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Dfp Ltd v. Sacramento Regional County Sanitation District

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT (Yolo)


August 30, 2011

DFP LTD, PLAINTIFF AND APPELLANT,
v.
SACRAMENTO REGIONAL COUNTY SANITATION DISTRICT, DEFENDANT AND RESPONDENT.

(Super. Ct. No. CV10452)

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

DFP v. Sacramento Reg. County Sanitation Dist. CA3

NOT TO BE PUBLISHED

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

Plaintiff DFP LTD sued defendant Sacramento Regional County Sanitation District, seeking to establish that defendant owns an easement over plaintiff's real property, rather than a fee interest. The trial court sustained a demurrer without leave to amend, finding plaintiff was collaterally estopped in this quiet title action by a nunc pro tunc order made by a different judge in a condemnation action filed by defendant against plaintiff's predecessor in interest. The nunc pro tunc order classified the portion of the property at issue as a fee interest, rather than an easement. It did not, however, address plaintiff's claimed status as a bona fide purchaser.

Plaintiff contends on appeal that the trial court erred when it determined that plaintiff's status as a bona fide purchaser was already decided in the condemnation proceeding. We agree.

As we will explain, defendant bore the burden to establish all the elements of collateral estoppel as the party seeking to use a prior order for its preclusive effect, including that the relevant issue was actually determined in the prior proceeding. As we discuss post, defendant has not demonstrated that the bona fide purchaser issue was actually determined in the prior case. Therefore, the trial court erred in sustaining the demurrer based on collateral estoppel. Because defendant presents no other ground to sustain the judgment, we shall reverse with directions to the trial court to overrule the demurrer.

FACTUAL AND PROCEDURAL BACKGROUND

I

Introduction

When plaintiff purchased the property, an extant condemnation order referred to the condemned interest as an easement. After plaintiff's purchase, defendant moved to correct a scrivener's error nunc pro tunc, to show the condemned interest was, in fact, a fee interest. Plaintiff opposed the motion, claiming it was a bona fide purchaser, and that granting the motion would necessitate this separate quiet title action.

Defendant argued that the bona fide purchaser issue was "completely irrelevant" to the motion, but also argued plaintiff was not a bona fide purchaser, because plaintiff had notice that a fee interest was being condemned. The nunc pro tunc motion was granted. However, the nunc pro tunc order, prepared by defendant's counsel and signed by the trial court, did not even reference, much less resolve, the bona fide purchaser issue.*fn1 As predicted, this action to quiet title followed.

II

The Complaint

The complaint alleges plaintiff owns property in West Sacramento by deed from Mike Fuller Motorsports, Inc. (Fuller) recorded on March 27, 2008. In 2004, defendant filed a condemnation action against the property. (Sacto. Regional Co. Sanitation Dist. v. Nor-Cal Beverage Co., Inc., et al., Yolo Co. Super. Ct. No. ED04-0403.) A "final" order of condemnation against Fuller was recorded on January 4, 2008. Annexed documents described the condemned interest as an easement. In January 2008, during escrow, the title company reported the condemned interest was an easement and defendant's attorney confirmed this fact. An amended "final" order, still reflecting an easement, was recorded on February 22, 2008. Plaintiff then bought the property. Defendant later obtained a nunc pro tunc order changing "easement" to "fee title."*fn2

Based on these facts, the complaint sought to quiet title and obtain declaratory relief to confirm that defendant had an easement, not a fee interest, over plaintiff's property, on the theory that plaintiff was a bona fide purchaser.

III

The Demurrer

Defendant demurred, contending plaintiff was collaterally estopped to assert its bona fide purchaser claim by the nunc pro tunc order in the condemnation action. Defendant requested judicial notice of documents pertaining to the nunc pro tunc order. The trial court granted judicial notice of these documents, which we now briefly summarize.

A. The Nunc Pro Tunc Pleadings and Order

In relevant part, the nunc pro tunc motion stated defendant entered into a stipulation for judgment with Fuller, providing for condemnation of a fee interest. However, the recorded documents mistakenly referred to an easement. The motion sought to make the amended final order of condemnation consistent with the stipulation for judgment.

Plaintiff opposed the nunc pro tunc motion, arguing that it was a bona fide purchaser of the property, had conducted a reasonable title investigation, and took title without notice of the claimed fee interest. Plaintiff also asserted that granting the motion would lead to a quiet title action to resolve the bona fide purchaser issue.

Defendant's reply argued that the bona fide purchaser issue was "completely irrelevant" to the nunc pro tunc motion. Defendant also pointed to documents in the condemnation action in an effort to show that, as a matter of law, plaintiff had notice that defendant was condemning a fee interest and therefore plaintiff could not be a bona fide purchaser. In particular, defendant argued plaintiff had notice of the amended final order of condemnation, which referenced the stipulation for judgment, and reviewing that stipulation would have revealed the inconsistency.*fn3 Defendant also argued a lis pendens had been filed in the condemnation action.*fn4

The nunc pro tunc order, prepared by defendant's counsel, directs that certain documents be corrected to show defendant acquired a fee interest in the property, rather than an easement. It does not mention the bona fide purchaser issue, but does recite that the trial court "considered all papers filed in support of, and in opposition to" the nunc pro tunc motion.

B. Opposition and Reply to Demurrer

Plaintiff's opposition to the demurrer argued in relevant part that the issue of plaintiff's bona fide purchaser status was not decided in the condemnation action "because [plaintiff's] complaint is the result of [defendant's] actions after [defendant] obtained the order of condemnation. Only after [defendant] obtained an interest in the property by eminent domain did the issue of [plaintiff's] status as bona fide purchaser arise." Plaintiff conceded it had opposed the nunc pro tunc motion, but asserted the trial court, in granting it, had not made "any findings or decision on the bona fide purchaser issue."

Defendant's reply in relevant part argued that the trial court, in granting the nunc pro tunc order, actually decided the bona fide purchaser issue because the order recites that the court considered all the arguments pertaining to the motion.

C. Ruling on Demurrer

The trial court first ruled that whether defendant acquired a fee interest had been determined in the condemnation action. The trial court then ruled in pertinent part as follows: "The issue of whether Plaintiff was a bona fide purchaser with no notice of the [defendant's] fee interest in the property was also decided in the eminent domain proceeding. In its opposition to the [nunc pro tunc] motion . . . Plaintiff admitted that it had notice of the eminent domain proceeding and the Final Condemnation Order prior to purchasing the property. However, Plaintiff argued that because it is a bona fide purchaser of the real property at issue with no notice of the claimed fee interest, [defendant's] motion to clarify the ambiguity in the final order of condemnation nunc pro tunc should be denied[.] The Court, having considered all arguments in support of [and] in opposition to the motion, granted the motion to clarify the ambiguity in the final order of condemnation nunc pro tunc."

The trial court sustained the demurrer without leave to amend, and plaintiff timely appealed.

DISCUSSION

I

Standard of Review

"'We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] We also consider matters which may be judicially noticed.' [Citation.] Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action." (Blank v. Kirwin (1985) 39 Cal.3d 311, 318.)

II

Collateral Estoppel

Defendant does not dispute that the complaint itself pleads a live controversy about title, based on plaintiff's claim that it conducted a reasonable title investigation before escrow closed, and therefore was a bona fide purchaser.*fn5

To establish that collateral estoppel bars plaintiff's action, defendant must show the bona fide purchaser issue was determined in the condemnation action, in connection with the nunc pro tunc motion. The California Supreme Court has described the elements of collateral estoppel as follows: "First, the issue sought to be precluded from relitigation must be identical to that decided in the former proceeding. Second, this issue must have been actually litigated in the former proceeding. Third, it must have been necessarily decided in the former proceeding. Fourth, the decision in the former proceeding must be final and on the merits. Finally, the party against whom preclusion is sought must be the same as, or in privity with, the party to the former proceeding." (Lucido v. Superior Court (1990) 51 Cal.3d 335, 341 (Lucido).)

The phrase "necessarily decided" can be misleading. In the collateral estoppel context, this phrase imports that a point "'entirely unnecessary'" to the prior judgment will not have preclusive effect. (Lucido, supra, 51 Cal.3d at p. 342.) But if an issue had to be decided for the court to render the judgment it gave, that is, was necessarily but tacitly decided, the judgment will have preclusive effect.

"That only is deemed to have been adjudged in a former judgment which appears upon its face to have been so adjudged, or which was actually and necessarily included therein or necessary thereto." (Code Civ. Proc., § 1911.) "Where, as is usual, more than one issue was involved, the burden of proof is on the party asserting the defense of collateral estoppel to show that this issue was adjudicated." (7 Witkin, Cal. Procedure (5th ed. 2008) Judgment, § 415(2), p. 1057 (Witkin); see Santa Clara Valley Transportation Authority v. Rea (2006) 140 Cal.App.4th 1303, 1311-1312 (Santa Clara).) "In carrying this burden of proof the party may resort to the judgment, the record of the entire proceedings, and extrinsic evidence." (Casad v. Qualls (1977) 70 Cal.App.3d 921, 927.)

"If 'anything is left to conjecture as to what was necessarily involved and decided' there can be no collateral estoppel [citations]; '"'Every estoppel must be certain to every intent, and not to be taken by argument or inference'"' [citation]. . . . '[I]t must appear . . . that the precise question was raised and determined in the former suit. If there be any uncertainty on this head in the record, the whole subject matter of the action will be at large and open to new contention[.]'" (Eichler Homes, Inc. v. Anderson (1970) 9 Cal.App.3d 224, 234.)

The nunc pro tunc order--drafted by defendant's counsel--does not state that the trial court ruled on the bona fide purchaser issue. The fact that the nunc pro tunc order recited that the trial court "considered" all of the arguments tendered does not mean the trial court adjudicated all of the issues.*fn6 Therefore, defendant can prevail if and only if the bona fide purchaser issue had to have been decided for the trial court to have granted the nunc pro tunc motion.

A nunc pro tunc order can be made to correct a clerical mistake about a property interest. (See Zisk v. City of Roseville (1976) 56 Cal.App.3d 41, 47 [attorney made a mistake in drafting judgment]; Meyer v. Porath (1952) 113 Cal.App.2d 808, 811 [judgment misdescribed easement].) But generally, a nunc pro tunc order does not address issues that arise after the original order or judgment was made. "The court can only make the record show that something was actually done at a previous time. A nunc pro tunc order cannot declare that something was done that was not done." (7 Witkin, supra, § 61, p. 596; see id., supra, § 67, p. 603.)

Plaintiff argues from this general rule that the trial court could not have adjudicated the bona fide purchaser issue in deciding the nunc pro tunc motion. We disagree.

Although plaintiff correctly states that certain events underlying disputed facts relevant to the issues to be litigated, such as the reasonableness of plaintiff's title search, occurred after the order that defendant sought to have corrected was entered, that observation is not dispositive. It is settled that a trial court may decline to make a nunc pro tunc order based on issues arising after the original judgment or order "where the result would be unconscionable." (7 Witkin, supra, § 61, p. 596; see Young v. Gardner-Denver Co. (1966) 244 Cal.App.2d 915, 919.) In particular, a trial court can decline to reform a mistake if the correction will prejudice a bona fide purchaser. (See Shupe v. Nelson (1967) 254 Cal.App.2d 693, 698-699; Sieger v. Standard Oil Co. (1957) 155 Cal.App.2d 649, 655-656 [if Sieger were a bona fide purchaser "there could be no reformation affecting his rights"]; United States v. Blaylock (N.D. Cal. 1958) 159 F.Supp. 874, 876-877 [because Blaylock was not a bona fide purchaser, reformation to correct land description was proper], aff'd. sub nom. Blaylock v. United States (9th Cir. 1959) 270 F.2d 809; Annot., Reformation--Intervening Rights (1961) 79 A.L.R.2d 1180.)

However, although correcting a deed may prejudice a bona fide purchaser in some cases, it does not necessarily do so in all cases. "A suit to reform a deed on the ground of mistake does not necessarily or impliedly involve title to the land and the judgment is not conclusive in a subsequent action as to title." (2 Freeman on Judgments (5th ed. 1925) The Judgment as Estoppel, § 689, pp. 1456-1457, italics added; see Prewitt v. Wilborn (1919) 184 Ky. 638, 650-653 [212 S.W. 442, 449-450] [refusal to reform deed due to mistake did not adjudicate title based on adverse possession, it merely held deed was accurate].)

On this record, the trial court in the condemnation action might well have declined to adjudicate the bona fide purchaser issue. After all, plaintiff asserted it could file a quiet title action regardless of how the trial court ruled, and defendant asserted the bona fide purchaser issue was "completely irrelevant" to the nunc pro tunc motion. Given these assertions, the trial court may well have chosen to relegate the parties to this separate action where the bona fide purchaser issue could be fully litigated, rather than resolve the issue in a law and motion proceeding.

Because it is not clear that the trial court actually determined the bona fide purchaser issue, defendant did not carry its burden to establish that the bona fide purchaser issue was actually determined in the condemnation action. (See Santa Clara, supra, 140 Cal.App.4th at pp. 1311-1312.) Therefore, defendant has not established a defense of collateral estoppel.

Defendant further argues public policy supports collateral estoppel here. This appears to be a defensive claim in response to some of plaintiff's arguments. A public policy analysis may be undertaken to show that, despite compliance with the traditional elements, some reason exists to deny application of collateral estoppel. (See Murphy, supra, 164 Cal.App.4th at p. 404; Mooney v. Caspari (2006) 138 Cal.App.4th 704, 717-718.) But defendant cites no authority for the view that "public policy" can support collateral estoppel where its traditional elements are not shown; instead, defendant's argument assumes it has demonstrated that the bona fide purchaser issue was actually determined in the prior action, a point we have rejected.

Defendant correctly asserts that a demurrer may be upheld on a different theory than that adopted by the trial court. (Muraoka v. Budget Rent-A-Car, Inc. (1984) 160 Cal.App.3d 107, 120.) But defendant's brief does not present any other theory to support the judgment, and in particular does not assert that facts judicially noticeable show plaintiff's title inquiry was not reasonable.*fn7

Because collateral estoppel was the sole ground for sustaining the demurrer, and defendant has not demonstrated that any other ground supports the judgment, we must reverse the judgment of dismissal with directions to overrule the demurrer.*fn8

DISPOSITION

The judgment is reversed with directions to the trial court to overrule the demurrer. Defendant shall pay plaintiff's costs on appeal. (See Cal. Rules of Court, rule 8.278(a)(2).)

We concur: BLEASE , Acting P. J. NICHOLSON , J.


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