchase the property no later than December 31, 2004, but that never happened, and after a decade, the continued carrying costs were damaging Dawson's credit. Dawson testified that when he tried to raise these concerns with Ayala in August 2011, Ayala for the first time began trying to claim that he was not a tenant, that he held equitable title to the property under an oral installment sale contract, and that the written lease was fraudulent.

In June 2012, Ayala filed this action, a lawsuit alleging claims against Dawson for fraud, breach of an oral contract, specific performance, preliminary and permanent injunctive relief, and declaratory relief. He later amended the complaint to add claims seeking a quiet title declaration, restitution for unjust enrichment, and the imposition of a constructive trust and a resulting trust. In July 2012, Dawson filed an action of his own for unlawful detainer.2 Rather than answer, Ayala filed a motion to quash service of summons on the ground that the court in which the unlawful detainer action *921was filed lacked jurisdiction because "[t]here was never a landlord-tenant relationship between the parties." In support of that jurisdictional argument, Ayala contended the written lease was fraudulent and Ayala occupied the property not as a tenant, but as a vendee-in-possession pursuant to an oral installment sale contract.

After holding a one and a half day evidentiary hearing in the unlawful detainer action, Judge D. Scott Daniels denied the motion to quash, ruling *1324that "[b]ased on Plaintiff's ... Residential Lease with Option to Purchase and the conduct of the parties, [Dawson had] met his burden of proof to establish the existence of a landlord-tenant relationship...." In denying the motion, Judge Daniels found that Ayala had read and signed the lease, declined to find any basis to relieve Ayala of his contractual obligations, and specifically rejected the theory that Dawson served as Ayala's real estate broker or was Ayala's trusted real estate advisor.

Ayala sought a writ of mandate in the superior court appellate division, requesting review of Judge Daniels's ruling. The appellate division panel denied the writ, specifically affirming Judge Daniels's finding of a landlord-tenant relationship as supported by substantial evidence.

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Cite This Page — Counsel Stack

Bluebook (online)
220 Cal. Rptr. 3d 917, 13 Cal. App. 5th 1319, 2017 WL 3326712, 2017 Cal. App. LEXIS 681, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ayala-v-dawson-calctapp5d-2017.