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Harbour Vista, LLC v. Hsbc Mortgage Services Inc

December 19, 2011


Appeal from a judgment of the Superior Court of Orange County, Francisco F. Firmat, Judge. Reversed and remanded. (Super. Ct. No. 30-2009-00313957)

The opinion of the court was delivered by: Bedsworth, Acting P. J.




This appeal requires us to interpret the statute governing judgments in quiet title actions. The statutory language is about as straightforward as such language ever gets: "The court shall not enter judgment by default. . . ." Entry of a default judgment against appellant HSBC Mortgage Services, Inc., and in favor of respondent Harbour Vista, LLC, in a quiet title action was error.

We therefore reverse. After examining the relevant statutes, we conclude the court did not have the authority to enter a default judgment in this situation. In addition, we conclude the statute obligated the court to hold an evidentiary hearing in open court before it adjudicated title, a hearing in which both HSBC and Harbour Vista could participate. We therefore remand the case to the trial court to conduct this hearing.


Harbour Vista has alleged it is the lessee of a ground lease of land on which a Huntington Beach condominium complex has been built. This case concerns one of the condos in the complex. The owner, Julie Nugent, borrowed the money to buy the unit from Fieldstone Mortgage Company. Nugent secured her Fieldstone loan with a deed of trust on the condo. She is also alleged to have entered into a sublease with Harbour Vista for the right to occupy the land on which the unit sits.

Nugent did not pay her rent pursuant to the sublease, and Harbour Vista obtained an unlawful detainer judgment, removing her from the condo. Nugent also defaulted on her mortgage with Fieldstone, and Fieldstone foreclosed on the unit. HSBC bought the condo at the foreclosure sale in December 2009.

In October 2009, Harbour Vista filed a quiet title action, alleging a right to the unit itself. HSBC was among the defendants named in the quiet title action, and it received the pleadings, including a lis pendens on the unit, no later than November.

HSBC failed to answer or otherwise respond to the complaint, and Harbour Vista took its default in January 2010.*fn2 HSBC appeared in April 2010 at the case management conference; by that time, Harbour Vista had lodged its prove-up documents for a default judgment. At the case management conference, counsel for HSBC informed the court that HSBC intended to move to set aside the default and asked to have the motion heard before the court ruled on the default judgment. The court proposed continuing the case management conference for 60 to 90 days. Counsel for Harbour Vista objected to continuing the case for that long and suggested that if HSBC did not file its set-aside motion within the next two weeks, the court should go ahead with the prove-up.

At this point, the court said, "Sounds like it was a race to whether we enter judgment before you file your motion to set aside and get it heard. Sounds simple. Just do it the old-fashioned way. Let's race to it. All right?" Upon being asked whether it had set a date for the prove-up, the court replied, "No. I think it's just submitted as chambers work so that the judge could do it on that same day it's received, the judge could do it in a week or two thereafter. It's typically handled as chambers work after it's received downstairs. So I would suggest that if you're going to file a motion to vacate, that you file it like yesterday."

The race was a 10-yard dash. On the day of the case management conference, April 28, 2010, the court entered the default judgment for quiet title in favor of Harbour Vista. HSBC subsequently filed its motion to set aside the default and vacate the default judgment. The court denied this motion and a later motion for reconsideration. This appeal followed.


HSBC has identified several issues on appeal. One of them, we believe, disposes of the entire matter. Contrary to the controlling statute, Code of Civil Procedure*fn3 section 764.010, and without holding an evidentiary hearing, one in which both Harbour Vista and HSBC were entitled to participate, the court entered a default judgment. We believe that was error.

I. Default Judgment in Quiet Title Actions

We review the interpretation and application of a statute to undisputed facts de novo. (Groth Bros. Oldsmobile, Inc. v. Gallagher (2002) 97 Cal.App.4th 60, 65.) We look to the words of the statute to determine legislative intent. If the language is clear and unambiguous, we follow the plain meaning. If it is not, we may consider other interpretive aids. (California Teachers Assn. v. San Diego Community College Dist. (1981) 28 Cal.3d 692, 698.) We do not consider statutes in isolation, but rather in light of the statutory scheme to which they belong. (Lewis v. Superior Court (1999) 19 Cal.4th 1232, 1245.)

Sections 760.010 et seq. set out the process for quieting title in property. The statute that concerns us here, section 764.010, provides, "The court shall examine into and determine the plaintiff's title against the claims of all the defendants. The 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, other than claims the validity of which is admitted by the plaintiff in the complaint. The court shall render judgment in accordance with the evidence and the law." (Italics added.)

The Legislature has not left anything to the imagination about whether a trial court can enter a default judgment in a quiet title action. "The court shall not enter judgment by default" is unequivocal. Moreover, unlike the ordinary default prove-up, in which a defendant has no right to participate (see, e.g., Garcia v. Politis (2011) 192 Cal.App.4th 1474, 1489), before entering any judgment on a quiet title cause of action the court must "in all cases" "hear such evidence as may be offered respecting the claims of any of the defendants." Although the statute does not spell out who offers this evidence, among the three possible candidates - the plaintiff, the court, or the defendant - the only sensible alternative is the defendant. (See People v. Jenkins (1995) 10 Cal.4th 234, 246 [statutes interpreted to avoid absurd consequences].)

Yeung v. Soos (2004) 119 Cal.App.4th 576 (Yeung) has been the leading case in quiet title default judgments since it was decided. In Yeung, the plaintiffs filed a complaint to quiet title, which the defendant did not answer. After a default judgment was entered against him, the defendant moved to set it aside on the grounds that it was a void judgment. The motion was denied, and he appealed from the judgment as being void on its face. (Id. at p. 579.)*fn4

The appellate court held that the judgment was not void on its face, but was merely erroneous, because the court had not held the evidentiary hearing mandated by section 764.010. (Yeung, supra, 119 Cal.App.4th at p. 582.) Defendant's motion to set aside the judgment was untimely, and the judgment was affirmed. (Id. at p. 583.)

After acknowledging that no prior cases had construed section 764.010 (Yeung, supra, 119 Cal.App.4th at pp. 580-581), the court put its own gloss on the statutory language: "[S]section 764.010 is frequently referred to as a prohibition against default judgments in quiet title actions. [Citation.] 'However, the provision against default judgments [in quiet title actions] appears to be a misnomer; i.e., it seems only to require a higher standard of evidence at the "prove-up" hearing [].' (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2003) ¶ 5:271, p. 5-59.)[*fn5 ] Competent evidence is required at the hearing of a quiet title action after default. [Citation.] . . . [S]section 764.010 simply provides that a plaintiff does not have a right to entry of judgment in his or her favor as a matter of course following entry of the defendant's default in a quiet title action.[*fn6 ] [Citation.] The statute does not preclude entry of a defendant's default. [Citations.] In fact, the statute was expressly intended to be consistent with . . . section 583 [sic: 585], subdivision (c), which concerns default judgments where service is by publication. [Citation.]" (Yeung, supra, 119 Cal.App.4th at pp. 580-581.)

We reluctantly disagree with Yeung and the practice guide. To us, the prohibition against default judgments in quiet title actions appears absolute. If the Legislature had wanted merely to increase the standard of proof for a quiet title default judgment, it would have constructed this statute differently; it would have addressed the standard of proof. Forbidding ...

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