Salazar v. Thomas
236 Cal. App. 4th 467
| Cal. Ct. App. | 2015Background
- Jaime and Alisia Salazar (owners in possession) purchased commercial property in 1992; their children largely ran businesses there. Plaintiffs have limited English and did not read notices themselves; daughter Marina opened some mail.
- A deed of trust and note (Dec. 2004) allegedly securing $350,000 was recorded Jan. 7, 2005, covering the Brundage Property and a different parcel; plaintiffs allege the signatures were forged (likely by a son).
- Notices of default were recorded/mailed in 2005. Marina opened them, called family, then contacted the loan servicer (PLM) in late 2005; she later told PLM in 2006 (or 2007) that the signatures were forged.
- In 2009 plaintiffs (through Marina) entered and signed (Marina signed parents’ names) a forbearance agreement and later extensions; payments continued thereafter.
- Plaintiffs filed suit Jan. 2012 (second amended complaint: quiet title, declaratory relief, cancellation, restitution, injunctive relief). Defendants moved for summary judgment claiming the action was time-barred under CCP § 338(d) and asserting affirmative defenses including unclean hands, waiver, ratification, laches, estoppel.
- Trial court granted summary judgment based on the three-year limitations rule (finding plaintiffs’ possession was disturbed by 2005 notices of default) and awarded attorney fees; the Court of Appeal reversed and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a notice of default under a (forged) deed of trust starts the statute of limitations for a quiet title action | Salazar: as record owners in undisturbed possession, statute doesn't run; notices of default under a void deed did not disturb possession | Defendants: notices of default in 2005 put possession in dispute and triggered § 338(d) | Held: Notices of default put a cloud on title but did not dispute or disturb possession; limitations did not begin in 2005 (owners remained in exclusive and undisputed possession) |
| Whether plaintiffs’ restitution claims for payments made after May 2009 are time-barred by § 338(d) | Salazar: later payments (May 2009 onward) created separate, timely restitution claims | Defendants: statute barred claims tied to the loan | Held: Each payment accrues a separate restitution claim; payments from May 2009 are within three years of filing (Jan. 2012) and are not barred |
| Whether defendants established equitable defenses (unclean hands, laches, estoppel, waiver, ratification) on summary judgment | Salazar: material factual disputes exist (e.g., defendant innocence, plaintiffs’ knowledge/intent, Marina’s authority) | Defendants: plaintiffs’ silence, forbearance agreement, and payments preclude relief | Held: Defendants’ separate statements omitted material facts (defendants’ innocence, prejudice, plaintiffs’ knowledge, Marina’s written authority), so summary adjudication of the equitable defenses was inappropriate |
| Whether Marina’s signing of the forbearance agreement waived or ratified plaintiffs’ forgery claim | Salazar: Marina lacked written authority and plaintiffs could not have ratified a void instrument without full knowledge | Defendants: forbearance agreement and payments show waiver/ratification | Held: Equal-dignities rule requires written authority for agent to sign a contract altering a deed of trust; defendants failed to prove written authority or full knowledge—waiver and ratification were not established on summary judgment |
Key Cases Cited
- Mayer v. L&B Real Estate, 43 Cal.4th 1231 (Cal. 2008) (statute of limitations for quiet title may turn on whether owner is in undisturbed possession)
- Muktarian v. Barmby, 63 Cal.2d 558 (Cal. 1965) (no statute of limitations runs against plaintiff seeking to quiet title while in possession; adverse claims must be actively asserted to start limitations)
- Secret Valley Land Co. v. Perry, 187 Cal. 420 (Cal. 1921) (an outstanding adverse claim that is only a cloud does not bar quiet title until the claim is asserted to jeopardize title)
- Sears v. County of Calaveras, 45 Cal.2d 518 (Cal. 1955) (quiet title accrual hinges on when owner ceases to be in exclusive and undisputed possession)
- Garfinkle v. Superior Court, 21 Cal.3d 268 (Cal. 1978) (overview of nonjudicial foreclosure steps and that possession remains undisturbed during the statutory waiting period)
- Crittenden v. McCloud, 106 Cal.App.2d 42 (Cal. Ct. App. 1951) (failure to disclose forgery to an innocent purchaser can create estoppel/unclean hands where prejudice results)
- Merry v. Garibaldi, 48 Cal.App.2d 397 (Cal. Ct. App. 1941) (plaintiff’s concealment of forgery and failure to notify innocent lender justified estoppel/deny relief)
- Aguilar v. Atlantic Richfield Co., 25 Cal.4th 826 (Cal. 2001) (standards and burdens for summary judgment motions)