California Cases - 2004 to Present
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Go to cases 2000 - 2008

Decon Group v. Prudential Mortgage Capital Company     Docket
Cal.App. 2nd Dist. (B248491)  6/30/14

DEED IN LIEU OF FORECLOSURE: The lien of a senior deed of trust and fee title ordinarily do not merge when a deed in lieu of foreclosure is given where there are junior lienholders of record. In this case, where a property owner conveyed title to the holder of a first deed of trust and there was a junior mechanic's lien, the lien of the deed of trust and fee title did not merge. Accordingly, the deed of trust could subsequently foreclose and wipe out the mechanic's lien.

Rufini v. CitiMortgage     Docket
Cal.App. 1st Dist. (A138480)  5/28/14; pub. order 6/23/14

LOAN MODIFICATIONS: Plaintiff alleged that defendant breached an agreement to modify a loan pursuant to the federal Home Affordable Modification Program ("HAMP"). The court overruled an order sustaining a demurrer as to causes of action for breach of contract, wrongful foreclosure and the California Unfair Competition Law ("UCL"), holding that 1) temporarily renting out the home does not violate the requirement under HAMP that the property be the borrower's primary residence, 2) plaintiff was not required to tender payment of the amount due under the loan because he is seeking damages and not seeking to set aside the foreclosure sale, and because the complaint alleges that the borrower was not in default, in which case a tender is not required and 3) The UCL applies to unfair practices even where a statute is not violated. Without deciding whether the statute of frauds bars a negligent misrepresentation claim based on an oral agreement to modify the loan, the court also upheld the demurrer as to the cause of action for negligent representation because plaintiff alleged a written agreement to modify the loan. Finally, the court upheld the demurrer as to causes of action for general negligence and breach of fiduciary duty on the basis that no fiduciary duty exists between a borrower and lender.

Keshtgar v. U.S. Bank     Modification     Docket
Cal.App. 2nd Dist. (B246193)  6/9/14

TRUSTEE'S SALES: The court followed Gomes v. Countrywide Home Loans (2011) 192 Cal.App.4th 1149 in holding that the California non-judicial foreclosure scheme does not allow a judicial action to determine whether the person initiating the foreclosure process is authorized. The court also held that a borrower does not have standing to challenge an assignment of a deed of trust absent a showing of prejudice, disagreeing with Glaski v. Bank of America (2013) 218 Cal.App.4th 1079 on this point. The court also distinguished Glaski because that case involved an action for damages brought after a foreclosure, whereas this case and Gomes involve attempts to enjoin a trustee's sale.

Graham v. Bank of America     Docket
Cal.App. 4th Dist., Div. 1 (D063779)  5/23/14

PREDATORY LENDING: The court affirmed the trial court's sustaining of a demurrer without leave to amend. Plaintiff did not state a cause of action for reliance on defendant's appraisal because a lender obtains an appraisal for it's own benefit, and the borrower cannot reasonably rely on it. Plaintiff also did not state a cause of action for violation of California's Unfair Competition Law (B&PC 17200 et seq.) because plaintiff did not allege a violation of another law that would support a UCL cause of action and because defendant's alleged conduct was not connected to an underlying constitutional, statutory or regulatory provision. The court pointed out that the foreclosure of plaintiff's house was the result of plaintiff's default in making payments, and not defendant's conduct.

Yvanova v. New Century Mortgage Corporation     Docket     Sup.Ct. Docket
Cal.App. 2nd Dist. (B247188)  4/25/14 (Pub. Order 5/22/14)     Request for depublication by Cal Supreme Ct. filed 6/3/14

TRUSTEE'S SALES: Plaintiff alleged that the deed of trust on her residence was improperly securitized and assigned from the original lender to several successive mortgagees and trustees, and ultimately improperly sold at foreclosure. The court held that a demurrer was properly sustained without leave to amend because 1) plaintiff is not entitled to quiet title because she failed to allege she tendered funds to discharge her debt and 2) an impropriety in the transfer of a promissory note affects only the parties to the transaction, not the borrower, so plaintiff lacks standing to challenge the allegedly deficient assignments and securitization.

In re Marriage of Valli     Docket
58 Cal.4th 1396 - Cal. Supreme Court (S193990)  5/15/14

COMMUNITY PROPERTY: The Family Code's transmutation rules, requiring an express written declaration in order to convert community property to separate property, apply to property acquired during marriage in the name of one spouse, even where both parties agreed to hold title in that manner. The court abrogated In re Marriage of Brooks & Robinson, and held that there is no exemption from the transmutation rules for spousal purchases from third parties.

Bisno v. Kahn     Docket     Sup.Ct. Docket
Cal.App. 1st Dist. (A133537)  4/25/14     Petition for review by Cal Supreme Ct. filed 6/5/14

USURY: California's usury law does not apply to a judgment creditor's agreement to forbear collecting on a judgment. However, a forbearance fee does not become part of the judgment and is not an amount that must be paid to satisfy the judgment. Rather, a forbearance agreement is a contract between the judgment creditor and the judgment debtor that is separate from the judgment to which it applies. Consequently, a forbearance agreement must be enforced in a separate contract action and is subject to standard contractual defenses such as duress and unconscionability.

Thoryk v. San Diego Gas & Electric Co.     Docket     Sup.Ct. Docket
Cal.App. 4th Dist., Div. 1 (D062680)  4/9/14     Petition for review by Cal Supreme Ct. filed 5/20/14

ANTIDEFICIENCY: Highland Valley Investors ("Highland"), a junior lienholder, acquired title at its non-judicial foreclosure, but the debt was not fully extinguished. The senior lienholder then foreclosed. The borrower filed an action against third parties seeking damages to the property as a result of a wildfire, and Highland filed a complaint in intervention seeking to impose a lien for the balance that remained owing under the terms of its note and deed of trust, and/or under the doctrine of equitable conversion, upon any recovery that the borrower might eventually obtain against the third party tortfeasors. The court ruled in favor of the borrower, holding that imposing a lien on the proceeds of a recovery of tort damages would amount to an improper antideficiency judgment because:
1. There was no express language in the deed of trust that assigned tort claims as additional security, and
2. The Doctrine of Equitable Conversion, which provides that proceeds from a condemnation action or tort damages can stand in place of the original real property security, did not apply because Highland will no longer hold a security interest in the property when the entitlement to any money damages is determined in the borrower's action against third parties.

Cansino v. Bank of America     Docket
224 Cal.App.4th 1462 - 6th Dist. (H038713)  3/26/14    Case complete 5/28/14

PREDATORY LENDING: A borrower filed this action for damages and for a loan modification alleging that the lender was guilty of fraud for representing that the property would appreciate in the future and for misrepresenting the value of the property. The court held that a demurrer was properly sustained without leave to amend because a prediction about future appreciation is regarded as an opinion and not a representation of fact, and because any representation of value was correct at the time the loan was made even though the value of the property declined afterward.

Schmidt v. Bank of America     Docket
223 Cal.App.4th 1489 - 2nd Dist. (D062532)  2/21/14    Case complete 4/25/14

EASEMENTS: The court held that a reservation of an easement for "the right of ingress and egress for public road purposes over, along and across the Easterly 40 feet" created only a private easement and did not create a public right of way. Accordingly, the easement did not include all purposes for which a governmental entity might use a public road. The court reversed a summary judgment in favor of defendants because there were triable issues of fact as to whether the easement included grading and pavement of the easement area, installation of a locked gate and various subterranean infrastructure elements, including sewer pipes, storm drains, oil and sand separators, and construction nails designed to hold steep dirt slopes in place. Finally, the court rejected Bank of America's argument that by foreclosing on units in a condominium development it did not acquire easement rights that had previously been conveyed to the homeowner's association because the homeowners association acquired only a portion of the dominant tenement. Where a dominant tenement is partitioned in this manner, the easement rights are apportioned according to the division of the dominant tenement.

Ash v. North American Title Company     Docket
223 Cal.App.4th 1258 2nd Dist. (B237404)  2/18/14    Case complete 4/22/14

ESCROW: A plaintiff-buyer obtained a judgment in an action where plaintiff alleged that defendants seller and escrow company were at fault for an escrow not closing on the agreed day. The judgment included damages for the loss of tax benefits because the transaction was part of a 1031 exchange transaction that failed to qualify for deferred taxation when the exchange intermediary filed for bankruptcy on the following day, and delayed disbursing plaintiff's funds until after the 1031 exchange time limits had expired. The appellate court reversed in part and remanded because: 1) there was insufficient evidence that the bankruptcy of the exchange intermediary was foreseeable; and 2) as to defendant escrow company, the trial court failed to instruct the jury on an intervening and superseding cause, i.e., the bankruptcy of the exchange intermediary.

Brewer Corporation v. Point Center Financial     Docket     Sup.Ct. Docket
223 Cal.App.4th 831 - 4th Dist., Div. 1 (D061665)  1/31/14     Petition for review & depublication request DENIED by Cal Supreme Ct. 4/30/14

MECHANICS LIENS:
1. A construction lender must make available to stop notice claimants those amounts from the construction loan that the lender has already disbursed to itself for interest and other fees because the disbursement of funds constitutes an "assignment" under Civil Code Section 3166 (current Section 8544). A lender cannot avoid this result by segregating the loan fund into separate accounts, one for paying interest and fees and the other for construction costs.
2. A contractor who has a direct contract with the owner, but who is not the general contractor, must serve the lender with a preliminary 20-day notice pursuant to CC 3097 (now see CC 8200) in order to enforce a stop notice.
3. The requirement in CC 3172 (current 8550(e)) of giving the construction lender notice within 5 days of the filing of an action to enforce a stop notice (now called a "stop payment notice") is not mandatory unless some detriment can be shown to have resulted from the failure to give notice.

Branscomb v. JPMorgan Chase Bank     Docket     Sup.Ct. Docket
223 Cal.App.4th 801 - 1st Dist. (A137140)  1/31/14     Petition for review by Cal Supreme Ct. DENIED 4/30/14

EQUITABLE SUBROGATION: The court applied the doctrine of equitable subrogation to give priority to defendants' deeds of trust that had refinanced first and second priority deeds of trust. Equitable subrogation was not precluded by the fact that defendants had knowledge of plaintiff's deed of trust because defendants did not know that plaintiff's deed of trust would remain on the property after their refinance transactions. Also, the escrow holder's alleged negligence did not preclude equitable subrogation because it did not affect the equities between the parties, and the escrow holder did not owe a duty to plaintiff who was not a party to the loan escrows.

Nativi v. Deutsche Bank     Docket     Sup.Ct. Docket
223 Cal.App.4th 261 - 6th Dist. (H037715)  1/23/14     Petition for review & depublication request DENIED by Cal Supreme Ct. 4/30/14

TRUSTEE'S SALES: The federal law known as the Protecting Tenants Against Foreclosure Act of 2009 and Code of Civil Procedure Section 1161b cause a bona fide lease of residential property to survive foreclosure through the end of the lease term, subject to the limited authority of the immediate successor in interest to terminate the lease, upon 90-days notice, upon sale to a purchaser who intends to occupy the unit as a primary residence. This applies even where the leased premises is occupied illegally in violation of the local building code.

California Bank & Trust v. Lawlor     Docket
222 Cal.App.4th 625 - 4th Dist., Div. 3 (G047899)  11/25/13 (As modified 12/20/13)     Case complete 2/21/14

GUARANTIES: A guarantor is protected by anti-deficiency laws where the guaranty is a sham because the legal relationship between the guarantor and the borrower is such that the guarantors are effectively the primary obligors on the loan. Where there is legal separation between the guarantor and borrower through a corporate or other legal structure so that the guarantor is not liable for corporate obligations and where the lender does not require the transaction to be structured in a manner intended to evade the anti-deficiency laws, the guaranty will normally not be deemed to be a sham. Here, the court upheld a deficiency judgment against the guarantors in spite of an apparently legitimate legal separation from the borrower because the guarantor failed to present evidence showing that the borrower was a properly formed corporation and that the necessary corporate formalities had been followed to protect the shareholders from corporate liabilities, or that the lender had required the transaction to be structured in a manner intended to evade the anti-deficiency laws.

Dolnikov v. Ekizian     Docket
222 Cal.App.4th 419 - 2nd Dist. (B226675)  12/19/13     Case complete 2/21/14

EASEMENTS: The court held that conduct can constitute actionable interference with the use and enjoyment of an easement even when the conduct does not physically obstruct the servitude. The easement in question was for ingress and egress to undeveloped lots. Defendants, the servient tenement owners, interfered with the easement during plaintiff's construction of two residences by refusing to sign both a covenant for community driveway and permission for a building permit to construct a retaining wall. When an easement is based on a grant, as in this case, the grant gives the easement holder both those interests expressed in the grant and those necessarily incident thereto. Every easement includes what are termed "secondary easements"; that is, the right to do such things as are necessary for the full enjoyment of the easement itself. Defendants' refusal to sign the documents interfered with plaintiff's rights and rendered plaintiff's easement useless for the purpose for which it was intended.

Rye. v. Tahoe Truckee Sierra Disposal Company     Modification     Docket     Sup.Ct. Docket
222 Cal.App.4th 84 - 3rd Dist. (C067970)  12/16/13     Petition for review by Cal Supreme Ct. DENIED 4/9/14

EASEMENTS: The court rejected defendant's attempt to use an easement beyond the area it had been used for many years, holding that when an instrument of conveyance grants an easement in general terms, without specifying or limiting the extent of its use, the permissible use is determined by the intention of the parties and the purpose of the grant. Once the easement has been used for a reasonable time, the extent of its use is established by its "historical use", and once the extent of an easement's use has been established, the easement owner cannot subsequently enlarge its character so as to materially increase the burden on the servient tenement. The court rejected defendant's alternative theory that the same easement was created by a lease because the lease had been ignored for 22 years, permitting the inference that it had been abandoned.

Lueras v. BAC Home Loans Servicing     Docket
221 Cal.App.4th 49 - 4th Dist., Div. 3 (G046799)  10/31/13     Case complete 1/2/14

TRUSTEE'S SALES: The court overruled the trial court's sustaining of defendant's demurrer, holding that:
1. A residential lender does not owe a common law duty of care to offer, consider, or approve a loan modification, or to explore and offer foreclosure alternatives. Any such duty arises only as set forth in the note and deed of trust, any forbearance agreement entered into by borrower and lender, federal and state statutes and regulations, and governmental directives and announcements. However, a lender does owe a duty to a borrower to not make material misrepresentations about the status of an application for a loan modification or about the date, time, or status of a foreclosure sale.
2. A forbearance agreement entered into pursuant to Fannie Mae's HomeSaver Forbearance Program includes the provisions and directives set forth in Fannie Mae's Announcement 09-05R, which was issued to provide policy clarification and instruction.
3. A cause of action does not lie for violation of Civil Code Section 2923.5, requiring a lender to explore foreclosure alternatives before foreclosing, because the only remedy afforded by that section is to postpone the foreclosure sale before it happens, and in this case the sale had been conducted.
4. Plaintiff's allegations that the lender misrepresented the status and date of the foreclosure sale were sufficient to state a cause of action for violation of California’s unfair competition law, Business and Professions Code Section 17200 et seq.
5. Plaintiff could not state a cause of action for quiet title without alleging tender of payment of the outstanding balance of the indebtedness.

Fowler v. M&C Association Management Services     Docket
220 Cal.App.4th 1152 - 1st Dist. (A137462)  10/28/13     Case complete 1/9/14

TRANSFER FEES: Transfer fees charged by a Homeowners Association were not "transfer fees" within the meaning of Civil Code Section 1098, which requires recordation of a document disclosing details of the fee, because CC Section 1098(g) excludes assessments, charges, penalties, or fees authorized by the Davis-Stirling Common Interest Development Act.

Bushell v. JPMorgan Chase Bank     Docket
220 Cal.App.4th - 3rd Dist. (C070643)  10/22/13     Case complete 12/24/13

LOAN MODIFICATIONS: After being denied a loan modification under the federal Home Affordable Modification Program ("HAMP"), plaintiffs properly alleged state law causes of action for breach of contract, breach of the implied covenant of good faith and fair dealing, promissory estoppel and fraud based on false promise, where they alleged that they complied with all terms of a "Trial Period Plan" including making all required payments, providing all required documentation, and maintaining the integrity of their modification-based representations.

The court rejected the defendant lender's argument that plaintiffs could not allege damages, because all plaintiffs did was to make monthly mortgage payments they were already obligated to make. Plaintiffs properly alleged damages where they alleged that they were damaged by the considerable time they spent repeatedly contacting defendant and repeatedly preparing documents at defendant's request; by discontinuing efforts to pursue a refinance from other financial institutions or to pursue other means of avoiding foreclosure (such as bankruptcy restructuring, or selling or renting their home); by having their credit reports further damaged; and by losing their home and making it unlikely they could purchase another one.

Self v. Sharafi     Docket     Sup.Ct. Docket
220 Cal.App.4th 483 - 4th Dist., Div. 1 (D061181)  9/20/13 (Pub. Order 10/11/13)     Petition for review by Cal Supreme Ct. DENIED 1/29/14

DEED RESTRICTIONS: A 1946 deed contained a restriction against erecting any buildings on specified property retained by the grantor. In this lawsuit between subsequent owners of each parcel concerning whether the restriction runs with the land so as to bind subsequent owners of the servient parcel, the court held:
1. The restriction is not a covenant running with the land under the version of Civil Code Section 1468 in effect at the time of the conveyance because that Code Section only applied to covenants between landowners. The statute was subsequently amended to include covenants between a grantor and grantee, but the amendment only applies to covenants postdating its enactment.
2. The restriction is a covenant running with the land under Civil Code Section 1462, which provides that a covenant contained in a grant of an estate and made for the direct benefit of "the property", runs with the land. The term "the property" refers to the property conveyed, which was benefitted by the restriction, so Section 1462 applies.

Rossberg v. Bank of America     Docket     Sup.Ct. Docket
219 Cal.App.4th 1481 - 4th Dist, Div. 3 (G047028)  8/27/13 (Pub. Order 9/26/13)     Petition for review by Cal Supreme Ct. DENIED 11/26/13

TRUSTEE'S SALES: The court held:
1. Civil Code Section 2923.5 requires a lender to contact a borrower to explore options to avoid foreclosure more than 30 days prior to recording a Notice of Default, but does not require contacting the borrower during the 30 days prior to recording the NOD.
2. A Substitution of Trustee is valid where it is executed prior to recording an NOD even though it is not recorded until after the NOD records.
3. A document can be notarized after, and even long after, it is executed.
4. An NOD can be executed by an agent for the beneficiary or trustee, rather than by the beneficiary or trustee themselves.
5. The requirement in C.C. 2932.5 that an assignment must be recorded prior to recordation of a Notice of Default applies only to mortgages and not to deeds of trust.
6. Plaintiffs did not state a cause of action for promissory fraud because they failed to specifically allege the harm suffered and how their reliance on the allegedly promised loan modification caused them harm.
7. Plaintiffs did not adequately allege a violation of the Unfair Competition Law (B&PC 17200 et seq.) because they did not properly allege a breach of C.C. 2924 et seq.
8. Plaintiff's breach of contract claim fails because an agreement to modify a loan secured by a deed of trust is subject to the Statute of Frauds, and plaintiffs did not allege that there was a written loan modification.

Swanson v. State Farm General Insurance Company     Docket
219 Cal.App.4th 1153 - 2nd Dist. (B240016)  9/23/13     Case complete 11/27/13

INSURANCE: An insurer agreed to provide a defense with a reservation of rights and approved independent counsel selected by the insured to represent the insured in the underlying tort action, pursuant to Civil Code Section 2860 and San Diego Federal Credit Union v. Cumis Ins. Society, Inc. (1984) 162 Cal.App.3d 358 (Cumis). The court held that the insurer did not have to continue to pay the insured's Cumis counsel after it subsequently withdrew all reservations of rights and coverage defenses that gave rise to the insured's right to Cumis counsel.

Chavez v. Indymac Mortgage Services     Docket
219 Cal.App.4th 1052 - 4th Dist., Div. 1 (D061997)  9/19/13     Case complete 11/19/13

TRUSTEE'S SALES:
1. Plaintiff borrower asserted that a trustee's sale was improper because she had complied with a modification agreement that defendant lender had not signed. The court held that defendant was equitably estopped from asserting a statute of frauds defense because defendant had represented to plaintiff that it would sign the modification agreement if plaintiff qualified for the modification, and plaintiff did qualify.
2. Plaintiff was excused from tendering the amount of the indebtedness because plaintiff alleged that the trustee's sale was void, which is one of four exceptions to the tender rule.

Joannou v.City of Rancho Palos Verdes     Docket
219 Cal.App.4th 746 - 2nd Dist. (B241035)  9/12/13     Case complete 11/14/13

LANDSLIDE / QUIET TITLE: The Cullen Earthquake Act, which provides for quiet title actions to reestablish boundaries that have shifted due to "disasters", does not apply to gradual earth movements.

Siliga v. MERS     Docket
219 Cal.App.4th 75 - 2nd Dist. (B240531)  8/27/13     Case complete 10/29/13

TRUSTEE'S SALES:
1. A property owner may not pursue a "preemptive suit" challenging the authority of a foreclosing beneficiary or beneficiary's agent absent a specific factual basis for alleging that the foreclosure was not initiated by the correct party. (A "preemptive suit" does not seek a remedy for specified misconduct in the nonjudicial foreclosure process, which may provide a basis for a valid cause of action. Instead, a preemptive suit seeks to create an additional requirement for the foreclosing party, apart from the comprehensive statutory requirements, by requiring the foreclosing party to demonstrate in court that it is authorized to initiate a foreclosure.)
2. MERS has the authority to assign a note secured by a deed of trust and to initiate trustee's sale proceedings.
3. A trustee may record a Notice of Default before it is substituted as trustee where it executes the NOD not as trustee but as agent for the beneficiary.

King v. Wu     Docket     Sup.Ct. Docket
218 Cal.App.4th 1211 - 2nd Dist. (B239801)  8/14/13     Petition for review by Cal Supreme Ct. DENIED 11/20/13

PRESCRIPTIVE EASEMENTS: Defendants asserted as a defense to a claim of a prescriptive easement that defendant was not in possession of the adversely used land for a continuous period of five years because the property was leased under a series of leases and defendant was therefore not personally in possession for five continuous years. The court rejected this defense holding that if at any point during the adverse use an owner or a landlord has been in possession, including constructively at the expiration of a renewable lease, he or she could and should have taken action to interrupt such use.

Glaski v. Bank of America     Docket     Sup.Ct. Docket
218 Cal.App.4th 1079 - 5th Dist. (F064556)  7/31/13 (Pub. order 8/8/13)     Request for depublication DENIED 2/26/14

TRUSTEE'S SALES: A borrower may challenge a securitized trust's chain of ownership of a deed of trust by alleging that the attempts to transfer the deed of trust to the trust (which was formed under New York law) occurred after the trust's "closing date". Transfers that violate the terms of the trust instrument are void under New York trust law, and borrowers have standing to challenge void assignments of their loans even though they are not a party to, or a third party beneficiary of, the assignment agreement. Also, tender of the amount due is not required where the foreclosure sale is void, rather than voidable, such as when a plaintiff proves that the entity lacked the authority to foreclose on the property.

Citizens Business Bank v. Gevorgian     Docket
218 Cal.App.4th 602 - 2nd Dist. (B239747)  8/1/13     Case complete 10/2/13

SUBORDINATION AGREEMENTS: A seller's agreement to subordinate its security interest to that of a bank is unenforceable where the developer and the bank entered into a letter of understanding between themselves, to which the seller did not consent, about which it knew nothing, and which substantially impaired its security. The bank had paid off prior deeds of trust, but the court rejected the bank's claim of equitable subrogation because it is not available where the superior equities of the otherwise senior lien holder would be prejudiced by granting equitable subrogation.

Zhang v. Superior Court     Docket
57 Cal.4th 364 - Cal. Supreme Court (S178542)  8/1/13

INSURANCE / BAD FAITH: Fraudulent conduct by an insurer does not give rise to a private right of action under the Unfair Insurance Practices Act (Insurance Code section 790.03 et seq.), but it can give rise to a private cause of action under the Unfair Competition Law ("UCL") (Business and Professions Code section 17200 et seq.). The court pointed out that the UCL permits only injunctive relief and restitution, not damages.

Sierra Club v. Superior Court of Orange County     Docket
57 Cal.4th 157 - Cal. Supreme Court (S194708)  7/8/13

COUNTY RECORDER: Orange County's geographic information system is a database that must be made available to the public at the actual cost of duplication. The plaintiff must, however, use its own software to access the data.

Trapp v. Naiman     Docket     Sup.Ct. Docket
218 Cal.App.4th 113 - 4th Dist., Div. 2 (E054908)  6/28/13 (Pub. order 7/24/13)     Petition for review by Cal Supreme Ct. DENIED 10/2/13

TRUSTEE'S SALES / ANTI-SLAPP: Plaintiffs brought this action against financial institutions and their lawyers based on a trustee's sale and subsequent unlawful detainer action. The court ordered the lawyers' anti-SLAPP motion to be granted and the action dismissed as to them. The act of noticing a nonjudicial foreclosure sale does not qualify as a protected activity under the anti-SLAPP statute, but the lawyers did not participate in the nonjudicial sale proceedings. The lawyers only involvement was with the unlawful detainer action, which is a protected activity.

Coker v. JP Morgan Chase Bank     Docket
218 Cal.App.4th 1 - 4th Dist., Div. 1 (D061720)  7/23/13

ANTI-DEFICIENCY: A lender under a purchase money loan on a residence sought to recover the balance due on the loan after the lender and borrower agreed to a short sale, with the borrower agreeing to be personal liable for the unpaid balance. The court held that C.C.P. Section 580b precludes a deficiency judgment even where the lender does not foreclose, and public policy prohibits a waiver of a borrower's rights under Section 580b.

Bank of America v. Roberts     Docket     Sup.Ct. Docket
217 Cal.App.4th 1386 - 5th Dist. (F064109)  7/17/13     Petition for review by Cal Supreme Ct. DENIED 10/30/13

ANTI-DEFICIENCY: Plaintiff held a loan secured by a second deed of trust on defendant's residence. The parties entered into a short sale agreement, which provided that plaintiff would release its security interest in the property with defendant paying only a portion of the amount due, and that defendant would remain personally liable for the balance. Plaintiff filed this action seeking a money judgment after defendant defaulted. The court upheld the trial court's grant of a summary judgment in favor of plaintiff holding:
1. C.C.P. Section 580e currently provides a borrower with anti-deficiency protection after the parties agree to a short sale and the loan is secured by any deed of trust on 1-4 family residential property. However, defendant is not entitled to that protection because at the time the parties entered into the short sale agreement Section 580e applied only to a first deed of trust, and the statute is not retroactive.
2. C.C.P. Section 726, which permits a deficiency judgment only after a judicial foreclosure, does not prohibit this lawsuit because defendant asked for and consented to the short sale and thereby waived any rights under Section 726.
3. The federal Troubled Asset Relief Program ("TARP"), which may require lenders subject to the program to modify mortgages, does not preclude this lawsuit for several reasons, including the fact that there is no private right of action under that law.

Enloe v. Kelso     Docket     Sup.Ct. Docket
217 Cal.App.4th 877 - 2nd Dist. (B241201)  7/3/13     Petition for review by Cal Supreme Ct. DENIED 9/18/13

ANTI-DEFICIENCY: Plaintiffs/sellers of real property carried back a loan secured by a second deed of trust. They filed this an action seeking a deficiency judgment after the parties entered into a short sale agreement leaving a large balance unpaid. Summary judgment in favor of defendant-purchasers was affirmed because Civil Code Section 580b bars a deficiency judgment for a purchase money loan, even though the trust deed was given to sellers after the close of escrow. Section 580b applies because the timing of the recordation of the trust deed did not change the character of the transaction.

Liberty National Enterprises v. Chicago Title Insurance Company     Docket     Sup.Ct. Docket
217 Cal.App.4th 62 - 2nd Dist. (B234341)  5/22/13  (Pub. Order 6/13/13)     Petition for review by Cal Supreme Ct. DENIED 8/28/13

TITLE INSURANCE: The court followed Safeco Title Ins. Co. v. Moskopoulos (1981) 116 Cal.App.3d 658, holding that the insuring clause of a title insurance policy did not cover an action that did not allege defective title, but rather tortious conduct in the manner in which the insured acquired title. There was no potential for coverage and therefore no duty to defend. The court did not address whether any policy exclusions applied because an occurrence not within the insuring clause does not also have to be excluded by the policy's exclusions.

Fuller v. First Franklin Financial     Docket     Sup.Ct. Docket
216 Cal.App.4th 955 - 3rd Dist. (C070452)  5/1/13 (Cert. for pub. 5/29/13)     Petition for review by Cal Supreme Ct. DENIED 9/25/13

PREDATORY LENDING: The court overruled the trial court's sustaining of a demurrer because the complaint's allegations of an overstatement of the appraisal value, concealment of plaintiffs' eligibility for more favorable loans, and hidden kickbacks stated a claim for deceit, and this alleged conduct, along with the alleged failure to explain the terms of the loans to plaintiffs, stated a claim for breach of fiduciary duty and for unfair business practices. The court also concluded that defendants had failed to establish the expiration of the statute of limitations period on the face of the pleading.

Jenkins v. JP Morgan Chase Bank     Docket
216 Cal.App.4th 497 - 4th Dist., Div. 3 (G046121)  5/17/13     Case complete 7/19/13

TRUSTEE'S SALES: The court upheld the trial court's sustaining of a demurrer without leave to amend, finding:
1. Production of the note is not required for a lender to process a trustee's sale.
2. Plaintiff's claim that defendant violated the terms of a securitized investment trust's pooling and servicing agreement fails because plaintiff was not a third party beneficiary of that agreement.
3. A borrower cannot bring a preemptive judicial action to challenge whether the person initiating the foreclosure is authorized to do so because California's trustee's sale statutes do not allow for an additional requirement that the foreclosing entity must demonstrate in court that it is authorized to initiate a foreclosure.
4. Civil Code Section 2932.5's requirement that an assignment be recorded before the power of sale can be exercised applies to mortgages, but not to deeds of trust.
5. Plaintiff lacked standing under Business and Professions Code Section 17200 et seq. (Unfair Competition Law) because one of the requirements is for a plaintiff to show economic injury resulting from the defendant's unlawful acts. Here, plaintiff's economic injury was a result of her default on her loan, which occurred prior to defendants' allegedly unlawful acts.
6. Plaintiff's claim of a breach of the implied covenant of good faith and fair dealing fails because the covenant must be related to a contract. Here, the only contracts were the note and deed of trust and defendants' alleged conduct was in connection with plaintiff's efforts to have the loan modified and in connection with the conduct of the trustee's sale, not to a violation of any provision of the note and deed of trust.
7. Plaintiff did not state a cause of action for violation of RESPA's Qualified Written Request rules because any harm plaintiff suffered occurred as a result of her own default on the loan.

Corrie v. Soloway     Docket
216 Cal.App.4th 436 - 1st Dist. (A135963)  5/16/13     Case complete 7/17/13

SUBDIVISION MAP ACT: An option agreement was originally illegal because it permitted the sale of a parcel of real property before the filing of a final parcel map and without being expressly conditioned upon the approval and filing of such a map, as required by the Subdivision Map Act (Gov. Code Section 66499.30(e)). However, a subsequent amendment to the option agreement provided that it was conditioned on the filing of a parcel map. The court held that the option was valid and did not violate Section 66499.30(e) because the amendment was in substance a new and different option agreement that stood on its own feet independently of the prior illegality.

Biancalana v. T.D. Service Company     Docket
56 Cal.4th 807 - Cal. Supreme Court (S198562)  5/16/13

TRUSTEE'S SALES: A trustee under a deed of trust may declare a trustee's sale to be void where the trustee made an error in communicating the lender's credit bid to the auctioneer, and the error was coupled with a grossly inadequate bid price. The court pointed out that its holding was premised on the trustee discovering its mistake before it issues the deed, and that after the deed is issued, a bona fide purchaser is entitled to a conclusive presumption that the sale was conducted regularly and properly.

Bock v. California Capital Loans     Docket
216 Cal.App.4th 264 - 3rd Dist. (C069863)  5/14/13     Case complete 7/16/13

USURY: Even when the lender on a loan arranged by a licensed real estate broker is a corporation that is wholly owned by the broker, the broker can still be found to have arranged the loan "for another" for purposes of the usury exemption in Civil Code section 1916.1. Also, in such a situation, the broker may be found to have met the requirement that the broker arranged the loan "in expectation of compensation" even if the only compensation the broker will receive is the profit his wholly owned corporation reaps from the interest on the loan. The court also found that a loan would be arranged "for another" if it was arranged for the borrower instead of the lender.

Multani v. Witkin & Neal     Modification     Docket
215 Cal.App.4th 1428 - 2nd Dist. (B237295)  5/1/13     Case complete 7/2/13

HOA LIEN FORECLOSURE:
1. A non-judicial foreclosure of a homeowner's association lien can be set aside where the HOA fails to provide notice of the homeowner's 90-day right of redemption, as required by C.C.P. 729.050.
2. Plaintiffs were excused from complying with the usual requirement that they tender the amount due in order to maintain an action to set aside a foreclosure because requiring tender of the amount due would undermine a debtor's right under C.C.P. 729.070 to seek a judicial determination of the redemption price.

Chanda v. Federal Home Loans Corporation     Docket     Sup.Ct. Docket
215 Cal.App.4th 746 - 4th Dist., Div. 1 (D059976)  4/19/13     Petition for review & depublication request DENIED by Cal. Supreme Ct. 7/10/13

INSURANCE: Under the Collateral Source Rule, payments under an insurance policy are not deducted from the damages a plaintiff can otherwise collect from a tortfeasor. Therefore, a plaintiff may not normally introduce evidence that the defendant had insurance coverage. Here, however, evidence that a loan broker obtained title insurance for plaintiff's deed of trust was admissible as to the issue of whether the loan broker satisfied industry standards and met its fiduciary duty toward plaintiff. Any prejudicial effect of the existence of insurance could be eliminated by an appropriate jury instruction.

Hamilton Court, LLC v. East Olympic, L.P.     Docket     Sup.Ct. Docket
215 Cal.App.4th 501 - 2nd Dist. (B240052)  4/16/13     Petition for review by Cal Supreme Ct. DENIED 7/10/13

EASEMENTS: The doctrine of merger does not apply to eliminate an easement where a servient and dominant tenement come under common ownership, and the dominant tenement is encumbered by a mortgage which later forecloses.

Hagman v. Meher Mount Corporation     Docket
215 Cal.App.4th 82 - 2nd Dist. (B239014)  4/13/13     Case complete 6/12/13

ADVERSE POSSESSION: A nonprofit religious organization's status as a "public benefit corporation" does not make it a "public entity" immune from adverse possession under Civil Code section 1007. Since the organization did not pay property taxes, the adverse possessor was able to establish adverse possession without the usual requirement that he pay taxes on the disputed land for five years. Also, the adverse possessor was not required to pay a mosquito abatement assessment because the assessment was not a tax.

Intengan v. BAC Home Loans Servicing     Docket
214 Cal.App.4th 1047 - 1st Dist. (A135782)  3/22/13     Case complete 5/24/13

DEEDS OF TRUST / FORECLOSURE:
1. Plaintiff stated a cause of action sufficient to overcome a demurrer where plaintiff alleged that defendant did not contact her to explore options to foreclosure as required by Civil Code Section 2923.5. The trial court improperly took judicial notice of defendant's statements in the declaration attached to the recorded notice of default asserting that defendant attempted with due diligence to contact plaintiff. While judicial notice may be taken of the existence of the declaration, the court may not take judicial notice of the facts asserted in the declaration.
2. Plaintiff did not need to tender payment of the loan in order to maintain this action because while the tender requirement may apply to causes of action to set aside a foreclosure sale, it does not apply to actions seeking to enjoin a foreclosure sale where the lender has allegedly not complied with a condition precedent to foreclosure.

West v. JPMorgan Chase Bank     Docket     Sup.Ct. Docket
214 Cal.App.4th 780 - 4th Dist., Div. 3 (G046516)  3/18/13     Petition for review & depublication request DENIED 7/10/13

DEEDS OF TRUST: When a borrower complies with the terms of a "trial period plan" under the Home Affordable Mortgage Program, and the borrower's representations remain true and correct, the loan servicer must offer the borrower a permanent loan modification. Accordingly, the plaintiff stated causes of action for damages and breach of contract where defendant foreclosed rather than offer a permanent loan modification. However, the court upheld the trial court's sustaining of a demurrer to the cause of action to set aside the trustee's sale because the complaint alleged only procedural irregularities in the sale notice and procedure, and the trustee's deed upon sale recited that the trustee complied with the deed of trust and all applicable statutory requirements. Thus, any notice defects were deemed voidable, not void, and plaintiff was therefore required to allege tender of the indebtedness in order to set aside the trustee's sale, which plaintiff did not do. The court also upheld the sustaining of a demurrer to the cause of action to quiet title because plaintiff did not name as a defendant the person who purchased at the trustee's sale.

Scott v. JPMorgan Chase Bank     Docket     Sup.Ct. Docket
214 Cal.App.4th 743 - 1st Dist. (A132741)  3/18/13     Petition for review by Cal Supreme Ct. DENIED 6/12/13

DEEDS OF TRUST: Plaintiff asserted that he had been fraudulently induced to enter into a subprime loan with the original lender, First Magnus Financial Corporation, and that consequently defendant could not foreclose. First Magnus had assigned the loan to Washington Mutual Bank, which was taken over by the FDIC, and the FDIC sold the loan to defendant pursuant to a Purchase and Assumption Agreement (P&A Agreement). The court upheld the trial court's sustaining of defendant's demurrer without leave to amend on the basis that under the P&A Agreement defendant obtained the beneficial interest under the deed of trust without assuming related liabilities.

Appel v. Superior Court     Docket
214 Cal.App.4th 329 - 2nd Dist. (B244590)  3/11/13     Case complete 4/3/13

MECHANICS LIENS: Where the value of a mechanics lien claimant's work exceeds the contract price, the amount of the lien is limited to the contract price under former Civil Code Section 3123(a) (substantially reenacted as CC 8430), even where the property has been conveyed to a person who was not a party to the contract. That code section provided that the amount of a mechanics lien is the lesser of 1) the reasonable value of the work or 2) the price agreed to by the claimant and the person that contracted for the work.

Jolley v. Chase Home Finance     Docket     Sup.Ct. Docket
213 Cal.App.4th 872 - 1st Dist. (A134019)  2/11/13     Petition for review and depublication DENIED by Cal Supreme Ct. 5/22/13

LOAN AGREEMENTS: In an action to enjoin a trustee's sale and for damages in connection with a construction loan, the court reversed a summary judgment in favor of the defendant lender, finding that there were triable issues of fact as to whether the lender was negligent or engaged in misconduct that allegedly lead plaintiff to believe the loan would be modified. The court held that, while the "Homeowner Bill of Rights" (Assem. Bill 278; Sen. Bill 900 (2011-2012 Reg. Sess.)) did not apply in this case, the legislation sets forth policy considerations that should affect a court's assessment of whether a duty of care was owed to plaintiff, and courts should not rely mechanically on the general rule that lenders owe no duty of care to their borrowers.

Aguayo v. Amaro     Docket
213 Cal.App.4th 1102 - 2nd Dist. (B231194)  1/31/13     Case complete 4/3/13

ADVERSE POSSESSION: The doctrine of unclean hands can serve as a defense to adverse possession by color of title, but normally is not a defense when it is based on claim of right. The court held that unclean hands can be a defense to a claim of adverse possession by claim of right where plaintiff recorded a "wild" deed executed by a non-title holder in order to divert property tax bills from the true owner. The doctrine applied to defeat the adverse possession claim because recordation of the deed constituted deceitful interference with the true owner's ability to defeat the claim.

Hutton v. Fidelity National Title Company     Modification     Docket
213 Cal.App.4th 486 - 5th Dist. (F063318/F063922)  1/31/13     Case complete 4/24/13

NOTARIES: Government Code section 8211.1 limits that amount a notary may charge for taking an acknowledgment to $10 per signature, but does not limit the amount a notary may charge for performing other services, such as traveling to the location of signing, presenting multiple documents for signature, showing where to sign or initial each document, answering questions, etc. In the unpublished portion of the opinion the court held that the attorney's fee provision in the General Provisions of defendant's escrow instructions was unconscionable because it was buried in the middle of extensive provisions in small font, was one of numerous documents signed by plaintiff and was one-sided because it provided for attorney's fees only for defendant, and not for plaintiff.

Windsor Pacific v. Samwood Co.     Docket
213 Cal.App.4th 263 - 2nd Dist. (B233514)  1/30/13     Case complete 4/3/13

PRESCRIPTIVE EASEMENTS:
1. Plaintiff could not establish a prescriptive easement over access roads where the use was permissive pending the parties' negotiations regarding development of the property.
2. Plaintiff was equitably estopped from asserting a prescriptive easement where defendants were entitled to rely on plaintiff's conduct indicating that use of the roads was permissive.

R.E. Loans v. Investors Warranty of America     Docket     Sup.Ct. Docket
212 Cal.App.4th 1432 - 2nd Dist. (B234384)  1/23/13     Petition for review by Cal Supreme Ct. DENIED 5/1/13

SUBORDINATION AGREEMENTS: The court held that defendant did not violate a subordination agreement pursuant to which plaintiff agreed to subordinate its deed of trust to a deed of trust in favor of defendant securing a loan in the amount of $4,006,600, even though defendant cross-collateralized the loan with two other loans for $11,227,500 and $5,912,750. To the extent defendant's trust deed secured a note in the amount of $4,006,600, it was senior to plaintiff's trust deed. To the extent defendant's trust deed secured other notes it is junior to plaintiff's trust deed. Plaintiff could have protected its interest by tendering the amount necessary to cure the default under the $4,006,600 note alone.

Bank of American v. Superior Court     Docket     Sup.Ct. Docket
212 Cal.App.4th 1076 - 4th Dist., Div. 3 (G046829)  1/15/13     Petition for review by Cal Supreme Ct. DENIED 4/10/13

ATTORNEY-CLIENT PRIVILEGE: A tripartite attorney-client relationship arises when a title insurer retains counsel to prosecute an action on behalf of an insured pursuant to a title policy. The privilege applies even where the insurer asserted a reservation of rights in a non-Cumis situation.

Riverisland Cold Storage v. Fresno-Madera Production Credit Assn.     Sup.Ct. Docket
191 Cal.App.4th 611 - Cal. Supreme Court (S190581)  1/14/13

PAROL EVIDENCE RULE: The California Supreme Court held that evidence of oral promises or agreements at variance with the terms of a written contract may be considered to determine if the contract should be invalidated as having been procured by fraud, even where the contract contains an "integration clause". The court overruled its 1935 decision in Bank of America v. Pendergrass, which held that evidence offered to prove fraud "must tend to establish some independent fact or representation, some fraud in the procurement of the instrument or some breach of confidence concerning its use, and not a promise directly at variance with the promise of the writing." The court pointed out that a showing of justifiable reliance would still be necessary to establish the alleged fraud.

Pfeifer v. Countrywide Home Loans     Docket     Sup.Ct. Docket
211 Cal.App.4th 1250 - 1st Dist. (A133071)  12/13/12     Petition for review by Cal Supreme Ct. & Depublication Request DENIED 2/20/13

FORECLOSURE:
1. A trustee is not subject to, and does not have to comply with the requirements of, the Fair Debt Collection Practices Act because processing a non-judicial foreclosure is not a debt collection activity under the Act.
2. Where a deed of trust incorporates by reference the servicing requirements of HUD, including a face-to-face interview, the lender had to comply with the servicing terms prior to conducting a valid nonjudicial foreclosure.
3. A tender of the amount owed was not required in this case because a) the tender rule applies only in cases seeking to set aside a completed sale, rather than an action seeking to prevent a sale in the first place, and b) the lender allegedly violated laws related to avoiding the necessity for a foreclosure.
4. Plaintiff's default does not bar their claim that the lender cannot proceed with the foreclosure prior to complying with the HUD servicing requirements.
5. Borrowers may seek to enjoin a lender from proceeding with a foreclosure based on the lender's failure to perform a HUD servicing requirement, but a private right of action for damages does not exist.

Wooster v. Dept. of Fish and Game     Docket     Sup.Ct. Docket
211 Cal.App.4th 1020 - 3rd Dist. (C068816)  11/26/12 (Pub. Order 12/11/12)     Petition for review by Cal Supreme Ct. DENIED 2/13/13

CONSERVATION EASEMENTS:
1. The Department of Fish and Game’s failure to comply with its obligation to post signs on the subject property did not extinguish a conservation easement or give the plaintiff a basis for rescinding the easement.
2. The grant of hunting rights to the department, so that the department could prohibit all hunting on the property, was legal and consistent with the statutes governing conservation easements.

Shuster v. BAC Home Loans Servicing     Docket
211 Cal.App.4th 505 - 2nd Dist. (B235890)  11/29/12     Case complete 1/29/13

TRUSTEE'S SALES: 1. Omission of the name of the trustee in a deed of trust does not preclude a non-judicial sale. It was sufficient that a trustee was substituted prior to the foreclosure.
2. The foreclosing party does not have to have an interest in or possession of the note. CC 2924(a)(1) permits the "trustee, mortgagee, or beneficiary, or any of their authorized agents" to institute foreclosure.
3. Plaintiff's claims fail because they did not allege tender of the amounts due and owing under the loan. The court pointed out that there are exceptions to the tender rule, such as when the borrower challenges the validity of the underlying debt, asserts a counterclaim or set-off against the beneficiary or demonstrates the deed of trust is void on its face, but none of those exceptions was applicable in this case.

La Jolla Group II v. Bruce     Docket
211 Cal.App.4th 461 - 5th Dist. (F061829)  11/28/12     Case complete 1/28/13

LIS PENDENS / FORGERY: 1. In order to be privileged under CC 47(b)(4), a lis pendens must a) identify a previously filed action and b) the previously filed action must be one that affects title or right of possession of real property. The court declined to add a third requirement that the plaintiff must make a showing of evidentiary merit.
2. The name of the beneficiary in a deed of trust was altered in an attempt by a loan broker to support an unrelated loan. The court held that since the deed of trust was materially altered after it was signed, it was a forgery and was therefore void ab initio.

Twenty-Nine Palms Enterprises Corporation v. Bardos     Docket     Sup.Ct. Docket
210 Cal.App.4th 1435 - 4th Dist., Div. 2 (E051769)  10/11/12 (Pub. order 11/8/12)     Petition for review by Cal Supreme Ct. DENIED 2/20/13

INDIANS / CONTRACTOR LAW: In an Indian tribal corporation's suit to recover money paid for construction work done on tribal land, on the ground that defendant was unlicensed at the time of the contract, a grant of summary judgment in favor of the plaintiff was affirmed where:
1. Defendant argued that sovereign immunity prevented plaintiff from asserting that defendant was not licensed as a contractor under state law because the work was performed on tribal land. This defense was rejected because it is only available to tribal entities and not to non-tribal entities;
2. Defendant was the sole shareholder of a corporation that had a contractor’s license, with defendant as Responsible Managing Officer. But the work was performed as a sole proprietorship under a different fictitious business name, and defendant did not obtain a contractor’s license in that name until after the work was complete. Even though a sole proprietorship is not a legal entity separate from the individual owner, the corporate license belonged to the corporation, which is a separate entity, so he could not perform work under the name of the sole proprietorship:
3. The court rejected defendant’s contention that the corporate identity should be disregarded via the alter ego doctrine because defendant used the sole proprietorship for the purpose of self-dealing, and equity does not require piercing the corporate veil in that circumstance.
4. Defendant could not establish substantial compliance with the licensing requirement because he did not meet the criteria of Business and Professions Code Section 7031(e); and
5. Defendant contended that plaintiff should be estopped from relying on Section 7031 because plaintiff told defendant that a license was not required for work performed on tribal land. But equitable principles may not be used to circumvent Business and Professions Code section 7031.

Cottonwood Duplexes, LLC v. Barlow     Docket
210 Cal.App.4th 1501 - 3rd Dist. (C069564)  11/13/12     Case complete 1/15/13

EASEMENTS: The court held that an easement cannot be reduced in size on the basis that the reasonable use requirements of the easement, both presently and in the future, do not require the full size and scope of the original easement. Even though defendant had no apparent use for more than 15 feet of the 60-foot easement, an easement acquired by deed cannot be lost by mere non-user. The court distinguished Scruby v. Vintage Grapevine, Inc. (1995) 37 Cal.App.4th 697, in which the court permitted the servient tenement to maintain water tanks and grape vines in the easement area because such use did not interfere with the dominant tenements use of the remainder of the easement for ingress and egress. Scruby dealt with the scope of use of an easement, whereas here plaintiff sought to entirely terminate defendant's rights as to a portion of the easement.

JP Morgan Chase Bank v. Banc of America Practice Solutions     Docket
209 Cal.App.4th 855 - 4th Dist., Div. 3 (G045943)  9/27/12     Case complete 11/29/12

EQUITABLE SUBROGATION: The court applied the Doctrine of Equitable Subrogation to subrogate respondent's deed of trust to two deeds of trust that had been paid off with the loan proceeds, thereby making respondent's deed of trust senior to appellant's earlier recorded deed of trust. The evidence showed that respondent intended to be in first position, and that appellant had intended to be in third position junior to the two deeds of trust that were paid off with the proceeds of respondent's loan.

Ragland v. U.S. Bank     Docket
209 Cal.App.4th 182 - 4th Dist., Div. 3 (G045580)  9/11/12     Case complete 11/13/12

FORECLOSURE: The court overruled the trial court's order sustaining the bank's motion for summary judgment, holding that:
1. Plaintiff raised a triable issue of fact as to whether the bank's representative told her not to make a payment. Plaintiff's failure to tender the amount due does not preclude her from raising this issue because the amount claimed by the bank includes late charges and other charges that would not have been incurred if plaintiff had continued to make payments.
2. Civil Code section 2924g(d), prohibiting a trustee's sale from being conducted prior to the seventh day after an injunction is terminated, creates a private right of action and is not preempted by federal law.
NOTE: Plaintiff conceded that her cause of action for rescission of the trustee's deed was no longer viable because the property was resold to a bona fide purchaser for value.

Martin v. Van Bergen     Docket
209 Cal.App.4th 84 - 2nd Dist. (B232570)  9/6/12     Case complete 11/6/12

BOUNDARY DISPUTES: The doctrine of boundary by agreement does not apply where: 1) a boundary was not uncertain where it can be ascertained by an accurate survey; and 2) evidence of an actual agreement to resolve a boundary dispute does not exist.

Burnham v. California Public Employees' Retirement System     Docket
208 Cal.App.4th 1576 - 3rd Dist. (C067715)  8/31/12     Case complete 10/31/12

DOMESTIC PARTNERS: Presenting a declaration of domestic partnership for filing with the Secretary of State is a necessary prerequisite for a valid domestic partnership. Signing a declaration of domestic partnership and having it notarized is not sufficient alone. Here, because plaintiff's purported domestic partner was deceased when plaintiff presented the declaration of domestic partnership for filing with the Secretary of State, they never became domestic partners. Therefore, Plaintiff was not entitled to the decedent's state pension survivor benefits. The court also held that the putative spouse doctrine did not apply because that doctrine protects the expectation of parties who accumulate property over time believing they are part of a valid union. Here, plaintiff and the decedent attempted to establish a domestic partnership shortly before one of them died, so they did not accumulate property over time in expectation of having a valid union.

JCC Development Corp. v. Levy     Docket     Sup.Ct. Docket
208 Cal.App.4th 1522 - 2nd Dist. (B231920)  8/31/12     Petition for review by Cal Supreme Ct. DENIED 11/20/12

PROMISSORY NOTES: A promissory note provided for a higher rate of interest to be charged if the due date of the note was accelerated due to a default. The court held that the higher interest rate did not apply after the note became due and payable by its own terms because at that point the due date was not being accelerated, and the higher interest rate was only contained within the acceleration clause.

Barroso v. Ocwen Loan Servicing     Docket     Sup.Ct. Docket
208 Cal.App.4th 1001 - 2nd Dist. (B229112)  8/21/12     Request for depublication DENIED by Cal Supreme Ct. 11/14/12

LOAN MODIFICATION: In this action to set aside a trustee's sale, the trial court sustained the loan servicer's demurrer, and the appellate court reversed. The court held that the demurrer was properly sustained to the extent the action was based on a Revised Modification Agreement because the borrower's signature was not notarized as required by the agreement and the borrower signed it after the deadline for accepting the offer. However, the demurrer should not have been sustained as to a previous Modification Agreement because that agreement did not contain a requirement that the signature be notarized, and it was timely submitted. Also, the general rule that a borrower must tender payment of the debt in order to set aside a trustee's sale did not apply here because there was no default under the terms of the Modification Agreement.

Vieira Enterprises v. City of East Palo Alto     Docket     Sup.Ct. Docket
208 Cal.App.4th 584 - 1st Dist. (A132754)  8/15/12     Request for depublication DENIED by Cal Supreme Ct. 11/28/12
Modification of Opinion: 209 Cal.App.4th 120

FIXTURES: The court held that Health & Safety Code Section 18551, which sets forth the requirements for approving the installation of a manufactured homes on a foundation, does not preempt the common law of fixtures. The notice and recording requirements of Section 18551 serve the sole purpose of placing the manufactured homes on the property tax rolls to permit taxing them as an improvement of real property. Accordingly, the manufactured home in this case became a fixture at the time it was installed even though that was prior to the City's issuance of a notice of installation. [Ed. note: The case would not normally be of interest because it is an action against a city for inverse condemnation and due process violations, but the discussion pertaining to the law of fixtures is relevant for our purposes.]

Pinnacle Museum Tower Assn. v. Pinnacle Market Development     Docket
55 Cal.4th 223 - Cal. Supreme Court (S186149)  8/16/12

CC&R's: The court held that a provision in CC&R's providing that the homeowners association and each condominium owner agree to waive their right to a jury trial and to have any construction dispute resolved exclusively through binding arbitration is not unconscionable and is properly enforced against the association, as well as the individual owners.

Arabia v. BAC Home Loans Servicing     Docket     Sup.Ct. Docket
208 Cal.App.4th 462 - 4th Dist., Div. 1 (D060923)  8/13/12     Petition for review by Cal Supreme Ct. DENIED 10/31/12

JUDICIAL FORECLOSURE: The court held:
1. A loan servicer may prosecute a judicial foreclosure action in its own name as long as the right to foreclose has been assigned to the loan servicer. Here the lender assigned that right pursuant to a Pooling and Servicing Agreement.
2. Failure to name a junior lienholder does not preclude a judgment against the named parties, although the judgment does not affect the junior lien.
3. Filing a cross-complaint for judicial foreclosure in an action by the borrower for alleged violations concerning earlier attempts to non-judicially foreclose is valid and does not undermine the extensive procedures California has put in place for non-judicial foreclosure. Judicial foreclosures are conducted under the supervision of a court and do not require the same procedural protections as non-judicial foreclosures.

Weinstein v. Rocha     Docket     Sup.Ct. Docket
208 Cal.App.4th 92 - 2nd Dist. (B235931)  8/1/12     Petition for review by Cal Supreme Ct. DENIED 10/31/12

ANTI-DEFICIENCY: The seller (Rocha) carried back a note secured by a second deed of trust on property he sold to defendant (Weinstein). The note was later modified pursuant to a settlement agreement in an action in which Weinstein sued Rocha for failing to disclose housing code violations. Weinstein defaulted on both deeds of trust and the holder of the first deed of trust foreclosed, wiping out Rocha's deed of trust. Rocha sued to recover the amount due on the note. The court held that the settlement agreement was inextricably tied to the promissory note, and was a modification of the terms of the note. Therefore, a deficiency judgment is precluded by C.C.P. Section 580b, which prohibits a seller who carries back a purchase money deed of trust from recovering a deficiency judgment.

Wilson v. Hynek     Docket
207 Cal.App.4th 999 - 4th Dist., Div. 1 (D057620)  6/20/12 (Pub. Order 7/16/12)     Case complete 9/19/12

TRUSTEE'S SALES: A loan was secured by two deeds of trust, one securing a vacant parcel of land and the other securing plaintiffs' residence. The court rejected plaintiffs' claim that defendants were bound by alleged oral representations that defendants would first foreclose on the vacant parcel, because the deeds of trust specifically provided: "Borrower hereby expressly waives any right which it may have to direct the order in which any of the Property shall be sold in the event of any sale or sales pursuant to this Deed of Trust." The court also rejected plaintiffs' claim that the notice of default was invalid because it was executed by an agent for the beneficiary rather than by the trustee, because Civil Code Section 2942(a)(1) provides that a notice of default can be recorded by a trustee, beneficiary or any of their authorized agents.

Skov v. U.S. Bank National Association     Docket
207 Cal.App.4th 690 - 6th Dist. (H036483)  6/8/12 (Partial Pub. Order 7/3/12)     Case complete 9/5/12

TRUSTEE'S SALES: The trial court sustained defendant's demurrer to a complaint asserting that defendant failed to comply with Civil Code Section 2923.5 (which requires that before recording a notice of default, a lender must contact the borrower to "explore" options for avoiding foreclosure). The appellate court reversed, holding that:
1. A court can take judicial notice of the fact that a Notice of Default has been recorded with an attached declaration asserting compliance with CC 2923.5. But whether the lender actually complied with CC 2923.5 is a question of fact that cannot be resolved on demurrer.
2. A private cause of action exists to enjoin a trustee's sale for a violation of CC 2923.5.
3. CC 2923.5 is not preempted by the National Bank Act (12 U.S.C. 21, et seq.).

Fait v. New Faze Development     Docket     Sup.Ct. Docket
207 Cal.App.4th 284 - 3rd Dist. (C067630)  6/27/12     Petition for review by Cal Supreme Ct. DENIED 10/17/12

ANTIDEFICIENCY LAW: Plaintiffs sold a parcel of property and carried back a note secured by a deed of trust to finance the balance of the p urchase price. The purchaser demolished a building on the property to make way for new development, but was unable to complete the development and defaulted on the loan. Plaintiffs foreclosed non-judicially and purchased the property at the foreclosure sale. They then sued for waste and impairment of security based on the demolition of the building and the resulting loss of value. Defendants claimed that the action was barred by California's antideficiency laws. The court held that the antideficiency laws bar recovery for waste only if it is caused by the economic pressures of a depressed market, such as where an owner is compelled as a result of an economic downturn to forego the general maintenance and repair of the property in order to keep up with payments on the mortgage debt. But antideficiency laws do not preclude this action because defendants' demolition of the building was not induced by an economic downturn.

Cadlerock Joint Venture v. Lobel     Docket     Sup.Ct. Docket
206 Cal.App.4th 1531 - 4th Dist., Div. 3 (G045936)  6/20/12     Petition for review by Cal Supreme Ct. DENIED 10/10/12

TRUSTEE'S SALES / DEFICIENCY JUDGMENTS: When a single lender contemporaneously makes two non-purchase money loans secured by two deeds of trust referencing a single parcel of real property and soon thereafter assigns the junior loan to a different entity, the assignee of the junior loan, who is subsequently "sold out" by the senior lienholder's nonjudicial foreclosure sale, may pursue the borrower for a money judgment in the amount of the debt owed. The court pointed out that there was no suggestion in the record that the loan originator and assignees were affiliated in any way or that two loans were created, when one would have sufficed, as an artifice to evade C.C.P. Section 580d. (Section 580d prohibits a lender from obtaining a deficiency judgment after non-judicially foreclosing its deed of trust.)

Nickell v. Matlock     Docket     Sup.Ct. Docket
206 Cal.App.4th 934 - 2nd Dist. (B230321)  6/4/12     Petition for review by Cal Supreme Ct. DENIED 8/15/12

QUIET TITLE: Normally, a defendant has no right to participate in the case after its default has been entered. But Code of Civil Procedure Section 764.010, pertaining to quiet title actions, provides that "[t]he court shall not enter judgment by default but shall in all cases require evidence of plaintiff's title and hear such evidence as may be offered respecting the claims of any of the defendants . . ." The court held that, while default may be entered, Section 764.010 requires that before issuing a default judgment the trial court must hold an evidentiary hearing in open court, and that defendants were entitled to participate in the hearing even though their answers to the complaint had been stricken as a result of sanctions, and their defaults had been entered.

Cal Sierra Construction v. Comerica Bank     Docket     Sup.Ct. Docket
206 Cal.App.4th 841 - 3rd Dist. (C060707)  5/31/12     Petition for review by Cal Supreme Ct. DENIED 8/29/12

MECHANICS LIENS: The court held that only owners, and not lenders, are entitled to bring a "Lambert" motion. This term refers to Lambert v. Superior Court (1991) 228 Cal.App.3d 383, which held that where a claimant has already filed suit to enforce a mechanics lien or stop notice, the owner may file a motion in the action to have the matter examined by the trial court. On such motion, the claimant bears the burden of establishing the "probable validity" of the claim underlying the lien or stop notice. If the claimant fails to meet that burden, the lien and stop notice may be released in whole or in part.

Cyr v. McGovran     Docket
206 Cal.App.4th 645 - 2nd Dist. (B231155)  5/29/12

OPTIONS: The 3-year statute of limitation under C.C.P. 338(b) for injury to real property does not apply to plaintiff's alleged injury to rights under an option because an option is a contractual right, and not an interest in real property.

American Property Management Corporation v. Superior Court     Docket     Sup.Ct. Docket
206 Cal.App.4th 491 - 4th Dist., Div. 1 (D060868)  5/24/12     Petition for review by Cal Supreme Ct. DENIED 8/22/12

INDIANS - SOVEREIGN IMMUNITY: The court held that a California limited liability company ("the LLC"), which was wholly owned through a series of California limited liability companies by an Indian tribe, was not entitled to sovereign immunity. The LLC owned a hotel and the lawsuit involved a dispute with its property management company. The court stated that the dispositive fact was that the LLC was a California limited liability company. Nevertheless, it went through the weighing process prescribed by the US 10th Circuit Court of Appeals in Breakthrough Mgmt. Group, Inc. v. Chukchansi Gold Casino & Resort 629 F.3d 1173, which concluded that a court needs to determine whether a tribe's entities are an "arm of the tribe" by looking to a variety of factors when examining the relationship between the tribe and its entities, including but not limited to: (1) their method of creation; (2) their purpose; (3) their structure, ownership, and management, including the amount of control the tribe has over the entities; (4) whether the tribe intended for the entities to have tribal sovereign immunity; (5) the financial relationship between the tribe and the entities; and (6) whether the purposes of tribal sovereign immunity are served by granting immunity to the entities. The court concluded that the balance of these factors weighed heavily against sovereign immunity, and reiterated that the most significant fact was the LLC's organization as a California limited liability company.

The concurring opinion would not accord the same dispositive effect of formation under state law as a limited liability company that the majority did, but agreed that the factors set forth by the 10th Circuit weighed against sovereign immunity.

[Ed. note: The "weighing" process is impossible to do with any certainty at the time of contracting with an LLC (or other entity) in which an Indian tribe owns an interest. In spite of the favorable outcome of this state court appellate opinion, it seems that in order to be safe, you need to insist on a specific waiver of sovereign immunity from a tribe that has an interest in any entity you enter into a contract with.]

Shady Tree Farms v. Omni Financial     Docket
206 Cal.App.4th 131 - 5th Dist. (F062924)  5/22/12     Case complete 7/23/12

MECHANICS LIENS: Plaintiff contracted directly with the owner of a development to deliver trees, and recorded a mechanics lien after not being paid. The court held that plaintiff's mechanics lien was invalid because it failed to provide defendant construction lender with a preliminary 20-day notice under Civil Code Section 3097(b). Section 3097(a), requiring a 20-day notice to the owner, original contractor and construction lender, did not apply because plaintiff was under direct contract with the owner, and the subsection contains an exception for such persons. However, Section 3097(b) requires a 20-day notice to the construction lender by anyone under direct contract with the owner, except "the contractor". The court interpreted that term to refer only to the general contractor, so the exception did not apply to plaintiff.

Deutsche Bank v. McGurk     Docket
206 Cal.App.4th 201 - 2nd Dist. (B231591)  5/22/12     Case complete 7/26/12

QUIET TITLE: Defendant McGurk filed a previous quiet title action against a purchaser who had defrauded her, and recorded a lis pendens. She also named as a defendant the lender holding a deed of trust executed by the purchaser. McGurk dismissed the lender after the lender filed bankruptcy intending to pursue the lender in the bankruptcy action. The lender then assigned the note and deed of trust to plaintiff, after which McGurk took the default of the purchaser. Plaintiff brought this declaratory relief action seeking a determination of the validity of the deed of trust. The court held that 1) even though the assignment was recorded subsequent to the lis pendens, plaintiff stands in the shoes of the lender, whose deed of trust recorded prior to the lis pendens, 2) while plaintiff took the assignment subject to the risk that its assignor's interest would be proven to have been invalid, that risk never came to fruition because the assignor was dismissed, 3) the case was remanded to the trial court to determine the validity of the deed of trust.

Herrera v. Federal National Mortgage Association     Docket     Sup.Ct. Docket
205 Cal.App.4th 1495 - 4th Dist., Div. 2 (E052943)  5/17/12     Petition for review DENIED by Cal Supreme Ct. 8/8/12

TRUSTEE'S SALES: MERS, as nominee beneficiary, has the power to assign its interest under a deed of trust. Even assuming plaintiffs can allege specific facts showing that MERS' assignment of the deed of trust was void, a plaintiff in a suit for wrongful foreclosure is required to demonstrate the alleged imperfection in the foreclosure process was prejudicial to the plaintiff's interests. Not only did plaintiffs fail to show prejudice, but if MERS lacked the authority to assign the deed of trust, the true victim would not be the plaintiffs, who were admittedly in default, but the lender whose deed of trust was improperly assigned. Finally, Civil Code Section 2932.5, requiring recordation of an assignment of a mortgage, applies only to mortgages that give a power of sale to the creditor, not to deeds of trust which grant a power of sale to the trustee.

Estates of Collins and Flowers (Flowers v. Dancy)     Docket     Sup.Ct. Docket
205 Cal.App.4th 1238 - 3rd Dist. (C064815)  5/10/12     Petition for review DENIED by Cal Supreme Ct. 7/25/12

FORGERY: The son of one of two property owners forged a deed after they both had died. The court held that the administrator of the estates of the property owners was precluded from attacking the admittedly forged deed due to the "unclean hands" doctrine. The administrator, prior to being appointed as such, wrongfully sought to control the house by filing a defective mechanics lien, filing a baseless quiet title action for his own benefit, and renting the property to tenants for his own benefit, without regard for the other heirs of the two deceased property owners. The court pointed out that a forged deed is a nullity, but a party's conduct may estop him from asserting that the deed is forged, and that the unclean hands doctrine can prevent a party from attacking a forged deed.

The court also addressed the fact that as the other heirs should not suffer as a result of the administrator's wrongful conduct. However, the court found that there was no evidence that any heirs who had not aided, ratified, or acquiesced in the administrator's actions actually exist in this case.

Sumner Hill Homeowners' Association v. Rio Mesa Holdings     Docket
205 Cal.App.4th 999 - 5th Dist. (F058617)  5/2/12     Petition for review DENIED by Cal Supreme Ct. 7/24/12

EASEMENTS: In the published portion of the opinion, the court held that a subdivision map failed to provide public access to a river as required by Government Code Section 66478.4 if the river is navigable, but that the challenge to the map was barred by the 90-day statute of limitations in Government Code Section 66499.37. The court did not reach the question of whether or not the river is navigable. The court also held that implied and equitable easement rights are sufficient "title" to support a slander of title action, and that defendant slandered plaintiffs' title by recording a Notice of Permission to Use Land Under Civil Code Section 813 that purported to restrict plaintiffs use of the easement.

The court also addressed Streets and Highways Code Section 8353, which provides that the vacation of a street or highway extinguishes all private easements claimed by reason of the purchase of a lot by reference to a map on which the street or highway is shown, unless within two years after the vacation, the claimant records a notice describing the private easement. The court held that this section does not apply to private easements that are based on other or additional grounds besides the fact that the purchase was by reference to a map depicting a street.

Haynes v. EMC Mortgage Corporation     Docket     Sup.Ct. Docket
205 Cal.App.4th 329 - 1st Dist. (A131023)  4/9/12 (Pub. Order 4/14/12)     Petition for review DENIED by Cal Supreme Ct. 8/8/12

TRUSTEE'S SALES: Civil Code Section 2932.5, which requires the assignee of a mortgagee to record the assignment before exercising a power to sell the real property, applies only to mortgages and not to deeds of trust. Section 2932.5 requires the assignment of a mortgage to be recorded so that a prospective purchaser knows that the mortgagee has the authority to exercise the power of sale. This is not necessary when a deed of trust is involved, since the trustee conducts the sale and transfers title. (Ed. note: The result was not affected by the fact that the assignee substituted a new trustee.)

Brown v. Wells Fargo Bank     Docket
204 Cal.App.4th 1353 - 2nd Dist (B233679)  4/16/12     Case complete 6/20/12

TRUSTEE'S SALES: Plaintiff filed suit and sought a preliminary injunction to prevent a trustee's sale. The trial court granted the injunction on the condition that plaintiff deposit $1,700 a month into a client trust account. The trial court subsequently dissolved the injunction after plaintiff failed to make any payments. The appellate court affirmed, and further determined that the appeal was frivolous because no viable issue was raised on appeal. It directed the court clerk to send a copy of the opinion to the California State Bar for consideration of discipline of plaintiff's attorney.

Connolly v. Trabue     Docket     Sup.Ct. Docket
204 Cal.App.4th 1154 - 1st Dist. (A131984)  4/10/12     Petition for review and depublication request DENIED by Cal Supreme Ct. 6/27/12

PRESCRIPTIVE EASEMENTS: Plaintiffs brought an action to establish a prescriptive easement to a portion of defendant's property they had fenced in 1998. Plaintiff and defendant's predecessor intended to do a lot line adjustment that would transfer the disputed area to plaintiffs, but it was not accomplished because of an error in a deed. The trial court ruled that, even if such an easement had been acquired by Plaintiffs, their claim was barred by the doctrine of laches because they had delayed in asserting their claim in a timely manner. The appellate court reversed, holding that the doctrine of laches is inapplicable in an action involving a claim for a prescriptive easement because 1) once a prescriptive easement is established for the statutory period, the owner of the easement is under no obligation to take further action, rather, it is the record owner who must bring an action within 5 years after the prescriptive period commences, 2) this was an action at law, not equity, and laches applies only to equitable actions and 3) there was no evidence that plaintiffs were aware of the error in deed until shortly before they filed this action. [Ed. note: Plaintiff's occupation of the disputed area was apparently exclusive, but the court did not discuss cases holding that a prescriptive easement cannot be established where the use is exclusive. For example, see Harrison v. Welch.]

Bank of America v. Mitchell     Docket
204 Cal.App.4th 1199 - 2nd Dist. (B233924)  4/10/12     Case complete 6/11/12

TRUSTEE'S SALES / DEFICIENCY JUDGMENTS: The court acknowledged existing case law holding that a "sold out" junior holder of a deed of trust can obtain a deficiency judgment when the junior lien is wiped out by a trustee's sale under a senior deed of trust. But the court held that a deficiency judgment was not available in this case where the same lender held both deeds of trust and assigned the junior deed of trust to plaintiff after the trustee's sale. The court also held that this applies regardless of whether the lender purchases at its own trustee's sale or where, as here, a 3rd party purchases at the sale.

Montgomery Sansome LP v. Rezai     Docket
204 Cal.App.4th 786 - 1st Dist. (A130272, A130694)  3/28/12     Case complete 5/29/12

MECHANICS LIENS/CONTRACTOR LICENSING: Plaintiff's certificate of limited partnership with the California Secretary of State was in the name of "Montgomery-Sansome, LP". Its contractor's license was in the name of Montgomery Sansome LTD. A fictitious business name statement named Montgomery Sansome LTD, L.P. and incorrectly stated that it was a general partnership. The contract entered into with defendant to perform certain repairs named plaintiff as Montgomery Sansome LTD, LP. The trial court granted a summary judgment in favor of defendant, holding that plaintiff could not recover because the entity that signed the contract was not licensed. The appellate court reversed, holding that there is a triable issue of fact regarding whether there is actually only a single entity. Plaintiff did not violate the licensing law if the entity that entered into the contract is actually the same as the entity that signed the contract. The court distinguished cases holding that the licensing law is violated where a corporation or partnership enters into a contract and the principal is licensed, but not the entity.

Debrunner v. Deutsche Bank     Docket     Sup.Ct. Docket
204 Cal.App.4th 433 - 6th Dist. (H036379)  3/16/12     Petition for review and depublication request DENIED by Cal Supreme Ct. 6/13/12

TRUSTEE'S SALES: The court upheld the trial court's grant of a demurrer in favor of the lender without leave to amend, holding:
1. Since each assignment of deed of trust provided for the assignment "together with the note or notes therein described", it was not necessary to separately endorse the promissory note.
2. Physical possession of the note is not a precondition to nonjudicial foreclosure.
3. A notice of default does not need to be filed by the person holding the note. C.C. 2924(a)(1) permits a notice of default to be filed by the "trustee, mortgagee or beneficiary, or any of their authorized agents".
4. A notice of default (NOD) is valid even though the substitution of the trustee identified in the NOD is not recorded until after the NOD records.

Walker v. Ticor Title Company of California     Docket
204 Cal.App.4th 363 - 1st Dist. (A126710)  3/15/12     Case complete 5/16/12

ESCROW: Plaintiffs filed suit against Ticor and 12 other defendants alleging defendants conspired to fraudulently induce them to refinance real estate loans. The court upheld the judgment in favor of Ticor, holding as follows:
1. Even though Ticor gave the loan documents to the loan broker in order to have plaintiffs sign them at home, this did not violate a provision of the lender's closing instructions prohibiting the release of loan documents without lender's prior approval because the lender was fully aware that this was Ticor's and the loan broker's practice so, therefore, it impliedly consented to it.
2. It was reasonable for the jury to conclude that Ticor did not violate a provision of the lender's closing instructions requiring the closing agent to "coordinate the settlement" because the loan broker's activity of obtaining signatures was only part of the larger coordination of the settlement handled and supervised by Ticor.
3. It was permissible for the loan broker to provide copies of the "Notice of Right to Cancel" because nothing in the language of the instructions precluded Ticor from delegating this task, nor could plaintiffs have been damaged by such a delegation.
4. One of the plaintiffs notified Ticor after the loan closed that his wife had not signed the loan documents. This was insufficient to establish that Ticor aided and abetted the loan broker's fraud because it did not show that Ticor had actual knowledge of the fraud.
5. It was improper for the trial court to reduce the amount of attorney's fees awarded to Ticor based on plaintiff's financial condition.

Kavin v. Frye     Docket
204 Cal.App.4th 35 - 2nd Dist. (B230076)  3/5/12     Case complete 5/7/12

OPTION TO RENEW LEASE:
1. An option to renew a lease was not effective where it was exercised by only one of four tenants, and the other tenants did not authorize the first tenant to do so.
2. A lease provision stating that all lessees are jointly and severally liable for lease obligations is not an authorization for only one lessee to execute an option to extend the lease.
3. The option was executed late per the terms of the lease. Normally, a lessor can waive the time requirement for an option since the provision normally benefits only the lessor. Here, however, the lessor could not waive the provision on behave of two of the tenants who, since they signed the lease basically as guarantors, also stood to benefit by the expiration of the option period.

SCI California Funeral Services v. Five Bridges Foundation     Docket
203 Cal.App.4th 549 - 1st Dist. (A126053)  2/14/12     Case complete 4/17/12

DAMAGES-DIMINUTION IN VALUE: In this non-title insurance case, plaintiff purchased property, including an easement that was determined, in another action, to be invalid. The court held that the buyer's damages for loss of the easement included, in addition to diminution in value caused by loss of the easement, damages attributable to the fact that the easement had additional unique value to a neighbor, which plaintiff could have used as a "bargaining chip" to obtain a higher price when negotiating a sale of the easement to the neighbor.

[Ed. Note: This case may not be applicable to title insurance because standard ALTA policies contain a provision limiting liability for damages to "the difference between the value of the Title as insured and the value of the Title subject to the risk insured against by this policy". CLTA policies contain a similar provision. The ALTA/CLTA Homeowners Policy of Title Insurance contains a provision limiting damages to "your actual loss".]

California Redevelopment Association v. Matosantos     Docket
53 Cal.4th 231 - Cal. Supreme Court (S194861)  12/29/11

REDEVELOPMENT AGENCIES:
1. Assembly Bill 1X 26, which bars redevelopment agencies from engaging in new business and provides for their windup and dissolution, is constitutional.
2. Assembly Bill 1X 27, which offers redevelopment agencies the alternative to continue to operate if the cities and counties that created them agree to make payments into funds benefiting the state's schools and special districts, is unconstitutional.

Stebley v. Litton Loan Servicing     Docket     Sup.Ct. Docket
202 Cal.App.4th 522 - 3rd Dist. (C066130)  11/30/11 (Pub. Order 12/29/11)    Petition for review and depublication request by Cal Supreme Ct. DENIED 3/14/12

TRUSTEE'S SALES: The court upheld the trial court's sustaining of a demurrer without leave to amend in an action alleging that defendant violated Civil Code Section 2923.5, which requires that before a notice of default can be filed, a lender must attempt to contact the borrower and explore options to prevent foreclosure. The court held:
1. Section 2923.5 does not provide for damages or for setting aside a foreclosure sale. The only remedy available is to provide the borrower more time before a foreclosure sale occurs. After the sale, the statute provides no relief.
2. The statute does not require a lender to modify the loan.
3. While a tender of the loan amount is not necessary to delay a foreclosure sale, it is necessary in order to set aside a sale after it occurs.
4. Plaintiff's cause of action for dependant adult abuse fails because plaintiff failed to allege that the property was taken wrongfully where an ordinary foreclosure sale occurred.

Portico Management Group v. Harrison     Docket     Sup.Ct. Docket
202 Cal.App.4th 464 - 3rd Dist. (C062060)  12/28/11     Petition for review by Cal Supreme Ct. DENIED 4/11/12

TRUSTS: In the published portion of the opinion, the court held that an arbitration award and judgment against a trust, and not against the trustees in their capacity as trustees, were not valid because a trust is not an entity or person capable of owning title to property. A trust is, rather, a fiduciary relationship with respect to property. The court pointed out that if the judgment had been against the trustees in their representative capacities, it would have also bound successor trustees. Although the lawsuit properly named the trustees, for some reason plaintiff did not seek to correct or modify the arbitration award or judgment to indicate that it was properly against the trustees.

Gray1 CPB v. Kolokotronis     Docket
202 Cal.App.4th 480 - 3rd Dist (C064954)  12/2/11 (Pub. Order 12/28/11)     Case complete 2/28/12

GUARANTY: The court rejected defendant's contention that the guaranty he signed was actually a demand note, which would have meant that he could compel the lender to foreclose on the security first and that the waiver of his rights under various antideficiency statutes would be invalid. The court held that the following language in the guaranty did not turn the guaranty into a promissory note: "whether due or not due," "on demand," and "not contingent upon and are independent of the obligations of Borrower."

Lona v. Citibank     Docket
202 Cal.App.4th 89 - 6th Dist (H036140)  12/21/11     Case complete 2/22/12

TRUSTEE'S SALES: The court reversed a summary judgment in favor of defendants in an action seeking to set aside a trustee's sale on the basis that the loan was unconscionable. The court held that summary judgment was improper for two reasons:
1. The homeowner presented sufficient evidence of triable issues of material fact regarding unconscionability. Plaintiff asserted that the loan broker ignored his inability to repay the loan (monthly loan payments were four times his monthly income) and, as a person with limited English fluency, little education, and modest income, he did not understand many of the details of the transaction which was conducted entirely in English.
2. Plaintiff did not tender payment of the debt, which is normally a condition precedent to an action by the borrower to set aside the trustee's sale, but defendants' motion for summary judgment did not address the exceptions to this rule that defendant relied upon.

The case contains a good discussion of four exceptions to the tender requirement: 1. If the borrower's action attacks the validity of the underlying debt, a tender is not required since it would constitute an affirmation of the debt. 2. A tender will not be required when the person who seeks to set aside the trustee's sale has a counter-claim or set-off against the beneficiary. 3. A tender may not be required where it would be inequitable to impose such a condition on the party challenging the sale. 4. No tender will be required when the trustor is not required to rely on equity to attack the deed because the trustee's deed is void on its face.

Pioneer Construction v. Global Investment Corp.     Modification Order     Docket     Sup.Ct. Docket
202 Cal.App.4th 161 - 2nd Dist. (B225685)  12/21/11     Request for depublication DENIED 3/28/12

MECHANICS LIENS: The court held that:
1. A mechanics lien claimant who provided labor and materials prepetition to a debtor in bankruptcy can record a mechanics lien after the property owner files for bankruptcy without violating the automatic stay. (11 U.S.C. §362(b)(3).)
2. A mechanics lienor must, and defendant did, file a notice of lien in the debtor's bankruptcy proceedings to inform the debtor and creditors of its intention to enforce the lien. (11 U.S.C. §546(b)(2)
3. The 90-day period to file an action after recording a mechanics lien is tolled during the pendency of the property owner's bankruptcy. Accordingly, an action to enforce the lien was timely when filed 79 days after a trustee's sale by a lender who obtained relief from the automatic stay. (The property ceased to be property of the estate upon completion of the trustee's sale.)

Harbour Vista v. HSBC Mortgage Services     Docket
201 Cal.App.4th 1496 - 4th Dist., Div. 3 (G044357)  12/19/11     Case complete 2/21/12

QUIET TITLE: Normally, a defendant has no right to participate in the case after its default has been entered. But Code of Civil Procedure Section 764.010, pertaining to quiet title actions, provides that "[t]he court shall not enter judgment by default but shall in all cases require evidence of plaintiff's title and hear such evidence as may be offered respecting the claims of any of the defendants . . ." The court held that, while default may be entered, Section 764.010 requires that before issuing a default judgment the trial court must hold an evidentiary hearing in open court, and that a defendant is entitled to participate in the hearing even when it has not yet answered the complaint and is in default.

Park v. First American Title Insurance Company     Docket
201 Cal.App.4th 1418 - 4th Dist., Div. 3 (G044118)  11/23/11 (Pub. Order 12/16/11)     Case complete 2/15/12

TRUSTEE'S SALES: A trustee's sale was delayed due to defendant's error in preparing the deed of trust. However, the court held that plaintiff could not establish damages because she could not prove that a potential buyer was ready, willing and able to purchase the property when the trustee's sale was originally scheduled. Such proof would require showing that a prospective buyer made an offer, entered into a contract of sale, obtained a cashier's check, or took any equivalent step that would have demonstrated she was ready, willing, and able to purchase plaintiff's property. Also, plaintiff would need to show that the prospective buyer was financially able to purchase the property, such as by showing that the prospective buyer had obtained financing for the sale, preapproval for a loan or had sufficient funds to purchase the property with cash.

Bardasian v. Superior Court     Docket
201 Cal.App.4th 1371 - 3rd Dist. (C068488)  12/15/11

TRUSTEE'S SALES: Civil Code Section 2923.5 requires that before a notice of default can be filed, a lender must attempt to contact the borrower and explore options to prevent foreclosure. Where the trial court ruled on the merits that a lender failed to comply with Section 2923.5, it was proper to enjoin the sale pending compliance with that section, but it was not proper to require plaintiff to post a bond and make rent payments. Also, discussions in connection with a loan modification three years previously did not constitute compliance with the code section.

Lang v. Roche     Docket
201 Cal.App.4th 254 - 2nd Dist. (B222885)  11/29/11     Case complete 2/3/12

SHERIFF'S SALES: Plaintiff sought to set aside a Sheriff's sale arising from the execution on a judgment rendered in another action. Defendant had obtained that judgment by default after service by publication even though plaintiff was defendant's next door neighbor and could easily be found. The court set the sale aside, holding that even though C.C.P. 701.780 provides that an execution sale is absolute and cannot be set aside, that statute does not eliminate plaintiff's right of equitable redemption where the judgment is void due to lack of personal jurisdiction.

Promenade at Playa Vista HOA v. Western Pacific Housing     Docket     Sup.Ct. Docket
200 Cal.App.4th 849 - 2nd Dist. (B225086)  11/8/11     Petition for review by Cal Supreme Ct. GRANTED 1/25/12

CAL SUPREME COURT 10/10/12: Transferred back to the Court of Appeal with directions to vacate its decision and to reconsider the cause in light of Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223.

2nd DISTRICT COURT OF APPEALS 12/6/12: Prior decision vacated because it is inconsistent with Pinnacle.

CC&R'S: In a construction defect action brought by a condominium homeowners association, the court held that a developer cannot compel binding arbitration of the litigation pursuant to an arbitration provision in the Declaration of Covenants, Conditions, and Restrictions. CC&R's are not a contract between the developer and the homeowners association. Instead, the provisions in the CC&R's are equitable servitudes and can be enforced only by the homeowners association or the owner of a condominium, not by a developer who has sold all the units.

Alpha and Omega Development v. Whillock Contracting     Docket     Sup.Ct. Docket
200 Cal.App.4th 656 - 4th Dist., Div. 1 (D058445)  11/2/11     Petition for review by Cal Supreme Ct. DENIED 2/15/12

LIS PENDENS: This is a slander of title and malicious prosecution action brought after defendant's unsuccessful action to foreclose a mechanics lien. Plaintiff's slander of title allegation is based on defendant's recordation of a lis pendens in the prior mechanics lien action. The appellate court upheld the trial court's granting of defendant's anti-SLAPP motion and striking the slander of title cause of action, because recording a lis pendens is privileged under Civil Code Section 47(b)(4).

Biancalana v. T.D. Service Company     Docket     Sup.Ct. Docket
200 Cal.App.4th 527 - 6th Dist. (H035400)  10/31/11     REVERSED by Cal Supreme Ct. 5/16/13

TRUSTEE'S SALES: Inadequacy of the sale price is not a sufficient ground for setting aside a trustee's sale of real property in the absence of any procedural errors. The unpaid balance of the loan secured by the subject deed of trust was $219,105. The trustee erroneously told the auctioneer to credit bid the delinquency amount ($21,894.17). Plaintiff was the successful bidder with a bid of $21,896. The court refused to set aside the sale because there were no procedural errors and the mistake was within the discretion and control of the trustee, who was acting as agent for the lender. The court distinguished Millennium Rock Mortgage, Inc. v. T.D. Service Co. because here the mistake was made by defendant in the course and scope of its duty as the beneficiary's agent, not by the auctioneer as in Millennium Rock.

The case also contains a discussion of the rule that once the trustee's deed has been delivered, a rebuttable presumption arises that the foreclosure sale has been conducted regularly and properly. But where the deed has not been delivered, the sale may be challenged on the grounds of procedural irregularity.

First Bank v. East West Bank     Docket
199 Cal.App.4th 1309 - 2nd Dist. (B226061)  10/17/11     Case complete 12/19/11

RECORDING: Where two deeds of trust secured by the same real property were simultaneously time-stamped for recording by the County Recorder's Office but were indexed at different times, the lenders have equal priority. The recording laws protect subsequent purchasers and neither bank was a subsequent purchaser. The court acknowledged that a subsequent purchaser (or lender) who records his interest before the prior interest is indexed has priority, but this rule does not apply when both deeds of trust were recorded simultaneously.

Dollinger DeAnza Assoc. v. Chicago Title Insurance Company     Docket     Sup.Ct. Docket
199 Cal.App.4th 1132 - 6th Dist. (H035576)  9/9/11 (Pub. Order 10/6/11)     Request for depublication DENIED 1/4/12

TITLE INSURANCE: Plaintiff's title insurance policy, which was issued in 2004, insured property that originally consisted of seven parcels, but which had been merged into a single parcel pursuant to a Notice of Merger recorded by the City of Cupertino in 1984. The policy did not except the Notice of Merger from coverage. Plaintiff filed this action after Chicago Title denied its claim for damages alleged to result from the inability to sell one of the parcels separately. The court ruled in favor of Chicago, holding:
1. While the notice of merger may impact Plaintiff's ability to market the separate parcel, it has no affect on Plaintiff's title to that parcel, so it does not constitute a defect in title. It does not represent a third person's claim to an interest in the property.
2. Chicago is not barred by principals of waiver or estoppel from denying plaintiff's claim, after initially accepting the claim, because 1) waiver only applies to insurers that do not reserve rights when accepting a tender of defense and 2) plaintiff failed to show detrimental reliance, which is one of the elements of estoppel.
3. Plaintiff's claim for breach of the implied covenant of good faith and fair dealing cannot be maintained where benefits are not due under plaintiff's insurance policy.
4. Since the court held that the Notice of Merger was not a defect in title, it did not need to consider Chicago's contention that the Notice of Merger was void because the County Recorder indexed it under the name of the City, rather than the name of the property owner.
5. Market value and marketable title are not synonymous. One can have marketable title to land while the land itself is unmarketable.
[Ed. note: This case must have dealt with an ALTA 1992 policy. The ALTA 2006 policy made changes to the Covered Risks.]

Sukut Construction v. Rimrock CA     Docket     Sup.Ct. Docket
199 Cal.App.4th 817 - 4th Dist., Div. 1 (D057774)  9/30/11     Petition for review by Cal Supreme Ct. DENIED 12/14/11

MECHANICS LIENS: Plaintiff could not establish a mining lien under Civil Code Section 3060 for removing rocks from a quarry because a quarry is not a mine and the rocks were not minerals. The court did not address whether plaintiff could establish a regular mechanics lien because it held that plaintiff was judicially estopped from asserting that position after leading defendant to believe that it was asserting only a mining claim.

UNPUBLISHED: First American Title Insurance Company v. Ordin     Docket
Cal.App. 2nd Dist. (B226671)  9/14/11     Case complete 11/17/11

TITLE INSURANCE: An arbitrator found that defendants did not lose coverage under their title policy when they conveyed title to their wholly owned corporation, then to themselves as trustees of their family trust and finally to a wholly owned limited liability company. This conflicts with the holding in Kwok v. Transnation Title Insurance Company and this could have been an interesting case, except that whether the ruling was right or wrong was not before the court. The court held only that the arbitrator's award could not be overturned, even if the the law was applied incorrectly, because there was no misconduct by the arbitrator.

Calvo v. HSBC Bank     Docket     Sup.Ct. Docket
199 Cal.App.4th 118 - 2nd Dist. (B226494)  9/13/11     Petition for review by Cal Supreme Ct. DENIED 1/4/12

TRUSTEE'S SALES: Notice of the assignment of a deed of trust appeared only in the substitution of trustee, which was recorded on the same date as the notice of trustee's sale, and which stated that MERS, as nominee for the assignee lender, was the present beneficiary. Plaintiff sought to set aside the trustee's sale for an alleged violation of Civil Code section 2932.5, which requires the assignee of a mortgagee to record an assignment before exercising a power to sell real property. The court held that the lender did not violate section 2932.5 because that statute does not apply when the power of sale is conferred in a deed of trust rather than a mortgage.

Robinson v. Countrywide Home Loans     Docket
199 Cal.App.4th 42 - 4th Dist., Div. 2 (E052011)  9/12/11     Case complete 11/15/11

TRUSTEE'S SALES: The trial court properly sustained defendant lender's demurrer without leave to amend because 1) the statutory scheme does not provide for a preemptive suit challenging MERS authority to initiate a foreclosure and 2) even if such a statutory claim were cognizable, the complaint did not allege facts sufficient to challenge the trustee's authority to initiate a foreclosure.

Hacienda Ranch Homes v. Superior Court (Elissagaray)     Docket
198 Cal.App.4th 1122 - 3rd Dist. (C065978)  8/30/11     Case complete 11/1/11

ADVERSE POSSESSION: Plaintiffs (real parties in interest) acquired a 24.5% interest in the subject property at a tax sale. The court rejected plaintiffs' claim of adverse possession under both 1) "color of title" because the tax deed by which they acquired their interest clearly conveyed only a 24.5% interest instead of a 100% interest, and 2) "claim of right" because plaintiffs' claims of posting for-sale signs and clearing weeds 2 or 3 times a year did not satisfy the requirement of protecting the property with a substantial enclosure or cultivating or improving the property, as required by Code of Civil Procedure Section 325. The court also pointed out that obtaining adverse possession against cotenants requires evidence much stronger than that which would be required against a stranger, and plaintiffs failed to establish such evidence in this case.

Gramercy Investment Trust v. Lakemont Homes Nevada, Inc.     Docket
198 Cal.App.4th 903 - 4th Dist., Div. 2 (E051384)  8/24/11     Case complete 10/27/11

ANTIDEFICIENCY: After a judicial foreclosure, the lender obtained a deficiency judgment against a guarantor. The court held that the choice of law provision designating the law of New York was unenforceable because there were insufficient contacts with New York. California is where the contract was executed, the debt was created and guaranteed, the default occurred and the real property is located. Also, Nevada law does not apply, even though the guarantor was a Nevada corporation, because Nevada had no connection with the transaction. The court also held that the guarantor was not entitled to the protection of California's antideficiency statutes because the guaranty specifically waived rights under those statutes in accordance with Civil Code Section 2856.

Hill v. San Jose Family Housing Partners     Docket
198 Cal.App.4th 764 - 6th Dist. (H034931)  8/23/11     Case complete 10/25/11

EASEMENTS: Plaintiff, who had entered into an easement agreement with defendant's predecessor to maintain a billboard on a portion of defendant's property, filed an action to prevent defendant from constructing a multi-unit building that would allegedly block the view of the billboard. Defendant asserted that the easement was unenforceable because it violated city and county building codes. The court held:
1. The easement was enforceable because the property's use for advertising purposes is not illegal in and of itself. Although the instrumentality of that use, i.e., the billboard, may be illegal, that is not a bar to the enforcement of the agreement.
2. The easement agreement did not specifically state that it included the right to view the billboard from the street, but the parties necessarily intended the easement to include that right since viewing the billboard by passing traffic is the purpose of the easement.
3. Nevertheless, the trial court improperly denied a motion for a retrial to re-determine damages based on new evidence that the city had instituted administrative proceedings to have the billboard removed. The award of damages was based on plaintiff's expected revenue from the billboard until 2037, and such damages will be overstated if the city forces plaintiff to remove the billboard.

Fontenot v. Wells Fargo Bank     Docket     Sup.Ct. Docket
198 Cal.App.4th 256 - 1st Dist. (A130478)  8/11/11     Depublication request DENIED 11/30/11

FORECLOSURE / MERS: Plaintiff alleged a foreclosure was unlawful because MERS made an invalid assignment of an interest in the promissory note and because the lender had breached an agreement to forbear from foreclosure. The appellate court held that the trial court properly sustained a demurrer to the fourth amended complaint without leave to amend. The court held that MERS had a right to assign the note even though it was not the beneficiary of the deed of trust because in assigning the note it was acting on behalf of the beneficiary and not on its own behalf. Additionally, Plaintiff failed to allege that the note was not otherwise assigned by an unrecorded document. The court also held that plaintiff failed to properly allege that the lender breached a forbearance agreement because plaintiff did not attach to the complaint a copy of a letter (which the court held was part of the forbearance agreement) that purportedly modified the agreement. Normally, a copy of an agreement does not have to be attached to a complaint, but here the trial court granted a previous demurrer with leave to amend specifically on condition plaintiff attach a copy of the entire forbearance agreement to the amended pleading.

Boschma v. Home Loan Center     Docket
198 Cal.App.4th 230 - 4th Dist., Div. 3 (G043716)  8/10/11     Case complete 10/11/11

LOAN DISCLOSURE: Borrowers stated a cause of action that survived a demurrer where they alleged fraud and a violation of California's Unfair Competition Law (B&PC 17200, et seq.) based on disclosures indicating that borrowers' Option ARM loan may result in negative amortization when, in fact, making the scheduled payments would definitely result in negative amortization. However, the court also pointed out that at trial in order to prove damages plaintiffs will have to present evidence that, because of the structure of the loans, they suffered actual damages beyond their loss of equity. For every dollar by which the loan balances increased, plaintiffs kept a dollar to save or spend as they pleased, so they will not be able to prove damages if their "only injury is the psychological revelation . . . that they were not receiving a free lunch from defendant".

Thorstrom v. Thorstrom     Docket
196 Cal.App.4th 1406 - 1st Dist. (A127888)  6/29/11     Case complete 8/30/11

EASEMENTS: Plaintiffs were not able to preclude defendants' use of a well on plaintiffs' property. The historic use of the well by the common owner (the mother of the current owners) indicated an intent for the well to serve both properties, and an implied easement was created in favor of defendants when the mother died and left one parcel to each of her two sons. However, the evidence did not establish that defendants were entitled to exclusive use of the well, so both properties are entitled to reasonable use of the well consistent with the volume of water available at any given time.

Herrera v. Deutsche Bank     Docket
196 Cal.App.4th 1366 - 3rd Dist. (C065630)  5/31/11 (Cert. for pub. 6/28/11)     Case complete 8/30/11

TRUSTEE'S SALES: Plaintiffs sought to set aside a trustee's sale, claiming that the Bank had not established that it was the assignee of the note, and that the trustee ("CRC") had not established that it was properly substituted as trustee. To establish that the Bank was the beneficiary and CRC was the trustee, defendants requested that the trial court take judicial notice of the recorded Assignment of Deed of Trust and Substitution of Trustee, and filed a declaration by an employee of CRC referring to the recordation of the assignment and substitution, and stating that they "indicated" that the Bank was the assignee and CRC was the trustee. The trial court granted defendants' motion for summary judgment and the appellate court reversed. The Court acknowledged that California law does not require the original promissory note in order to foreclose. But while a court may take judicial notice of a recorded document, that does not mean it may take judicial notice of factual matters stated therein, so the recorded documents do not prove the truth of their contents. Accordingly, the Bank did not present direct evidence that it held the note.

Ed. notes: 1. It seems that the Bank could have avoided this result if it had its own employee make a declaration directly stating that the Bank is the holder of the note and deed of trust, 2. In the unpublished portion of the opinion, the Court held that if the Bank is successful in asserting its claim to the Property, there is no recognizable legal theory that would require the Bank to pay plaintiffs monies they expended on the property for back taxes, insurance and deferred maintenance.

Tashakori v. Lakis     Docket     Sup.Ct. Docket
196 Cal.App.4th 1003 - 2nd Dist. (B220875)  6/21/11     Petition for review by Cal Supreme Ct. DENIED 9/21/11

EASEMENTS: The court granted plaintiffs an "equitable easement" for driveway purposes. Apparently, plaintiffs did not have grounds to establish a prescriptive easement. But a court can award an equitable easement where the court applies the "relative hardship" test and determines, as the court did here, that 1) the use is innocent, which means it was not willful or negligent, 2) the user will suffer irreparable harm if relief is not granted and 3) there is little harm to the underlying property owner.

Conservatorship of Buchenau (Tornel v. Office of the Public Guardian)     Docket
196 Cal.App.4th 1031 - 2nd Dist. (B222941)  5/31/11 (Pub. order 6/21/11)     Case complete 8/24/11

CONTRACTS: A purchaser of real property was held liable for damages for refusing to complete the purchase contract, even though the seller deposited the deed into escrow 19 days after the date set for close of escrow. The escrow instructions did not include a "time is of the essence" clause, so a reasonable time is allowed for performance. The purchaser presented no evidence that seller's delay of 19 days was unreasonable following a two-month escrow.

Diamond Heights Village Assn. v. Financial Freedom Senior Funding Corp.     Docket     Sup.Ct. Docket
196 Cal.App.4th 290 - 1st Dist. (A126145)  6/7/11     Petition for review by Cal Supreme Ct. DENIED 9/21/11

HOMEOWNERS ASSOCIATION LIENS:
1. A homeowner's association recorded a notice of assessment lien, judicially foreclosed and obtained a judgment against the homeowners. However, it did not record an abstract of judgment, which would have created a judgment lien, nor did it record a writ of execution, which would have created an execution lien. The court held that a subsequently recorded deed of trust had priority because when an assessment lien is enforced through judicial action, the debt secured by the lien is merged into the judgment. The association's previous rights were merged into the judgment, substituting in their place only such rights as attach to the judgment.
2. After defendant lender prevailed on summary judgment as to the single cause of action naming the lender, trial proceeded as to the owners of the property, including a cause of action for fraudulent conveyance of a 1/2 interest in the property pertaining to a transfer from the original owner to himself and his mother. The trial court ruled in favor of the Association on the fraudulent conveyance cause of action AND held that defendant lender's deed of trust was set aside as to that 1/2 interest. The appellate court held that trial of those remaining claims was proper, including trial of the Association's cause of action against the homeowners for fraudulent conveyance of their condominium unit. It was not proper, however, to void the lender's security interest in the property (in whole or part) when the lender had not been joined as a party to the fraudulent conveyance cause of action, and final judgment had already been entered in its favor.

Hamilton v. Greenwich Investors XXVI      Modification     Docket
195 Cal.App.4th 1602 - 2nd Dist. (B224896)  6/1/11     Case complete 8/17/11

TRUSTEE'S SALES:
1. Plaintiff/borrower's failure to disclose, in earlier bankruptcy proceedings, the existence of his breach of contract and fraud claims against the lender bars the borrower from litigating those claims now. The court distinguished several cases that permitted a debtor in bankruptcy from subsequently pursuing a cause of action that was not disclosed in the bankruptcy pleadings on the basis that in those cases the defendant was not a creditor in the bankruptcy and because the schedules specifically asked the debtor to disclose any offsets against the debts that were listed. This action against the lender amounts to an offset against the loan, so by listing the loan and failing to list this claim, the borrower's bankruptcy schedules were inaccurate.
2. The borrower's causes of action for breach of contract and fraud fail in any event because the borrower did not allege the essential fact of payment of sums due from the borrower (i.e. performance by the borrower) or set forth an excuse for performance.
3. The borrower cannot state a cause of action for violations of Civil Code Section 2923.5, which requires lenders to contact borrowers to explore options to avoid foreclosure, because the only remedy for such violations is postponement of the foreclosure sale, and borrower's house has been sold.

***DECERTIFIED***
Ferguson v. Avelo Mortgage     Modification     Docket     Sup.Ct. Docket
Cal.App. 2nd Dist. (B223447)  6/1/11     Petition for review by Cal Supreme Ct. DENIED & DECERTIFIED 9/14/11

FORECLOSURE / MERS:
1. A Notice of Default was defective because it was signed by a trustee before recordation of the substitution of trustee substituting it in place of the original trustee. But the Notice of Sale was properly given because it recorded at the same time as the substitution and included the statutorily required affidavit attesting to the mailing of a copy of the substitution to all persons to whom an NOD must be mailed. Since the NOS was valid, the court held that the sale was merely voidable and not void. Therefore, unlike a void sale (such as where a substitution of trustee is not recorded until after the trustee's sale is completed), where the sale is merely voidable the plaintiff must tender full payment of the debt in order to bring an action setting aside the sale. The plaintiff did not make such a tender, so the trial court properly refused to set aside the sale.
2. Mortgage Electronic Registration Systems (MERS), as nominee of the original lender had the authority to assign the note and deed of trust to defendant, even if MERS does not possess the original note.

Creative Ventures, LLC v. Jim Ward & Associates     Docket     Sup.Ct. Docket
195 Cal.App.4th 1430 - 6th Dist. (H034883)  5/31/11     Petition for review by Cal Supreme Ct. DENIED 8/10/11

USURY:
1. The real estate broker arranged loan exception to the Usury Law does not apply were a corporation was not licensed as a broker, even though the officer who negotiated the loan was licensed, where the officer was acting on behalf of the corporation and not on his own behalf.
2. The payee of the note assigned the note to multiple investors. In order to take free of the borrower's defenses against the original payee, the assignees would have had to be holders in due course. They were not holders in due course because a) the original payee did not endorse the note and transfer possession of the note to the assignees, both of which are requirements for holder in due course status, and b) each investor was assigned a partial interest and partial assignees cannot be holders in due course.
3. The individual investors did not receive usurious interest because the interest rate itself was not usurious. But since the overall interest was usurious when the payee's brokerage fee was included, the investors must refund the illegal interest each received.
4. The fact that the investors did not intend to violate the Usury Law is irrelevant because the only intent required is the intent to receive payment of interest.
5. An award of treble damages is within the discretion of the trial court, and the trial court properly exercised its discretion not to award treble damages because the conduct of defendants was not intentional.

Ribeiro v. County of El Dorado     Docket     Sup.Ct. Docket
195 Cal.App.4th 354 - 3rd Dist. (C065505)  5/10/111     Petition for review by Cal Supreme Ct. DENIED 8/24/11

TAX SALES: "Caveat emptor" applies to tax sales. Accordingly, plaintiff/tax sale purchaser could not rescind the tax sale and obtain his deposit back where he was unaware of the amount of 1915 Act bond arrearages and where the County did not mislead him.

The Main Street Plaza v. Cartwright & Main, LLC     Docket
194 Cal.App.4th 1044 - 4th Dist., Div. 3 (G043569)  4/27/11     Case complete 6/27/11

EASEMENTS: Plaintiff sought to establish a prescriptive easement for parking and access. The trial court granted a motion for summary judgment against plaintiff because it had not paid taxes on the easement. The appellate court reversed because, while payment of property taxes is an element of a cause of action for adverse possession, payment of taxes is not necessary for an easement by prescription, unless the easement has been separately assessed. A railway easement over the same area was separately assessed, but that is irrelevant because the railway easement and the prescriptive easement were not coextensive in use.

Liberty National Enterprises v. Chicago Title Insurance Company     Docket
194 Cal.App.4th 839 - 2nd Dist. (B222455)  4/6/11 (pub. order 4/26/11)     Case complete 6/28/11

NOTE: This case is not summarized because it deals with disqualification of a party's attorney, and not with issues related to title insurance. It is included here only to point out that fact.

Barry v. OC Residential Properties     Docket     Sup.Ct. Docket
194 Cal.App.4th 861 - 4th Dist., Div. 3 (G043073)  4/26/11     Petition for review by Cal Supreme Ct. DENIED 7/13/11

TRUSTEE'S SALES: Under C.C.P. 729.035 a trustee's sale to enforce a homeowners association lien is subject to a right of redemption for 90 days after the sale, and under C.C.P. 729.060 the redemption price includes reasonable amounts paid for maintenance, upkeep and repair. Defendant purchased plaintiff's interest in a common interest development at a foreclosure sale of a homeowners association lien. Plaintiff sought to redeem the property and defendant included certain repair costs in the redemption amount. Plaintiff asserted that the costs were not for reasonable maintenance, upkeep and repair. The court held that the costs were properly included because the person seeking to redeem has the burden of proof, and plaintiff failed to carry that burden in this case. Plaintiff also asserted that she should not have to pay the repair costs because the work was performed by an unlicensed contractor. The court held that the cost of the repair work was properly included because plaintiff would receive a windfall if she did not have to reimburse those costs and because this is not an action in which a contractor is seeking compensation.

McMackin v. Ehrheart     Docket
194 Cal.App.4th 128 - 2nd Dist. (B224723)  4/8/11     Case complete 6/9/11

CONTRACTS / PROBATE: This case involves a "Marvin" agreement, which is an express or implied contract between nonmarital partners. Plaintiff sought to enforce an alleged oral agreement with a decedent to leave plaintiff a life estate in real property. The court held that since the agreement was for distribution from an estate, it is governed by C.C.P. Section 366.3, which requires the action to be commenced within one year after the date of death. But the court further concluded that, depending on the circumstances of each case, the doctrine of equitable estoppel may be applied to preclude a party from asserting the statute of limitations set forth in section 366.3 as a defense to an untimely action where the party's wrongdoing has induced another to forbear filing suit.

Ferwerda v. Bordon     Docket
193 Cal. App. 4th 1178 - 3rd Dist. (C062389)  3/25/11     Petition for review by Cal Supreme Ct. DENIED 6/8/11

CC&R's
In the published portion of the opinion, the court held:
1. The following language in the CC&R's gave the Homeowners Association the authority to adopt new design standards pertaining to development of lots in the subdivision: "in the event of a conflict between the standards required by [the Planning] Committee and those contained herein, the standards of said Committee shall govern"; and
2. The Planning Committee could not adopt a rule that allowed for attorney's fees to be awarded to the prevailing party in a lawsuit because such a provision was not contained in the CC&R's. Adopting the rule was an attempt by the committee to insert a new provision that binds homeowners without their approval.

In the unpublished portion of the opinion, the court held that the Planning Committee acted properly in denying the plaintiff's building plans. (The details are not summarized here because that part of the opinion is not certified for publication.)

Capon v. Monopoly Game LLC     Docket
193 Cal. App. 4th 344 - 1st Dist. (A124964)  3/4/11     Case complete 5/5/11

HOME EQUITY SALES CONTRACT ACT: In the published portion of the opinion, the court held that plaintiff was entitled to damages under the Home Equity Sales Contract Act because the purchaser was subject to the Act and the purchase contract did not comply with it. There is an exception in the Act for a purchaser who intends to live in the property. The principal member of the LLC purchase asserted that he intended to live in the property, but the court held the exception does not apply because the purchaser was the LLC rather than the member, so his intent was irrelevant.

Gomes v. Countrywide Home Loans     Docket     Cal. Sup.Ct. Docket     U.S. Supreme Ct. Docket
192 Cal. App. 4th 1149 - 4th Dist., Div. 1 (D057005)  2/18/11     Petition for review by Cal Supreme Ct. DENIED 5/18/11, Petition for a writ of certiorari DENIED 10/11/11

FORECLOSURE / MERS: A borrower brought an action to restrain a foreclosure of a deed of trust held by MERS as nominee for the original lender. A Notice of Default had been recorded by the trustee, which identified itself as an agent for MERS. The court held that 1) There is no legal basis to bring an action in order to determine whether the person electing to sell the property is duly authorized to do so by the lender, unless the plaintiff can specify a specific factual basis for alleging that the foreclosure was not initiated by the correct party; and 2) MERS has a right to foreclose because the deed of trust specifically provided that MERS as nominee has the right to foreclose.

Schuman v. Ignatin     Docket
191 Cal. App. 4th 255 - 2nd Dist. (B215059)  12/23/10     Case complete 2/23/11

CC&R's: The applicable CC&R's would have expired, but an amendment was recorded extending them. Plaintiff filed this action alleging that defendant's proposed house violated the CC&R's. The trial court held that the amendment was invalid because it was not signed by all of the lot owners in the subdivision. Since the CC&R's had expired, it did not determine whether the proposed construction would have violated them. The appellate court reversed and remanded, holding that the defect in the amendment rendered it voidable, not void, and it could no longer be challenged because the four-year statute of limitations contained in C.C.P. 343 had run.

Schelb v. Stein     Docket
190 Cal. App. 4th 1440 - 2nd Dist. (B213929)  12/17/10     Case complete 2/16/11

MARKETABLE RECORD TITLE ACT: In a previous divorce action, in order to equalize a division of community property, the husband was ordered to give the wife a note secured by a deed of trust on property awarded to the husband. In this case (many years later), the court held that under the Marketable Record Title Act, the deed of trust had expired. (Civil Code Section 882.020.) However, under Family Code Section 291, the underlying family law judgment does not expire until paid, so it is enforceable as an unsecured judgment.

Vuki v. Superior Court     Docket
189 Cal. App. 4th 791 - 4th Dist., Div. 3 (G043544)  10/29/10     Case complete 1/3/11

TRUSTEE'S SALES: Unlike section 2923.5 as construed by this court in Mabry v. Superior Court (2010) 185 Cal.App.4th 208, neither Section 2923.52 or Section 2923.53 provides any private right of action, even a very limited one as this court found in Mabry. Civil Code section 2923.52 imposes a 90-day delay in the normal foreclosure process. But Civil Code section 2923.53 allows for an exemption to that delay if lenders have loan modification programs that meet certain criteria. The only enforcement mechanism is that a violation is deemed to be a violation of lenders license laws. Section 2923.54 provides that a violation of Sections 2923.52 or 2923.53 does not invalidate a trustee's sale, and plaintiff also argued that a lender is not entitled to a bona fide purchaser protection. The court rejected that argument because any noncompliance is entirely a regulatory matter, and cannot be remedied in a private action.

Abers v. Rounsavell     Mod Opinion     Docket
189 Cal. App. 4th 348 - 4th Dist., Div. 3 (G040486)  10/18/10     Case complete 12/20/10

LEASES: Leases of residential condominium units required a re-calculation of rent after 30 years based on a percentage of the appraised value of the "leased land". The term "leased land" was defined to consist of the condominium unit and an undivided interest in the common area of Parcel 1, and did not include the recreational area (Parcel 2), which was leased to the Homeowners Association. The Court held that the language of the leases was clear. The appraisals were to be based only on the value of the lessees' interest in Parcel 1 and not on the value of the recreational parcel.

UNPUBLISHED: Residential Mortgage Capital v. Chicago Title Ins. Company     Docket
Cal.App. 1st Dist. (A125695)  9/20/10     Case complete 11/23/10

ESCROW: An escrow holder released loan documents to a mortgage broker at the broker's request in order to have the borrowers sign the documents at home. They were improperly backdated and the broker failed to provide duplicate copies of the notice of right to rescind. Due these discrepancies, the lender complied with the borrower's demand for a rescission of the loan, and filed this action against the escrow holder for amounts reimbursed to the borrower for finance charges and attorney's fees. The Court held that the escrow holder did not breach a duty to the lender because it properly followed the escrow instructions, and it is common for escrow to release documents to persons associated with the transaction in order for them to be signed elsewhere.

Starr v. Starr     Docket
189 Cal. App. 4th 277 - 2nd Dist. (B219539)  9/30/10     Case complete 12/16/10

COMMUNITY PROPERTY: In a divorce action the Court ordered the husband to convey title to himself and his former wife. Title had been taken in the husband's name and the wife executed a quitclaim deed. But Family Code Section 721 creates a presumption that a transaction that benefits one spouse was the result of undue influence. The husband failed to overcome this presumption where the evidence showed that the wife executed the deed in reliance on the husband's representation that he would subsequently add her to title. The husband was, nevertheless, entitled to reimbursement for his separate property contribution in purchasing the property.

Malkoskie v. Option One Mortgage Corp.     Docket
188 Cal. App. 4th 968 - 2nd Dist. (B221470)  9/23/10     Case complete 11/23/10

TRUSTEE'S SALES: After plaintiff stipulated to a judgment in an unlawful detainer action, she could not challenge the validity of the trustee's sale in a subsequent action because the subsequent action is barred by collateral estoppel. Because the action was barred, the court did not reach the question of the validity of the trustee's sale based on the substitution of trustee being recorded after trustee's sale proceedings had commenced and based on assignments of the deed of trust into the foreclosing beneficiary being recorded after the trustee's deed.

Lee v. Fidelity National Title Ins. Co.     Docket     Sup.Ct. Docket
188 Cal. App. 4th 583 - 1st Dist. (A124730)  9/16/10     Petition for review and depublication by Cal Supreme Ct. DENIED 12/1/10

TITLE INSURANCE:
1. The insureds could have reasonably expected that they were buying a title insurance policy on APN 22, and not just APN 9, where both the preliminary report and policy included a reference to APN 22, listed exclusions from coverage that were specific to APN 22, and attached an assessor's parcel map with an arrow pointing to both APN 9 and 22.
2. A preliminary report is merely an offer to issue a title policy, but an insured has the right to expect that the policy will be consistent with the terms of the offer.
3. There was a triable issue of fact as to whether a neighbor's construction of improvements on APN 22 was sufficient to commence the running of the statute of limitations, where the insureds testified that they did not know the precise location of APN 22 and assumed that the neighbors constructed the improvements on their own property.
4. There was a triable issue of fact as to whether Fidelity National Title Insurance Company acted as escrow holder or whether the escrow was conducted by its affiliate, Fidelity National Title Company (only the insurance company was named as a defendant).

Chicago Title Insurance Company v. AMZ Insurance Services     Docket     Sup.Ct. Docket
188 Cal. App. 4th 401 - 4th Dist., Div. 3 (G041188)  9/9/10     Petition for review and depublication by Cal Supreme Ct. DENIED 12/15/10

ESCROW: A document entitled "Evidence of Property Insurance" ("EOI") constitutes a binder under Insurance Code Section 382.5(a). In this case an EOI was effective to obligate the insurer to issue a homeowner's policy even though the escrow failed to send the premium check. In order to cancel the EOI the insured has to be given notice pursuant to Insurance Code Section 481.1, which the insurer did not do. The escrow holder paid the insured's loss and obtained an assignment of rights. The court held that the escrow holder did not act as a volunteer in paying the amount of the loss, and is entitled to be reimbursed by the insurance company under the doctrine of equitable subrogation.

Vanderkous v. Conley     Docket
188 Cal. App. 4th 111 - 1st Dist (A125352)  9/2/10     Case complete 11/3/10

QUIET TITLE: 1) In a quiet title action the court has equitable powers to award compensation as necessary to do complete justice, even though neither party's pleadings specifically requested compensation. 2) Realizing that the court was going to require plaintiff to compensate defendant in exchange for quieting title in plaintiff's favor, plaintiff dismissed the lawsuit. However, the dismissal was invalid because it was filed following trial after the case had been submitted to the court.

Purdum v. Holmes     Docket
187 Cal. App. 4th 916 - 2nd Dist. (B216493)  7/29/10     Case complete 10/22/10

NOTARIES: A notary was sued for notarizing a forged deed. He admitted that he knew the grantor had not signed the deed, but the lawsuit was filed more than six years after the deed was signed and notarized. The court held that the action was barred by the six-year limitation period in C.C.P. 338(f)(3) even though plaintiff did not discover the wrongful conduct until well within the six year period.

Perlas v. GMAC Mortgage     Docket
187 Cal. App. 4th 429 - 1st Dist. (A125212)  8/11/10     Case complete 10/10/10

DEEDS OF TRUST: Borrowers filed an action against a lender to set aside a deed of trust, setting forth numerous causes of action. Borrowers' loan application (apparently prepared by a loan broker) falsely inflated the borrowers' income. In the published portion of the opinion. The court held in favor of the lender, explaining that a lender is not in a fiduciary relationship with borrowers and owes them no duty of care in approving their loan. A lender's determination that the borrowers qualified for the loan is not a representation that they could afford the loan. One interesting issue in the unpublished portion of the opinion was the court's rejection of the borrowers' argument that naming MERS as nominee invalidated the deed of trust because, as borrower argued, the deed of trust was a contract with MERS and the note was a separate contract with the lender.

Soifer v. Chicago Title Company     Modification     Docket     Sup.Ct. Docket
187 Cal. App. 4th 365 - 2nd Dist. (B217956)  8/10/10     Petition for review by Cal Supreme Ct. DENIED 10/27/10

TITLE INSURANCE: A person cannot recover for errors in a title company's informal communications regarding the condition of title to property in the absence of a policy of title insurance or the purchase of an abstract of title. There are two ways in which an interested party can obtain title information upon which reliance may be placed: an abstract of title or a policy of title insurance. Having purchased neither, plaintiff cannot recover for title company's incorrect statement that a deed of trust in foreclosure was a first lien.

In re: Hastie (Weinkauf v. Florez)     Docket     Sup.Ct. Docket
186 Cal. App. 4th 1285 - 1st Dist. (A127069)  7/22/10     Petition for review by Cal Supreme Ct. filed late and DENIED 9/21/10

DEEDS: An administrator of decedent's estate sought to set aside two deeds on the basis that the grantees were the grandson and granddaughter of decedent's caregiver. Defendant did not dispute that the transfers violated Probate Code Section 21350, which prohibits conveyances to a fiduciary, including a caregiver, or the fiduciary's relatives, unless specified conditions are met. Instead, defendant asserted only that the 3-year statute of limitations had expired. The court held that the action was timely because there was no evidence indicating that the heirs had or should have had knowledge of the transfer, which would have commenced the running of the statute of limitations.

Bank of America v. Stonehaven Manor, LLC     Docket     Sup.Ct. Docket
186 Cal. App. 4th 719 - 3rd Dist. (C060089)  7/12/10     Petition for review by Cal Supreme Ct. DENIED 10/20/10

ATTACHMENT: The property of a guarantor of a debt--a debt which is secured by the real property of the principal debtor and also that of a joint and several co-guarantor--is subject to attachment where the guarantor has contractually waived the benefit of that security (i.e. waived the benefit of Civil Code Section 2849).

Jackson v. County of Amador     Docket
186 Cal. App. 4th 514 - 3rd Dist. (C060845)  7/7/10     Depublication request DENIED 9/15/10

RECORDING LAW: An owner of two rental houses sued the county recorder for recording a durable power of attorney and two quitclaim deeds that were fraudulently executed by the owner's brother. The superior court sustained the recorder's demurrer without leave to amend. The court of appeal affirmed, holding that the legal insufficiency of the power of attorney did not provide a basis for the recorder to refuse to record the power of attorney under Government Code Section 27201(a) and the recorder did not owe the owner a duty to determine whether the instruments were fraudulently executed because the instruments were notarized.

Luna v. Brownell     Docket
185 Cal. App. 4th 668 - 2nd Dist. (B212757)  6/11/10     Case complete 8/17/10

DEEDS: A deed transferring property to the trustee of a trust is not void as between the grantor and grantee merely because the trust had not been created at the time the deed was executed, if (1) the deed was executed in anticipation of the creation of the trust and (2) the trust is in fact created thereafter. The deed was deemed legally delivered when the Trust was established.

Mabry v. Superior Court     Docket     Sup.Ct. Docket
185 Cal. App. 4th 208 - 4th Dist., Div. 3 (G042911)  6/2/10     Petition for review by Cal Supreme Ct. DENIED 8/18/10

TRUSTEE'S SALES: The court answered, and provided thorough explanations for, a laundry list of questions regarding Civil Code Section 2923.5, which requires a lender to explore options for modifying a loan with a borrower prior to commencing foreclosure proceedings.
1. May section 2923.5 be enforced by a private right of action?  Yes.
2. Must a borrower tender the full amount of the mortgage indebtedness due as a prerequisite to bringing an action under section 2923.5?  No.
3. Is section 2923.5 preempted by federal law?  No.
4. What is the extent of a private right of action under section 2923.5?  It is limited to obtaining a postponement of a foreclosure to permit the lender to comply with section 2923.5.
5. Must the declaration required of the lender by section 2923.5, subdivision (b) be under penalty of perjury?  No.
6. Does a declaration in a notice of default that tracks the language of section 2923.5(b) comply with the statute, even though such language does not on its face delineate precisely which one of three categories applies to the particular case at hand?  Yes.
7. If a lender forecloses without complying with section 2923.5, does that noncompliance affect the title acquired by a third party purchaser at the foreclosure sale?  No.
8. Did the lender comply with section 2923.5?  Remanded to the trial court to determine which of the two sides is telling the truth.
9. Can section 2923.5 be enforced in a class action in this case?  Not under these facts, which are highly fact-specific.
10. Does section 2923.5 require a lender to rewrite or modify the loan? No.

612 South LLC v. Laconic Limited Partnership     Docket
184 Cal. App. 4th 1270 - Cal.App.4th Dist., Div. 1 (D056646)  5/25/10     Case complete 7/26/10

ASSESSMENT BOND FORECLOSURE:
1. Recordation of a Notice of Assessment under the Improvement Act of 1911 imparted constructive notice even though the notice did not name the owner of the subject property and was not indexed under the owner's name. There is no statutory requirement that the notice of assessment be indexed under the name of the property owner.
2. A Preliminary Report also gave constructive notice where it stated: "The lien of special tax for the following municipal improvement bond, which tax is collected with the county taxes. . ."
3. A property owner is not liable for a deficiency judgment after a bond foreclosure because a property owner does not have personal liability for either delinquent amounts due on the bond or for attorney fees incurred in prosecuting the action.

Tarlesson v. Broadway Foreclosure Investments     Docket
184 Cal. App. 4th 931 - 1st Dist. (A125445)  5/17/10     Case complete 7/20/10

HOMESTEADS: A judgment debtor is entitled to a homestead exemption where she continuously resided in property, even though at one point she conveyed title to her cousin in order to obtain financing and the cousin subsequently conveyed title back to the debtor. The amount of the exemption was $150,000 (later statutorily changed to $175,000) based on debtor's declaration that she was over 55 years old and earned less than $15,000 per year, because there was no conflicting evidence in the record.

UNPUBLISHED: MBK Celamonte v. Lawyers Title Insurance Corporation     Docket     Sup.Ct. Docket
Cal.App.4th Dist., Div. 3 (G041605)  4/28/10     Petition for review by Cal Supreme Ct. DENIED 7/21/10

TITLE INSURANCE / ENCUMBRANCES: A recorded authorization for a Mello Roos Assessment constitutes an "encumbrance" covered by a title policy, even where actual assessments are conditioned on the future development of the property.

Plaza Home Mortgage v. North American Title Company     Docket     Sup.Ct. Docket
184 Cal. App. 4th 130 - 4th Dist., Div. 1 (D054685)  4/27/10     Depublication request DENIED 8/11/10

ESCROW / LOAN FRAUD: The buyer obtained 100% financing and managed to walk away with cash ($54,000) at close of escrow. (Actually, the buyer's attorney-in-fact received the money.) The lender sued the title company that acted as escrow holder, asserting that it should have notified the lender when it received the instruction to send the payment to the buyer's attorney-in-fact after escrow had closed. The court reversed a grant of a motion for summary judgment in favor of the escrow, pointing out that its decision is narrow, and holding only that the trial court erred when it determined the escrow did not breach the closing instructions contract merely because escrow had closed. The case was remanded in order to determine whether the escrow breached the closing instructions contract and if so, whether that breach proximately caused the lender's damages.

Garcia v. World Savings     Docket     Sup.Ct. Docket
183 Cal. App. 4th 1031 - 2nd (B214822)  4/9/10     Petition for review and depublication by Cal Supreme Ct. DENIED 6/23/10

TRUSTEE'S SALES: A lender told plaintiffs/owners that it would postpone a trustee's sale by a week to give plaintiffs time to obtain another loan secured by other property in order to bring the subject loan current. Plaintiffs obtained a loan the following week, but the lender had conducted the trustee's sale on the scheduled date and the property was sold to a third party bidder. Plaintiffs dismissed causes of action pertaining to setting aside the sale and pursued causes of action for breach of contract, wrongful foreclosure and promissory estoppel. The court held that there was no consideration that would support the breach of contract claim because plaintiffs promised nothing more than was due under the original agreement. Plaintiffs also could not prove a cause of action for wrongful foreclosure because that cause of action requires that the borrower tender funds to pay off the loan prior to the trustee's sale. However, plaintiffs could recover based on promissory estoppel because procuring a high cost, high interest loan by using other property as security is sufficient to constitute detrimental reliance.

LEG Investments v. Boxler     Docket
183 Cal. App. 4th 484 - 3rd Dist. (C058743)  4/1/10     Certified for Partial Publication     Case complete 6/2/10

PARTITION: A right of first refusal in a tenancy in common agreement does not absolutely waive the right of partition. Instead, the right of first refusal merely modifies the right of partition to require the selling cotenant to first offer to sell to the nonselling cotenant before seeking partition. [Ed. note: I expect that the result would have been different if the right of partition had been specifically waived in the tenancy in common agreement.]

Steiner v. Thexton     Docket
48 Cal. 4th 411 - Cal. Supreme Court (S164928)  3/18/10

OPTIONS: A contract to sell real property where the buyer's performance was entirely conditioned on the buyer obtaining regulatory approval to subdivide the property is an option. Although plaintiffs' promise was initially illusory because no consideration was given at the outset, plaintiffs' part performance of their bargained-for promise to seek a parcel split cured the initially illusory nature of the promise and thereby constituted sufficient consideration to render the option irrevocable.

Grotenhuis v. County of Santa Barbara     Docket
182 Cal. App. 4th 1158 - 2nd Dist. (B212264)  3/15/10     Case complete 5/18/10

PROPERTY TAXES: Subject to certain conditions, a homeowner over the age of 55 may sell a principle residence, purchase a replacement dwelling of equal or lesser value in the same county, and transfer the property tax basis of the principal residence to the replacement dwelling. The court held that this favorable tax treatment is not available where title to both properties was held by an individual's wholly owned corporation. The court rejected plaintiffs' argument that the corporation was their alter ego because that concept is used to pierce the corporate veil of an opponent, and not to enable a person "to weave in and out of corporate status when it suits the business objective of the day."

Clear Lake Riviera Community Assn. v. Cramer     Docket
182 Cal.App.4th 459 - 1st Dist. (A122205)  2/26/10     Case complete 4/29/10

HOMEOWNER'S ASSOCIATIONS: Defendant homeowners were ordered to bring their newly built house into compliance with the homeowners association's guidelines where the house exceed the guidelines' height restriction by nine feet. Even though the cost to the defendants will be great, they built the house with knowledge of the restriction and their hardship will not be grossly disproportionate to the loss the neighbors would suffer if the violation were not abated, caused by loss in property values and loss of enjoyment of their properties caused by blocked views. The height restriction was contained in the associations guidelines and not in the CC&R's, and the association did not have records proving the official adoption of the guidelines. Nevertheless, the court held that proper adoption was inferred from the circumstantial evidence of long enforcement of the guidelines by the association.

Forsgren Associates v. Pacific Golf Community Development     Docket     Sup. Ct. Docket
182 Cal.App.4th 135 - 4th Dist., Div. 2 (E045940)  2/23/10     Petition for review by Cal Supreme Ct. DENIED 6/17/10

MECHANIC'S LIENS: 1. Owners of land are subject to mechanic's liens where they were aware of the work being done by the lien claimant and where they failed to record a notice of non-responsibility.
2. Civil Code Section 3128 provides that a mechanic's lien attaches to land on which the improvement is situated "together with a convenient space about the same or so much as may be required for the convenient use and occupation thereof". Accordingly, defendant's land adjacent to a golf course on which the lien claimant performed work is subject to a mechanic's lien, but only as to the limited portions where a tee box was located and where an irrigation system was installed.
3. The fact that adjacent property incidentally benefits from being adjacent to a golf course does not support extending a mechanic's lien to that property.
4. The owners of the adjacent property were liable for interest, but only as to their proportionate share of the amount of the entire mechanic's lien.

Steinhart v. County of Los Angeles      Docket
47 Cal.4th 1298 - Cal. Supreme Court (S158007)  2/4/10

PROPERTY TAXES: A “change in ownership”, requiring a property tax reassessment, occurs upon the death of a trust settlor who transferred property to a revocable trust, and which became irrevocable upon the settlor's death. The fact that one trust beneficiary was entitled to live in the property for her life, and the remaining beneficiaries received the property upon her death, did not alter the fact that a change in ownership of the entire title had occurred.

Kuish v. Smith     Docket
181 Cal.App.4th 1419 - 4th Dist., Div. 3 (G040743)  2/3/10     Case complete 4/12/10

CONTRACTS: 1. Defendants' retention of a $600,000 deposit designated as “non-refundable” constituted an invalid forfeiture because a) the contract did not contain a valid liquidated damages clause, and b) plaintiff re-sold the property for a higher price, so there were no out-of-pocket damages. 2. The deposit did not constitute additional consideration for extending the escrow because it was labeled “non-refundable” in the original contract.

Kendall v. Walker (Modification attached)     Docket
181 Cal.App.4th 584 - 1st Dist. (A105981)  12/30/09     Case complete 3/29/10

WATER RIGHTS: An owner of land adjoining a navigable waterway has rights in the foreshore adjacent to his property separate from that of the general public. The court held that the boundary in the waterway between adjacent parcels of land is not fixed by extending the boundary lines into the water in the direction of the last course ending at the shore line. Instead, it is fixed by a line drawn into the water perpendicular to the shore line. Accordingly, the court enjoined defendants from allowing their houseboat from being moored in a manner that crossed onto plaintiffs' side of that perpendicular boundary line.

Junkin v. Golden West Foreclosure Service     Docket
180 Cal.App.4th 1150 - 1st Dist. (A124374)  1/5/10     Case complete 3/12/10

USURY: The joint venture exception to the Usury Law, which has been developed by case law, provides that where the relationship between the parties is a bona fide joint venture or partnership, an advance by a joint venturer is an investment and not a loan, making the Usury Law inapplicable. The court applied the exception to a loan by one partner to the other because instead of looking at the loan in isolation, it looked at the entire transaction which it determined to be a joint venture. The case contains a good discussion of the various factors that should be weighed in determining whether the transaction is a bona fide joint venture. The presence or absence of any one factor is not, alone, determinative. The factors include whether or not: 1) there is an absolute obligation of repayment, 2) the investor may suffer a loss, 3) the investor has a right to participate in management, 4) the subject property was purchased from a third party and 5) the parties considered themselves to be partners.

Banc of America Leasing & Capital v. 3 Arch Trustee Services     Docket
180 Cal.App.4th 1090 - 4th Dist., Div. 3 (G041480)  12/11/09     Case complete 3/8/10

TRUSTEE'S SALES: A judgment lien creditor is not entitled to receive a notice of default, notice of trustee's sale or notice of surplus sale proceeds unless the creditor records a statutory request for notice. The trustee is required to disburse surplus proceeds only to persons who have provided the trustee with a proof of claim. The burden rests with the judgment creditor to keep a careful watch over the debtor, make requests for notice of default and sales, and to submit claims in the event of surplus sale proceeds.

Park 100 Investment Group v. Ryan     Docket
180 Cal.App.4th 795 - 2nd Dist. (B208189)  12/23/09     Case complete 2/26/10

LIS PENDENS: 1. A lis pendens may be filed against a dominant tenement when the litigation involves an easement dispute. Although title to the dominant tenement would not be directly affected if an easement right was shown to exist, the owner's right to possession clearly is affected

2.A recorded lis pendens is a privileged publication only if it identifies an action previously filed with a court of competent jurisdiction which affects the title or right of possession of real property. If the complaint does not allege a real property claim, or the alleged claim lacks evidentiary merit, the lis pendens, in addition to being subject to expungement, is not privileged.

Millennium Rock Mortgage v. T.D. Service Company     Modification     Docket
179 Cal.App.4th 804 - 3rd Dist. (C059875)  11/24/09     Case complete 1/26/10

TRUSTEE'S SALES: A trustee's sale auctioneer erroneously read from a script for a different foreclosure, although the correct street address was used. The auctioneer opened the bidding with the credit bid from the other foreclosure that was substantially less than the correct credit bid. The errors were discovered after the close of bidding but prior to the issuance of a trustee's deed. The court held that the errors constituted an "irregularity" sufficient to give the trustee the right to rescind the sale.

The court distinguished 6 Angels v. Stuart-Wright Mortgage, in which the court held that a beneficiary's negligent miscalculation of the amount of its credit bid was not sufficient to rescind the sale. In 6 Angels the error was totally extrinsic to the proper conduct of the sale itself. Here there was inherent inconsistency in the auctioneer's description of the property being offered for sale, creating a fatal ambiguity in determining which property was being auctioned.

Fidelity National Title Insurance Company v. Schroeder     Docket
179 Cal.App.4th 834 - 5th Dist. (F056339)  11/24/09     Case complete 1/25/10

JUDGMENTS: A judgment debtor transferred his 1/2 interest in real property to the other cotenant prior to the judgment creditor recording an abstract of judgment. The court held that if the trial court on remand finds that the transfer was intended to shield the debtor's property from creditors, then the transferee holds the debtor's 1/2 interest as a resulting trust for the benefit of the debtor, and the creditor's judgment lien will attach to that interest. The court also held that the transfer cannot be set aside under the Uniform Fraudulent Transfer Act because no recoverable value remained in the real property after deducting existing encumbrances and Gordon's homestead exemption.

The case contains a good explanation of the difference between a resulting ("intention enforcing") and constructive ("fraud-rectifying") trust. A resulting trust carries out the inferred intent of the parties; a constructive trust defeats or prevents the wrongful act of one of them.

Zhang v. Superior Court     Docket     Sup.Ct. Docket
Cal.App.4th Dist., Div. 2 (E047207) 10/29/09     Affirmed by Cal Supreme Ct. 8/1/13

INSURANCE / BAD FAITH: Fraudulent conduct by an insurer does not give rise to a private right of action under the Unfair Insurance Practices Act (Insurance Code section 790.03 et seq.), but it can give rise to a private cause of action under the Unfair Competition Law (Business and Professions Code section 17200 et seq.).

Presta v. Tepper     Docket
179 Cal.App.4th 909 - 4th Dist., Div. 3 (G040427)  10/28/09     Case complete 1/25/10

TRUSTS: An ordinary express trust is not an entity separate from its trustee, like a corporation is. Instead, a trust is merely a relationship by which one person or entity holds property for the benefit of some other person or entity. Consequently, where two men entered into partnership agreements as trustees of their trusts, the provision of the partnership agreement, which required that upon the death of a partner the partnership shall purchase his interest in the partnership, was triggered by the death of one of the two men.

Wells Fargo Bank v. Neilsen      Modification     Docket     Sup.Ct. Docket
178 Cal.App.4th 602 - 1st Dist. (A122626)  10/22/09 (Mod. filed 11/10/09)     Petition for review by Cal Supreme Ct. DENIED 2/10/10

CIRCUITY OF PRIORITY: The Court follows the rule in Bratcher v. Buckner, even though Bratcher involved a judgment lien and two deeds of trust and this case involves three deeds of trust. The situation is that A, B & C have liens on the subject property, and A then subordinates his lien to C's lien. The problem with this is that C appears to be senior to A, which is senior to B, which is senior to C, so that each lien is senior and junior to one of the other liens.

The Court held that the lien holders have the following priority: (1) C is paid up to the amount of A's lien, (2) if the amount of A's lien exceeds C's lien, A is paid the amount of his lien, less the amount paid so far to C, (3) B is then paid in full, (4) C is then paid any balance still owing to C, (5) A is then paid any balance still owing to A.

This is entirely fair because A loses priority as to the amount of C's lien, which conforms to the intent of the subordination agreement. B remains in the same position he would be in without the subordination agreement since his lien remains junior only to the amount of A's lien. C steps into A's shoes only up to the amount of A's lien.

NOTE: The odd thing about circuity of priority cases is that they result in surplus proceeds after a foreclosure sale being paid to senior lienholders. Normally, only junior lienholders and the foreclosed out owner are entitled to share in surplus proceeds, and the purchaser takes title subject to the senior liens.

Schmidli v. Pearce     Docket
178 Cal.App.4th 305 - 3rd Dist. (C058270)  10/13/09      Case complete 12/15/09

MARKETABLE RECORD TITLE ACT: This case was decided under the pre-2007 version of Civil Code Section 882.020, which provided that a deed of trust expires after 10 years if the maturity date is “ascertainable from the record”. The court held that this provision was not triggered by a Notice of Default, which set forth the maturity date and which was recorded prior to expiration of the 10-year period. NOTE: In 2007, C.C. Section 882.020 was amended to make it clear that the 10-year period applies only where the maturity date is shown in the deed of trust itself.

Nielsen v. Gibson     Docket
178 Cal.App.4th 318 - 3rd Dist. (C059291)  10/13/09     Case complete 12/15/09

ADVERSE POSSESSION: 1. The "open and notorious" element of adverse possession was satisfied where plaintiff possessed the subject property by actual possession under such circumstances as to constitute reasonable notice to the owner. Defendant was charged with constructive knowledge of plaintiff's possession, even though defendant was out of the country the entire time and did not have actual knowledge.

2. The 5-year adverse possession period is tolled under C.C.P. Section 328 for up to 20 years if the defendant is "under the age of majority or insane". In the unpublished portion of the opinion the court held that although the defendant had been ruled incompetent by a court in Ireland, there was insufficient evidence that defendant's condition met the legal definition of "insane".

Ricketts v. McCormack     Docket     Sup.Ct. Docket
177 Cal.App.4th 1324 - 2nd Dist. (B210123)  9/27/09     Petition for review by Cal Supreme Ct. DENIED 12/17/09

RECORDING LAW: Civil Code Section 2941(c) provides in part, "Within two business days from the day of receipt, if received in recordable form together with all required fees, the county recorder shall stamp and record the full reconveyance or certificate of discharge." In this class action lawsuit against the County recorder, the court held that indexing is a distinct function, separate from recording a document, and is not part of section 2941(c)'s stamp-and-record requirement.

The court distinguished indexing, stamping and recording:
Stamping: The "stamping" requirement of Section 2941(c) is satisfied when the Recorder endorses on a reconveyance the order of receipt, the day and time of receipt and the amount of fees paid.
Recording: The reconveyance is "recorded" once the Recorder has confirmed the document meets all recording requirements, created an entry for the document in the "Enterprise Recording Archive" system, calculated the required fees and confirmed payment of the correct amount and, finally, generated a lead sheet containing, among other things, a bar code, a permanent recording number and the words "Recorded/Filed in Official Records."
Indexing: Government Code Section 27324 requires all instruments "presented for recordation" to "have a title or titles indicating the kind or kinds of documents contained therein," and the recorder is "required to index only that title or titles captioned on the first page of a document.

Starlight Ridge South Homeowner's Assn. v. Hunter-Bloor     Docket
177 Cal.App.4th 440 - 4th Dist., Div. 2 (E046457)  8/14/09 (Pub. Order 9/3/09)     Case complete 10/19/09

CC&R's: Under Code Civ. Proc. Section 1859, where two provisions appear to cover the same matter, and are inconsistent, the more specific provision controls over the general provision. Here the provision of CC&R's requiring each homeowner to maintain a drainage ditch where it crossed the homeowners' properties was a specific provision that controlled over a general provision requiring the homeowner's association to maintain landscape maintenance areas.

First American Title Insurance Co. v. XWarehouse Lending Corp.     Docket
177 Cal.App.4th 106 - 1st Dist. (A119931)  8/28/09      Case complete 10/30/09

TITLE INSURANCE: A loan policy provides that "the owner of the indebtedness secured by the insured mortgage" becomes an insured under the loan policy. Normally, this means that an assignee becomes an insured. However, where the insured lender failed to disburse loan proceeds for the benefit of the named borrower, an indebtedness never existed, and the warehouse lender/assignee who disbursed money to the lender did not become an insured. The court pointed out that the policy insures against defects in the mortgage itself, but not against problems related to the underlying debt.

NOTE: In Footnote 8 the court distinguishes cases upholding the right of a named insured or its assignee to recover from a title insurer for a loss due to a forged note or forged mortgage because in those cases, and unlike this case, moneys had been actually disbursed or credited to the named borrower by either the lender or its assignee.

Wells Fargo v. D & M Cabinets     Docket
177 Cal.App.4th 59 - 3rd Dist. (C058486)  8/28/09     Case complete 10/28/09

JUDGMENTS: A judgment creditor, seeking to sell an occupied dwelling to collect on a money judgment, may not bypass the stringent requirements of C.C.P. Section 704.740 et seq. when the sale is conducted by a receiver appointed under C.C.P Section 708.620. The judgment creditor must comply with Section 704.740, regardless of whether the property is to be sold by a sheriff or a receiver.

Sequoia Park Associates v. County of Sonoma     Docket     Sup.Ct. Docket
176 Cal.App.4th 1270 - 1st Dist. (A120049)  8/21/09     Petition for review by Cal Supreme Ct. DENIED 12/2/09

PREEMPTION: A County ordinance professing to implement the state mobilehome conversion statutes was preempted for the following reasons: (1) Gov. Code Section 66427.5 expressly preempts the power of local authorities to inject other factors when considering an application to convert an existing mobilehome park from a rental to a resident-owner basis, (2) the ordinance is impliedly preempted because the Legislature has established a dominant role for the state in regulating mobilehomes, and has indicated its intent to forestall local intrusion into the particular terrain of mobilehome conversions and (3) the County's ordinance duplicates several features of state law, a redundancy that is an established litmus test for preemption.

Citizens for Planning Responsibly v. County of San Luis Obispo     Docket     Sup.Ct. Docket
176 Cal.App.4th 357 - 2nd Dist (B206957)  8/4/09     Petition for review by Cal Supreme Ct. DENIED 10/14/09

PREEMPTION: The court held that the State Aeronautics Act, which regulates the development and expansion of airports, did not preempt an initiative measure adopted by the voters because none of the following three factors necessary to establish preemption was present: (1) The Legislature may so completely occupy the field in a matter of statewide concern that all, or conflicting, local legislation is precluded, (2) the Legislature may delegate exclusive authority to a city council or board of supervisors to exercise a particular power over matters of statewide concern, or (3) the exercise of the initiative power would impermissibly interfere with an essential governmental function.

Delgado v. Interinsurance Exchange of the Auto Club of So. Cal.     Docket
47 Cal.4th 302 - Cal. Supreme Court (S155129)  8/3/09

INSURANCE / BAD FAITH: The case is not as relevant to title insurance as the lower court case, which held that an insurance company acted in bad faith as a matter of law where a potential for coverage was apparent from the face of the complaint. The Supreme Court reversed, basing its decision on the meaning of "accident" in a homeowner's policy, and holding that an insured's unreasonable belief in the need for self-defense does not turn the resulting intentional act of assault and battery into "an accident" within the policy's coverage clause. Therefore, the insurance company had no duty to defend its insured in the lawsuit brought against him by the injured party.

1538 Cahuenga Partners v. Turmeko Properties     Docket
176 Cal.App.4th 139 - 2nd Dist. (B209548)  7/31/09     Case complete 10/7/09

RECONVEYANCE: [This is actually a civil procedure case that it not of much interest to title insurance business, but it is included here because the underlying action sought to cancel a reconveyance.] The court ordered that a reconveyance of a deed of trust be cancelled pursuant to a settlement agreement. The main holding was that a trial court may enforce a settlement agreement against a party to the settlement that has interest in the subject matter of the action even if the party is not named in the action, where the non-party appears in court and consents to the settlement.

Lee v. Lee     Docket
175 Cal.App.4th 1553 - 5th Dist. (F056107)  7/29/09     Case complete 9/28/09

DEEDS / STATUTE OF FRAUDS:
1. The Statute of Frauds does not apply to an executed contract, and a deed that is executed by the grantor and delivered to the grantee is an executed contract. The court rejected defendants' argument that the deed did not reflect the terms of sale under a verbal agreement.
2. While the alteration of an undelivered deed renders the conveyance void, the alteration of a deed after it has been delivered to the grantee does not invalidate the instrument as to the grantee. The deed is void only as to the individuals who were added as grantees after delivery.

White v. Cridlebaugh     Docket
178 Cal.App.4th 506 - 5th Dist. (F053843)  7/29/09  (Mod. 10/20/09)     Case complete 12/21/09

MECHANIC'S LIENS: Under Business and Professions Code Section 7031, a property owner may recover all compensation paid to an unlicensed contractor, in addition to not being liable for unpaid amounts. Furthermore, this recovery may not be offset or reduced by the unlicensed contractor's claim for materials or other services.

Linthicum v. Butterfield     Docket     Sup.Ct. Docket
175 Cal.App.4th 259 - 2nd Dist. (B199645)  6/24/09     Petition for review by Cal Supreme Ct. DENIED 9/9/09

NOTE: This is a new opinion following a rehearing. The only significant changes from the original opinion filed 4/2/09 (modified 4/8/09) involve the issue of a C.C.P. 998 offer, which is not a significant title insurance or escrow issue.
EASEMENTS: The court quieted title to an "equitable easement" for access based on the doctrine of "balancing conveniences " or "relative hardship". Prohibiting the continued use of the roadway would cause catastrophic loss to the defendants and insignificant loss to the plaintiffs. However, the court remanded the case for the trial court to determine the width of the easement, which should be the minimal width necessary. The court reversed the judgment insofar as it awarded a utility easement to the defendants because they did not seek to quiet title to an easement for utilities, even though they denied the material allegations of that cause of action.

United Rentals Northwest v. United Lumber Products     Docket
174 Cal.App.4th 1479 - 5th Dist. (F055855)  6/18/09     Case complete 8/18/09

MECHANIC'S LIENS: Under Civil Code Section 3106, a "work of improvement" includes the demolition and/or removal of buildings. The court held that lumber drying kilns are "buildings" so the contractor who dismantled and removed them was entitled to a mechanic's lien.

People v. Shetty     Docket     Sup.Ct. Docket
174 Cal.App.4th 1488 - 2nd Dist. (B205061)  6/18/09     Petition for review by Cal Supreme Ct. DENIED 9/30/09

HOME EQUITY SALES CONTRACT ACT: This case is not significant from a title insurance standpoint, but it is interesting because it is an example of a successful prosecution under the Home Equity Sales Contract Act (Civil Code Section 1695 et seq.).

Strauss v. Horton     Modification     Docket
46 Cal.4th 364 - Cal. Supreme Court (S168047)  5/26/09

SAME SEX MARRIAGE: The California Supreme Court upheld Proposition 8, which amended the California State Constitution to provide that: "Only marriage between a man and a woman is valid or recognized in California." Proposition 8 thereby overrode portions of the ruling of In re Marriage Cases, which allowed same-sex marriages. But the Court upheld the marriages that were performed in the brief time same-sex marriage was legal from 5:00pm on June 16, 2008 (when In re Marriage Cases was final) through November 4, 2008 (the day before Proposition 8 became effective restricting the definition of marriage to a man and a woman).

In re Marriage of Lund     Docket
174 Cal.App.4th 40 - 4th Dist., Div. 3 (G040863)  5/21/09     Case complete 7/27/09

COMMUNITY PROPERTY: An agreement accomplished a transmutation of separate property to community property even though it stated that the transfer was "for estate planning purposes". A transmutation either occurs for all purposes or it doesn't occur at all.

St. Marie v. Riverside County Regional Park, etc.     Docket
46 Cal.4th 282 - Cal. Supreme Court (S159319)  5/14/09

OPEN SPACE DEDICATION: Property granted to a Regional Park District is not "actually dedicated" under Public Resources Code Section 5540 for open space purposes until the district's Board of Directors adopts a resolution dedicating the property for park or open space purposes. Therefore, until the Board of Directors adopts such a resolution, the property may be sold by the District without voter or legislative approval.

Manhattan Loft v. Mercury Liquors     Docket     Sup.Ct. Docket
173 Cal.App.4th 1040 - 2nd Dist. (B211070)  5/6/09     Petition for review by Cal Supreme Ct. DENIED 8/12/09

LIS PENDENS: An arbitration proceeding is not an "action" that supports the recordation of a notice of pendency of action. The proper procedure is for a party to an arbitration agreement to file an action in court to support the recording of a lis pendens, and simultaneously file an application to stay the litigation pending arbitration.

Murphy v. Burch     Docket
46 Cal.4th 157 - Cal. Supreme Court (S159489)  4/27/09

EASEMENT BY NECESSITY: This case contains a good discussion of the law of easements by necessity, which the court held did not apply in this case to provide access to plaintiff's property. This means plaintiff's property is completely landlocked because the parties had already stipulated that a prescriptive easement could not be established.

An easement by necessity arises by operation of law when 1) there is a strict necessity as when a property is landlocked and 2) the dominant and servient tenements were under the same ownership at the time of the conveyance giving rise to the necessity. The second requirement, while not categorically barred when the federal government is the common grantor, requires a high burden of proof to show 1) the intent of Congress to establish the easement under federal statutes authorizing the patent and 2) the government's lack of power to condemn the easement. Normally, a reservation of an easement in favor of the government would not be necessary because the government can obtain the easement by condemnation.

The court pointed out that there is a distinction between an implied grant and implied reservation, and favorably quotes a treatise that observes: "an easement of necessity may be created against the government, but the government agency cannot establish an easement by necessity over land it has conveyed because its power of eminent domain removes the strict necessity required for the creation of an easement by necessity."

Abernathy Valley, Inc. v. County of Solano     Docket
173 Cal.App.4th 42 - 1st Dist. (A121817)  4/17/09     Case complete 6/22/09

SUBDIVISION MAP ACT: This case contains a very good history of California's Subdivision Map Act statutes. The court held that parcels shown on a 1909 map recorded pursuant to the 1907 subdivision map law are not entitled to recognition under the Subdivision Map Act's grandfather clause (Government Code Section 66499.30) because the 1907 act did not regulate the "design and improvement of subdivisions". The court also held that a local agency may deny an application for a certificate of compliance that seeks a determination that a particular subdivision lot complies with the Act, where the effect of issuing a certificate would be to effectively subdivide the property without complying with the Act.

Linthicum v. Butterfield     Modification     Docket     Sup.Ct. Docket
172 Cal.App.4th 1112 - 2nd Dist. (B199645)  4/2/09
SEE NEW OPINION FILED 6/24/09
EASEMENTS: The court quieted title to an "equitable easement" for access based on the doctrine of "balancing conveniences " or "relative hardship". Prohibiting the continued use of the roadway would cause catastrophic loss to the defendants and insignificant loss to the plaintiffs. However, the court remanded the case for the trial court to determine the width of the easement, which should be the minimal width necessary. The court reversed the judgment insofar as it awarded a utility easement to the defendants because they did not seek to quiet title to an easement for utilities, even though they denied the material allegations of that cause of action.
McAvoy v. Hilbert     Docket
172 Cal.App.4th 707 - 4th Dist., Div 1 (D052802)  3/24/09     Case complete 5/27/09

ARBITRATION: C.C.P. Section 1298 requires that an arbitration provision in a real estate contract be accompanied by a statutory notice and that the parties indicate their assent by placing their initials on an adjacent space or line. The court held that a listing agreement that is part of a larger transaction for the sale of both a business and real estate is still subject to Section 1298, and refused to enforce an arbitration clause that did not comply with that statute.

Peak-Las Positas Partners v. Bollag     Modification     Docket
172 Cal.App.4th 101 - 2nd Dist. (B205091)  3/16/09     Case complete 5/27/09

ESCROW: Amended escrow instructions provided for extending the escrow upon mutual consent which "shall not be unreasonably withheld or delayed". The court held that substantial evidence supported the trial court's determination that the seller's refusal to extend escrow was unreasonable. The court pointed out the rule that equity abhors a forfeiture and that plaintiff had paid a non-refundable deposit of $465,000 and spent $5 million in project costs to obtain a lot line adjustment that was necessary in order for the property to be sold.

Alfaro v. Community Housing Improvement System & Planning Assn     Modification     Docket     Sup.Ct. Docket
171 Cal.App.4th 1356 6th Dist. (H031127)  2/19/09     Petition for review by Cal Supreme Ct. DENIED 5/13/09

CC&R's: The court upheld the validity of recorded CC&R's containing an affordable housing restriction that required property to remain affordable to buyers with low to moderate income. The court reached several conclusions:
1. Constructive notice of recorded CC&R's is imparted even if they are not referenced in a subsequent deed,
2. CC&R's may describe an entire tract, and do not need to describe individual lots in the tract,
3. An affordable housing restriction is a reasonable restraint on alienation even if it is of indefinite duration,
4. Defendants had a duty as sellers to disclose the existence of the CC&R's. Such disclosure was made if plaintiffs were given, prior to close of escrow, preliminary reports that disclosed the CC&R's.
5. The fact that a victim had constructive notice of a matter from public records is no defense to fraud. The existence of such public records may be relevant to whether the victim's reliance was justifiable, but it is not, by itself, conclusive.
6. In the absence of a claim that defendants somehow prevented plaintiffs from reading the preliminary reports or deeds, or misled them about their contents, plaintiffs cannot blame defendants for their own neglect in reading the reports or deeds. Therefore, the date of discovery of alleged fraud for failing to disclose the affordable housing restriction would be the date plaintiffs received their preliminary reports or if they did not receive a preliminary report, the date they received their deeds.

Kwok v. Transnation Title Insurance Company     Docket     Sup.Ct. Docket
170 Cal.App.4th 1562 - 2nd Dist. (B207421)  2/10/09     Petition for review by Cal Supreme Ct. DENIED 4/29/09

TITLE INSURANCE: Plaintiffs did not succeed as insureds "by operation of law" under the terms of the title insurance policy after transfer of the property from a wholly owned limited liability company, of which appellants were the only members, to appellants as trustees of a revocable family trust. This case highlights the importance of obtaining a 107.9 endorsement, which adds the grantee as an additional insured under the policy.

Pro Value Properties v. Quality Loan Service Corp.     Docket
170 Cal.App.4th 579 - 2nd Dist. (B204853)  1/23/09     Case complete 3/27/09

TRUSTEE'S SALES: A Trustee's Deed was void because the trustee failed to record a substitution of trustee. The purchaser at the sale was entitled to a return of the money paid plus interest. The interest rate is the prejudgment interest rate of seven percent set forth in Cal. Const., Art. XV, Section 1. A trustee's obligations to a purchaser are based on statute and not on a contract. Therefore, Civil Code Section 3289 does not apply, since it only applies to a breach of a contract that does not stipulate an interest rate.

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