California Court of Appeals, Fourth District, First Division
DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee, etc., Plaintiff, Cross-defendant and Respondent,
ALAN PYLE et al., Defendants, Cross-complainants and Appellants.
from a judgment of the Superior Court of Riverside County No.
PSC1400290, James T. Latting and Randall D. White, Judges.
Hennelly & Grossfeld and Ronald K. Giller for Defendants,
Cross-complainants and Appellants.
Ibrahim & Berg, John M. Sorich, Bryant Delgadillo and
Mariel Gerlt-Ferraro for Plaintiff, Cross-defendant and
OC Interior Services, LLC v. Nationstar Mortgage,
LLC (2017) 7 Cal.App.5th 1318 (review den. May 10, 2017)
(OC Interior) another panel of this court concluded
that a void judgment does not pass title free of the lien
purportedly cancelled by the void judgment; rather, "a
void judgment in the chain of title has the effect of
nullifying a subsequent transfer, including a transfer to a
purported bona fide purchaser." (Id. at p.
1335.) In this case, the parties seek to avoid a similar
result by arguing that a void default judgment essentially
granted quiet title relief. We reject this argument because
the void default judgment did not quiet title to the
AND PROCEDURAL BACKGROUND
Loan and Lender's Acquisition of the Property
Denise Saluto recorded a grant deed to real property located
in Rancho Mirage, California (the Property). In 2005 Saluto
obtained a $517, 000 loan on the Property secured by a deed
of trust (DOT). The DOT identified Saluto as the borrower and
Long Beach Mortgage Company (LBMC) as the lender, beneficiary
and trustee. LBMC later merged with Washington Mutual Bank
(WaMu), which then became the beneficiary of the loan and
DOT, as successor in interest to LBMC. In early 2007 Saluto
defaulted on the loan.
Deutsche Bank National Trust Company, as trustee for Long
Beach Mortgage Loan Trust 2005-WL3 (Deutsche Bank) acquired
the Property in July 2007 at a trustee's sale for
approximately $510, 000, becoming the beneficiary of the loan
and DOT. In August 2007 Deutsche Bank recorded its
trustee's deed upon sale (the trustee's deed).
Bank sought to gain possession of the Property through an
unlawful detainer action, but Saluto filed for bankruptcy
protection. On September 25, 2008, JPMorgan Chase Bank, N.A.
(JPMorgan), acquired certain assets of WaMu from the Federal
Deposit Insurance Corporation, by and through a purchase and
assumption agreement, including any interest WaMu had in the
February 2009 Saluto, acting in propria persona, sued
Deutsche Bank and WaMu Bank, as successor to LBMC, to cancel,
set aside and vacate the trustee's deed and cancel the
DOT. Saluto alleged that she was the lawful owner of the
Property free and clear of the DOT and sought to enjoin
Deutsche Bank and WaMu from asserting any ownership or other
legal rights or interest in the Property. Saluto did not
allege a quiet title claim.
December 15, 2009, the trial court entered a default judgment
in favor of Saluto canceling and setting aside the
trustee's deed and DOT, and enjoining Deutsche Bank and
WAMu from asserting any interest in the Property. In March
2010 Saluto recorded the default judgment. That same month,
JPMorgan learned of the default judgment when Saluto sought
to refinance the Property.
2010 Deutsche Bank and JPMorgan (as WaMu's successer in
interest) filed a motion to set aside the default judgment
under Code of Civil Procedure section 473, subdivision
(b). The trial court denied the motion as untimely. In
December 2010 Deutsche Bank and JPMorgan filed a second
motion to set aside the default judgment under section 473.5.
The trial court granted the second motion, but this ruling
was reversed on appeal. (Saluto v. Deutsche Bank National
Trust Company (Apr. 24, 2012, E053221) [nonpub. opn.]
(Saluto I).) On July 27, 2012, the decision
reinstating the default judgment became final based on the
issuance of a remittitur.
November 2013 Deutsche Bank and JPMorgan filed a third motion
to set aside the default judgment based on extrinsic fraud,
alleging that the proofs of service had been falsified and
they were never served with the summons and complaint. After
holding an evidentiary hearing, the trial court granted the
motion finding that Saluto had filed false proofs of service
and Deutsche Bank and JPMorgan had never been served with the
summons and complaint in the Saluto action. On December 3,
2013, the order setting aside the default judgment was
Fraud and Sale of the Property
Deutsche Bank purchased the property in July 2007, Saluto
recorded a number of documents purporting to convey an
interest in the property. Saluto recorded additional
documents after Deutsche Bank purchased the property. While
the Saluto action was pending, Saluto recorded more documents
and sold the property to defendants. JPMorgan, its
predecessors, or its agent did not authorize any of these
documents. We summarize these interim events here.
2006 a grant deed was recorded conveying title to the
Property from Saluto to SNJ Properties, LLC (SNJ). In
November 2006 another grant deed was recorded, wherein title
to the Property was conveyed from SNJ to Atistar Mortgage
Solutions, LLC (Atistar). In February 2007 Atistar conveyed
title to the Property back to SNJ.
2007 an "Affidavit & Notice of Dissolution of Trust
Deed and Merger of Trust Deed into Title of Trust Deed
Beneficiary" (Affidavit) was recorded, stating that SNJ
transferred its interest in the Property to LBMC and WaMu.
The Affidavit purported to dissolve the DOT, without Deutsche
Bank's authorization. That same day, another grant deed
was recorded, whereby SNJ purported to convey title to LBMC
August 2007 Deutsche Bank recorded its trustee's deed. In
July 2010 a recorded grant deed purported to convey title to
the Property from Saluto to Lillie LTD (Lille). In September
2010 a grant deed was recorded ...