B294249
Cal. Ct. App.Jul 7, 2020Background
- Wells Fargo held a senior deed of trust on a Sherman Oaks property (original loan 2005; assignment to Wells Fargo recorded). Quality Loan Service recorded notices of default and trustee sale in 2014–2016.
- A forged trustee’s deed upon sale was recorded July 8, 2016, purporting that Adeliya Timirova Investments (ATI) bought the property at foreclosure, although no sale occurred.
- Relying on the forged deed, a subsequent sham sale to Tatiana Vovk closed Oct 7, 2016; Alviso (later WFG Title) lent $850,000 and recorded a first deed of trust the same day. No loan payments were made.
- Wells Fargo recorded a notice of rescission of the forged deed on November 16, 2016 after learning of the fraud; Alviso/WFG sued to quiet title and for a declaration that its deed is senior to Wells Fargo’s.
- Trial court granted Wells Fargo summary judgment, holding the forged deed (and all subsequent title stemming from it) was void and that Wells Fargo had no duty to monitor or promptly correct public records; WFG appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of Alviso’s deed derived from forged trustee’s deed | Alviso’s recorded deed of trust should be treated as a valid (senior) interest despite the forged source | A forged deed is void ab initio; any title or encumbrance derived from it is void and cannot defeat a prior valid interest | The forged trustee’s deed was void; Alviso’s deed, tracing to the forged deed, is void as a matter of law |
| Equitable estoppel / ratification based on Wells Fargo’s delay in rescinding forged deed | Wells Fargo’s “excessive and unreasonable delay” in rescinding constituted negligence/ratification, estopping Wells Fargo from asserting priority | Wells Fargo had no duty to monitor/maintain public records; mere failure to immediately act is not constructive fraud or ratification | No estoppel; Wells Fargo had no obligation to monitor records and its inaction did not supply the constructive fraud needed for estoppel |
| Applicability of Civil Code § 3543 (loss should fall on negligent party) | § 3543 requires the party best able to prevent loss (Wells Fargo) to bear it where its negligence allowed third parties to rely on forged record | § 3543 requires proof of negligence; Wells Fargo owed no duty to Alviso/WFG to monitor records, so no negligence exists | § 3543 is inapplicable because plaintiff cannot show Wells Fargo owed a duty or was negligent |
| Procedural challenges to summary judgment evidence and continuance request | Plaintiff asserted defects in Wells Fargo’s separate statement and evidentiary objections; sought continuance | Wells Fargo maintained its motion complied and met its burden; plaintiff failed to supply supporting record citations | Court did not err; many procedural/ evidentiary arguments were forfeited on appeal for lack of record citation or analysis |
Key Cases Cited
- Aguilar v. Atlantic Richfield Co., 25 Cal.4th 826 (Cal. 2001) (summary judgment standard; defendant must negate an element or show plaintiff lacks evidence)
- Guz v. Bechtel Nat’l, Inc., 24 Cal.4th 317 (Cal. 2000) (moving party may meet burden with affirmative evidence negating an essential element)
- Schiavon v. Arnaudo Bros., 84 Cal.App.4th 374 (Cal. Ct. App. 2000) (a forged deed is void and transfers no title)
- Wutzke v. Bill Reid Painting Service, 151 Cal.App.3d 36 (Cal. Ct. App. 1984) (equitable estoppel and § 3543 may protect innocent purchasers/encumbrancers only where negligence or misconduct by true owner enabled the fraud)
- Meley v. Collins, 41 Cal. 663 (Cal. 1871) (owner with recorded conveyance is not required to continuously monitor records; lack of duty to police forgeries)
- Regents of Univ. of California v. Superior Court, 4 Cal.5th 607 (Cal. 2018) (duty in negligence is a question of law suitable for summary judgment)
- Wurzl v. Holloway, 46 Cal.App.4th 1740 (Cal. Ct. App. 1996) (confirms negligence is required for § 3543 relief)