Bailey v. Citibank, N.A., F079311

In 2005 Lifson and Black executed and recorded a deed of trust; a note default and bankruptcy filings followed, but no foreclosure sale occurred then.
Plaintiffs entered and openly occupied the property June 28, 2013, paying taxes and making improvements, and claimed ownership by adverse possession.
The 2005 deed of trust was assigned to Citibank (successor beneficiary); a trustee’s sale occurred April 2, 2018, and a trustee’s deed was recorded April 12, 2018.
Plaintiffs filed a quiet title complaint July 16, 2018; Citibank was served in October 2018, failed to answer, and default was entered November 14, 2018; an evidentiary prove-up hearing followed and the trial court entered judgment quieting title in plaintiffs’ favor (Feb 2019).
Citibank’s counsel (Katz) was retained/assigned January 10, 2019 (after default); Citibank moved under Code Civ. Proc. § 473(b) with an attorney affidavit to set aside default and judgment; the trial court granted the motion and set aside the default and judgment.
On appeal this court (1) reversed the § 473(b) relief (attorney was not the cause of the default) and (2) on Citibank’s cross-appeal reversed the quiet-title judgment on the merits and instructed the trial court to enter judgment for Citibank.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether mandatory relief under CCP § 473(b) was available where counsel was retained after default	Katz’s affidavit of fault justified mandatory relief because counsel’s neglect deprived Citibank of the chance to present at the quiet-title prove-up	Mandatory relief unavailable because the attorney was not retained until after default and thus could not have caused the failure to respond	Reversed: § 473(b) relief unavailable as a matter of law where attorney was not the cause of the default (court follows Cisneros)
Whether plaintiffs proved adverse possession against Citibank (beneficiary of a preexisting recorded deed of trust)	Plaintiffs had open, notorious, continuous possession since 2013, paid taxes, and met the five‑year requirements	Plaintiffs’ possession began after the 2005 deed of trust; a beneficiary/mortgagee lacks possessory rights until foreclosure, trustee’s deed relates back to 2005, and adverse possession cannot defeat the prior lien	Judgment reversed for plaintiffs: possession was not hostile/adverse to Citibank for five years and any title obtained would be subject to the 2005 deed of trust; remand to enter judgment for Citibank

Cisneros v. Vueve, 37 Cal.App.4th 906 (1995) (mandatory §473(b) relief does not apply where attorney was not the cause of the default)
Harbour Vista, LLC v. HSBC Mortgage Servs., 201 Cal.App.4th 1496 (2011) (in quiet-title actions the court must require proof of title and allow a defaulting defendant to present evidence at the prove-up)
Nickell v. Matlock, 206 Cal.App.4th 934 (2012) (same principle regarding quiet-title prove-up and participation of defaulting defendant)
Laubisch v. Roberdo, 43 Cal.2d 702 (1954) (possession is not hostile to a mortgagee/mortgagor relationship until foreclosure and delivery of deed)
Comstock v. Finn, 13 Cal.App.2d 151 (1936) (mortgagee lacks right of possession absent special agreement; adverse possession does not run against mortgagee prior to foreclosure)
Dover Mobile Estates v. Fiber Form Products, Inc., 220 Cal.App.3d 1494 (1990) (title conveyed by trustee’s deed on foreclosure relates back to the date the deed of trust was executed)
Sevier v. Locher, 222 Cal.App.3d 1082 (1990) (transfer of title after the prescriptive period has begun does not interrupt the prescriptive/adverse-possession period)