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Salazar v. Thomas

California Court of Appeals, Fifth District

May 1, 2015

JAIME SALAZAR et al., Plaintiffs, Cross-defendants and Appellants,
v.
JACK THOMAS et al., Defendants, Cross-complainants and Respondents.

Order Filed Date: 05/28/15

CERTIFIED FOR PARTIAL PUBLICATION [*]

APPEAL from a judgment of the Superior Court of Kern County. Lorna H. Brumfield, Judge.

Klein, DeNatale, Goldner, Cooper, Rosenlieb & Kimball, Catherine E. Bennett, David J. Cooper; Wendel, Rosen, Black & Dean, Charles A. Hansen, Kevin R. Brodehl; Law Office of Thomas C. Fallgatter and Thomas C. Fallgatter for Plaintiffs, Cross-defendants and Appellants.

Anderson, McPharlin & Conners, Michael S. Robinson and D. Damon Willens for Defendants, Cross-complainants and Respondents.

ORDER MODIFYING OPINION AND DENYING REHEARINGORDER MODIFYING OPINION AND DENYING REHEARING

THE COURT:

It is ordered that the following modification be made to the published portion of the opinion filed herein on May 1, 2015:

On page 16 at the end of footnote 14 add the following sentences:

This assumption covers many of the specific facts that defendants’ petition for rehearing contends are “material” to this appeal. Moreover, defendants’ view of materiality is based on a legally erroneous view of the term “disturb” that focuses on the subjective impact of the notices of default on plaintiffs (i.e., whether it is emotionally troubling) and overlooks the need for a connection between the disturbance and the landowner’s current right to possession.

There is no change in the judgment.

Respondents’ petition for rehearing is denied.

OPINION

FRANSON, J.

This appeal involves the application of the statute of limitations to a quiet title action that attempts to have a deed of trust declared void as a forgery. The plaintiffs are record owners in possession of the property. One of their sons was most likely involved in the forging and recording of the challenged deed of trust and related promissory note.

The defendant beneficiaries under the deed of trust moved for summary judgment, asserting the affirmative defenses of the statute of limitations, waiver of the forgery claim, unclean hands, ratification, and laches. The trial court granted summary judgment on the three-year limitations period in Code of Civil Procedure section 338, subdivision (d), [1] but did not address the other affirmative defenses. The court concluded that the notices of default sent by lender to the plaintiffs in 2005 triggered the statute of limitations and the limitations period had expired before the quiet title action was filed in January 2012.

On appeal, the plaintiffs rely on their status as owners of record in possession of the property and “the rule that the statute of limitations does not bar an action to quiet title by an owner in undisturbed possession of the land ….” (Mayer v. L&B Real Estate (2008) 43 Cal.4th 1231, 1238 (Mayer).) The plaintiffs argue their possession was not disturbed by the delivery of notices of default under a forged, and therefore void, deed of trust. On this issue of first impression, we conclude that the notices of default under a void deed of trust provided notice of a cloud on the plaintiffs’ title, but did not dispute or disturb the plaintiffs’ possession of the property. Consequently, the statute of limitations does not bar their quiet title action.

As to the beneficiaries’ other affirmative defenses of waiver, unclean hands, ratification, and laches, their separate statements do not set forth all of the facts material to those defenses. For example, the fact of prejudice or detriment is material to the defenses of unclean hands and laches and the separate statements did not identify how the beneficiaries were prejudiced by not being informed about the forgeries until 2006.

We therefore reverse the judgment and the order awarding attorney fees.

FACTS

Plaintiff Jamie Salazar was born in Mexico in 1945. He attended school through the second grade, speaks little English, reads hardly any English, and cannot write English. Plaintiff Alisia Salazar was born in California in 1949 and attended school through the second grade. She understands very little English and does not speak, read or write English. Plaintiffs were married in 1964. Since about 1990, plaintiffs have made a living by operating a food truck.

In 1992, plaintiffs purchased the commercial real property that is the subject of this action, located on East Brundage Lane in Bakersfield (Brundage Property). Plaintiffs’ declarations state that since purchasing the Brundage Property they “have had a store there, a restaurant and other similar businesses.” For most of the time, all of the businesses occupying the Brundage Property were run by their children, who did not pay rent. Plaintiffs also had other tenants who paid them rent.

On January 7, 2005, a deed of trust and absolute assignment of rents, signed on December 17, 2004, was recorded with the Kern County Recorder’s Office as document #0205004541 (deed of trust). The deed of trust listed two parcels of real estate as collateral-the Brundage Property and another parcel located on California Avenue in Bakersfield (California Avenue Property). The debt secured by the deed of trust was described as a promissory note dated December 13, 2004, in the principal amount of $350, 000.[2] The proceeds of the promissory note were for the purchase of the California Avenue Property.

The deed of trust stated defendant Hope Trust Deed Company, Inc., a California corporation doing business as HOPE 4 LOANS (Hope, Inc.), was the trustee and listed as beneficiaries defendants Ann Howard (15% interest), J. D. Heib (11% interest), Mary Burleigh (6% interest), and Hope, Inc. (68% interest). Hope, Inc. subsequently assigned portions of its interest in the loan to other individuals and trusts. These individuals and trustees of the trust, along with the loan servicer, constitute the remaining defendants in this lawsuit.[3]

The motions for summary judgment that are the subject of this appeal were filed by two groups of defendants. Jeffrey Dwayne “J.D.” Heib, Walter Okon and Hope, Inc. constituted the “Hope Defendants.” Jack Thomas, Maria Thomas, Bret M. Powell, Carlos E. Zozula, Maria A. Zozula, Beverly Barnhart, Ann Howard, Mary Burleigh and related trusts constituted the “Thomas Defendants.”[4]

Both the deed of trust and the note purport to have been made by plaintiffs. However, plaintiffs alleged that the signatures on the note and deed of trust were forged and were not placed on the deed of trust at their direction. Mr. Salazar believes that their son, Jamie Salazar, Jr. (Junior), forged their names on the documents.

On March 30, 2005, a notice of default and election to sell under deed of trust was recorded. It stated that past due payments and expenses totaling $10, 851.98 were due as of March 29, 2005, and payment of this amount was necessary to bring the $350, 000 promissory note into good standing. The notices of default were mailed to plaintiffs.

Because plaintiffs did not speak or read English, their youngest daughter, Marina Salazar (Marina), would go through their mail and identify the mail that was in English. Marina would open and look at that mail.

In 2005, when Marina opened mail containing copies of the notices of default, she called her brother Zeke Salazar (Zeke) and asked him if he knew anything about a mortgage or default on the Brundage Property. Zeke told her he did not know anything and suggested she call Junior. Junior told Marina that it was his business and he would take care of it. Marina’s declaration states that, acting on the advice of Zeke, she did not show or tell plaintiffs about the notices of default at that time.

After additional notices of default were received, Zeke told Marina to talk with their father. Marina’s declaration states she believes this occurred in late 2005 and, a short time later, her father asked her to contact the people sending the notices. Accordingly, Marina started calling the loan servicer, PLM, in late 2005. From her first call to PLM until sometime in 2011, Marina spoke regularly with different people at PLM about the mortgage.

Marina’s declaration states that sometime in 2006 or 2007, she told someone at PLM that her parents had not signed the mortgage on the Brundage Property and that someone had forged their signatures. A short time later, perhaps the same day, Marina received a phone call from a man who identified himself as Heib. Marina repeated to him that her parents had not signed any mortgage on the Brundage Property and that their signatures must have been forged. In response, Heib said something like, “Well that is interesting, ” thanked her for talking to him, and ended the telephone conversation.

When Junior disappeared in 2009, Mr. Salazar began to make the payments on the loan. He would bring Marina money and she would deposit it into her bank account, purchase a cashier’s check and sent the check to PLM. Marina’s declaration states these payments by her father began in mid-2009 and, after a few payments, PLM sent another notice of default.

Marina’s declaration states that she and Heib had discussions about the latest default and they “agreed to an arrangement where my father would pay some amount immediately and would pay the regular monthly payment every month, and in addition, would pay an extra amount later.” Shortly after that discussion, PLM sent a forbearance agreement to Marina. She signed her parents’ names on the forbearance agreement and sent it to PLM in October 2009.

The forbearance agreement identified plaintiffs as the “borrower” and included provisions (1) setting forth a payment schedule; (2) stating the borrower released all claims against defendants; and (3) representing that the borrower had no claims, actions or offsets relating to the loan documents, the secured obligation or the deed of trust. The forbearance agreement also stated that, prior to signing the agreement, the borrower had been advised to take it to an independent attorney and had been given an opportunity to do so.

Subsequently, Mr. Salazar made payments in accordance with the schedule of payments set forth in the forbearance agreement. Later, Marina signed plaintiffs’ names to two extensions of the forbearance agreement.

The forbearance agreement and extensions were prepared by PLM at the direction of Hope, Inc. Hope, Inc. asserts that it rescinded the defaults and reinstated the loan based on its receipt of the signed forbearance agreement and the payments made pursuant to that agreement.

Payments continued to be made on the loan as of the date of defendants’ motion for summary judgment.

PROCEEDINGS

On January 9, 2012, plaintiffs filed a verified complaint. The operative pleading in this case is their second amended complaint (SAC), which alleges causes of action for (1) quiet title, (2) declaratory relief, (3) relief on the ground of mistake, (4) cancellation of deed of trust, and (5) injunctive relief. The SAC challenges the validity of the deed of trust, alleging plaintiffs’ signatures on the note and deed of trust were forged and those signatures were not placed on the deed of trust at their direction. Plaintiffs also alleged the deed of trust was a cloud on their title to the Brundage Property.

The Hope Defendants and the Thomas Defendants filed answers and then cross-complained against plaintiffs and Junior. The third affirmative defense in both answers asserted that “every purported cause of action in the Second Amended Complaint is barred by the applicable statute of limitations, including, but not limited to, Code of Civil Procedure [sections] 318, 319, 320, 321, 325 and 338.”[5]

In April 2013, the Hope Defendants and the Thomas Defendants filed motions for summary judgment. The motions were based on five affirmative defenses: (1) the three-year statute of limitations in subdivision (d) of section 338, (2) waiver, (3) unclean hands, (4) ratification, and (5) laches.

Defendants’ separate statements repeated the same 70 paragraphs of material facts for each of the affirmative defenses.[6]

Plaintiffs filed oppositions to both motions accompanied by supporting evidence and a separate document containing 19 written objections to the evidence presented by defendants. Defendants’ reply papers included 24 objections to the evidence submitted by plaintiffs.

In June 2013, at the hearing on the motions, the trial court announced its rulings on the objections and then heard arguments from counsel. The court also granted defendants’ request for judicial notice of several recorded documents and documents filed with the court.

In July 2013, the trial court filed orders granting the motions for summary judgment. Judgments in favor of the defendants were later entered.

Plaintiffs appealed the judgments.

Attorney Fees Award and Appeal

After the judgments were entered, defendants filed motions for attorney fees as authorized by contract and by Civil Code section 1717. Plaintiffs opposed the motions.

In October 2013, the trial court awarded attorney fees to the Hope Defendants and the Thomas Defendants in the amount of $110, 753.32 and $156, 685.00, respectively. Plaintiffs appealed the awards of attorney fees.

In February 2014, pursuant to the stipulation of the parties, this court consolidated the appeal from the judgment with the appeal of the award of attorney fees.

DISCUSSION

I. MOTIONS FOR SUMMARY JUDGMENT[*]

A. Triable Issues of Material Fact

A motion for summary judgment “shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” (§ 437c, subd. (c).) A moving party is entitled to judgment as a matter of law when it establishes by admissible evidence that the “action has no merit.” (Id., subd. (a).)

Generally, a defendant moving for summary judgment meets this burden by presenting evidence demonstrating that one or more elements of the cause of action cannot be established or that there is a complete defense to the action. (§ 437c, subds. (o), (p)(2); Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 849-850, 853-854 (Aguilar).) Once a defendant makes this showing, the burden shifts to the plaintiff to show a triable issue of material fact exists as to that cause of action or defense. (§ 437c, subd. (p)(2); see Aguilar, supra, at p. 850.) There is a triable issue of fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof. (Aguilar, supra, at p. 845.)

B. Standard of Review

Appellate courts independently review an order granting summary judgment. (Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 767 (Saelzler); Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 334 (Guz).) In performing this independent review, appellate courts apply the same three-step analysis as the trial court. (Brantley v. Pisaro (1996) 42 Cal.App.4th 1591, 1602 (Brantley).) First, the court identifies the issues framed by the pleadings. Second, the court determines whether the moving party has established facts justifying judgment in its favor. Finally, in most cases, if the moving ...


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