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Fidelity National Title Insurance Co. v. Schroeder

November 24, 2009

FIDELITY NATIONAL TITLE INSURANCE COMPANY, PLAINTIFF AND APPELLANT,
v.
GORDON SCHROEDER ET AL., DEFENDANTS AND RESPONDENTS.



APPEAL from a judgment of the Superior Court of Fresno County. Donald R. Franson, Jr., Judge. (Super. Ct. No. 06CECG04139).

The opinion of the court was delivered by: Kane, J.

CERTIFIED FOR PUBLICATION

OPINION

On learning that plaintiff Fidelity National Title Insurance Company (Fidelity) was about to file an abstract of judgment as a lien against his real property, defendant Gordon Schroeder (Gordon) deeded his interest in a Fresno home that he co-owned with defendant Toni Richardson, aka Toni Schroeder (Toni), over to Toni. The trial court found that Gordon intended to defraud Fidelity, but the transfer was not set aside under the Uniform Fraudulent Transfer Act (UFTA; Civ. Code § 3439 et seq.) because no recoverable value remained in the real property after deducting existing encumbrances and Gordon's homestead exemption. The trial court also rejected Fidelity's other causes of action, including that of resulting trust. Fidelity appeals, contending the trial court failed to correctly apply the law when it denied relief under the UFTA and the resulting trust cause of action. We agree with the trial court that Fidelity was not entitled to relief under the UFTA, but disagree with its conclusion that Fidelity could not maintain a resulting trust cause of action. Accordingly, we reverse and remand for the trial court to determine, under the facts and circumstances of this case, whether Toni holds Gordon's one-half interest in the Fresno property as a resulting trust for the benefit of Gordon. If the trial court so finds, Fidelity's judgment lien will attach to Gordon's equitable interest, effective on the date Fidelity recorded its abstract of judgment.

FACTS AND PROCEDURAL HISTORY

Gordon failed to pay court-ordered spousal support and his former wife, Elizabeth Schroeder (Elizabeth), obtained a judgment against him in the amount of $73,298. In 1996, the judgment was duly recorded in Fresno County. Years later, Gordon and Toni purchased a home on North Brunswick Avenue in the City of Fresno, which home became their residence (the Fresno property). The vesting deed to the Fresno property placed title in both of their names, as joint tenants, and it also stated they were "husband and wife," even though they were not legally married.*fn1

In 2002, Gordon and Toni refinanced the loan on their Fresno property. Fidelity was the title insurance company on behalf of the new lender, Long Beach Mortgage Company, in connection with the loan refinance. Fidelity failed to discover or disclose the existence of Elizabeth's prior judgment lien against Gordon's interest in the property, and consequently Fidelity became obligated under the title insurance policy to pay off the judgment lien. In May of 2004, Fidelity paid $73,298 to Elizabeth, and obtained an assignment of all rights under Elizabeth's judgment and lien. Thereafter, in early 2005, Fidelity inadvertently released the judgment lien, leaving it as holder of an unsecured judgment against Gordon.

Fidelity filed its original complaint against Gordon and Toni on December 14, 2006, alleging causes of action for unjust enrichment, money paid, and equitable subrogation. Gordon and Toni answered the complaint on February 20, 2007. In June of 2007, Fidelity filed its motion for summary judgment. In opposition to the motion, Gordon and Toni disclosed for the first time that they were not legally married. Since Fidelity had premised its summary judgment motion partly on Gordon's and Toni's status as husband and wife, on August 31, 2007, Fidelity's counsel agreed to withdraw its motion for summary judgment and, instead, informed opposing counsel it would attempt to secure a new judgment lien on the Fresno property.

A few days later, on September 3, 2007, Gordon and Toni executed a grant deed conveying the property from "Gordon Schroeder & Toni Richardson" to "Toni Richardson" for no consideration. The grant deed was recorded on September 4, 2007. Fidelity's abstract of judgment was recorded on October 10, 2007.

On December 10, 2007, Fidelity filed its first amended complaint asserting the following causes of action:

(1) Declaratory Relief, to obtain a judicial declaration that Gordon and Toni were putative spouses and that Fidelity was entitled to collect its judgment from both Gordon's separate property and Toni's quasi-community property;

(2) Fraudulent Conveyance, pursuant to the UFTA, seeking to have the September 3, 2007, grant deed to Toni set aside as a fraud upon Fidelity's rights as a creditor;

(3) Constructive Trust, against Toni, seeking a determination that based on fraud or other wrongdoing, she holds the Fresno property as a constructive trustee for Fidelity; and

(4) Resulting Trust, against Toni, to obtain a ruling that the September 3, 2007, grant deed was merely to shield Gordon's ownership interest from creditors, and that Gordon's and Toni's true intention was she would hold legal title in trust for Gordon while he retained his equitable interest in the Fresno property. Under ...


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