64 Cal.App.5th 507
Cal. Ct. App.2021Background
- In 1997 Paterra conveyed her condominium to a third party under a reverse-mortgage type arrangement; title later passed through multiple parties and, on November 1, 2006, a $480,000 loan from Clarion was recorded as a deed of trust showing MERS as beneficiary/nominee.
- Paterra filed a 2016 quiet title action; Clarion was served with the first amended complaint and defaulted, but Paterra later filed a second amended complaint that was not served on Clarion.
- The court tried Paterra’s quiet title claim only against Hansen; the court and Paterra’s counsel repeatedly stated the trial did not address the Clarion Deed of Trust, and the court denied MERS’s intervention.
- Despite that, the court signed a February 2018 Amended Judgment that included a paragraph finding in Paterra’s favor against Clarion.
- MERS assigned the Clarion deed to ABS in March 2018; ABS attempted foreclosure, Paterra sued ABS/MERS relying on the February 2018 judgment, and ABS sought to vacate the prior judgment as void.
- The trial court denied ABS’s motion; on appeal the Court of Appeal reversed, holding the judgment was void as to Clarion and directing the court to strike the paragraph adjudicating Clarion.
Issues
| Issue | Paterra's Argument | ABS / Opposing Argument | Held |
|---|---|---|---|
| Standing to move to vacate the February 2018 judgment | ABS lacked standing as a nonparty (and its claimed assignment was unproven). | ABS was an aggrieved party (assignee or one injured by enforcement) and may attack a void judgment. | ABS had standing: a stranger aggrieved by a void judgment may move to vacate; ABS was aggrieved when foreclosure was enjoined. |
| Whether failure to serve Clarion with the second amended complaint voided the judgment | Second amended complaint made no substantive changes; service not required. | The second amended complaint materially changed the theory against Clarion, so failure to serve reopened the default and any judgment was void. | The second amended complaint materially altered the claim vs. Clarion; failure to serve Clarion rendered the judgment void as to Clarion. |
| Whether § 764.010 required an open-court evidentiary hearing as to Clarion before adjudicating title | The trial on Hansen satisfied the evidentiary requirement and judgment was proper. | § 764.010 forbids default adjudication of quiet-title claims without an open-court evidentiary hearing on each defaulting defendant. | The court acknowledged it did not hear evidence on Clarion; under § 764.010 a judgment against a defaulting lender without such a hearing is void. |
| Whether failure to name MERS rendered the judgment void as to Clarion | No mandatory duty to name MERS; § 764.030 preserves nonparties with recorded prior interests. | MERS was a known, recorded beneficiary/nominee with authority under the deed of trust and therefore a necessary party; failing to join MERS undermines an all-world quiet-title adjudication. | Because MERS was a known, adverse party tied to the deed of trust, Paterra was required to name MERS; failing to do so made the judgment void as to Clarion. |
Key Cases Cited
- Harbour Vista, LLC v. HSBC Mortgage Servs., 201 Cal.App.4th 1496 (Cal. Ct. App. 2011) (§ 764.010 precludes default judgments in quiet-title actions; an open-court evidentiary hearing is required).
- Nickell v. Matlock, 206 Cal.App.4th 934 (Cal. Ct. App. 2012) (quiet-title defaults require a hearing; plaintiff must prove case against defaulting defendant).
- Sass v. Cohen, 10 Cal.5th 861 (Cal. 2020) (an amended complaint that materially alters a defendant’s exposure reopens default and requires service).
- Airs Aromatics, LLC v. CBL Data Recovery Techs., Inc., 23 Cal.App.5th 1013 (Cal. Ct. App. 2018) (de novo review appropriate for determining whether a default judgment is void).
- Carlson v. Eassa, 54 Cal.App.4th 684 (Cal. Ct. App. 1997) (a court’s grant of relief beyond its statutory power renders the judgment void).
- Abelleira v. District Court of Appeal, 17 Cal.2d 280 (Cal. 1941) (defining lack of jurisdiction and limits on court power).
- Mitchell v. Automobile Owners Indem. Underwriters, 19 Cal.2d 1 (Cal. 1941) (a stranger may attack a void judgment that injuriously affects his rights).