Opinion
B322195
11-05-2024
OSCAR MENDOZA, Plaintiff and Appellant, v. MARIA DE JESUS MENDOZA, Defendant and Respondent.
Law Office of D. Wayne Leech and D. Wayne Leech for Plaintiff and Appellant. Holland & Knight and Anne R. Beehler for Defendant and Respondent.
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. BC666204 Stephanie M. Bowick, Judge. Affirmed.
Law Office of D. Wayne Leech and D. Wayne Leech for Plaintiff and Appellant.
Holland & Knight and Anne R. Beehler for Defendant and Respondent.
CURREY, P. J.
INTRODUCTION
Since 1994, Oscar Mendoza and Maria De Jesus Mendozahave owned a four-unit complex consisting of a duplex and two stand-alone units built on a single lot. Oscar sued Maria in 2019, seeking to quiet title to the property and obtain declaratory relief. Among other things, Oscar asked the trial court to declare he has a fee simple interest in the property and to order partition by sale. Maria then filed a cross-complaint, by which she likewise sought to quiet title and obtain declaratory relief. In contrast with Oscar, however, she asked the trial court to, among other things: (1) declare she is the sole owner of, and that Oscar has no interest in, the property; and (2) declare Oscar holds title to the property solely as trustee of a resulting trust for her benefit, and that Maria has equitable title to a 100% interest in the property.
Because the parties are related and share the same surname, we will refer to them by their first names. No disrespect is intended.
Following a bench trial, the trial court ruled in favor of Maria and against Oscar on all of the claims asserted. Concluding Maria was the property's sole owner, it ordered Oscar to quitclaim his alleged interest in the property to Maria.
On appeal from the judgment, Oscar contends reversal is required because the trial court's findings lack evidentiary support; Maria's claims are barred by the statute of limitations, as well as the doctrines of laches, estoppel, and unclean hands; and the trial court's ruling runs afoul of public policy. For the reasons discussed below, we disagree with Oscar and therefore affirm the judgment.
BACKGROUND
In this section of the opinion, we limit our discussion of the facts to the main events giving rise to this appeal. In part I.B of the Discussion below, we will discuss additional facts, including those pertaining to the allocation of responsibility for property management.
Maria immigrated to the United States in 1973, when she was 33 years old. She has lived on the property for over 40 years with her sister and her brother-in-law. Maria worked at a clothing factory in the 1970s, a shoe factory in the 1980s, and a burrito factory from 1990 until approximately 2000, when she was injured at work. She has a second grade education and cannot read or write English.
Oscar is Maria's nephew. Since 1975 or 1976, when he was eight or nine years old, he lived with Maria full-time on the property until 1987. Because she essentially raised Oscar since he was a child, he referred to Maria as his mother, even though she is his aunt. He moved in with his actual parents in 1990 and did not live on the property again until March 2002, when he moved into a unit separate from Maria's.
Following the death of the property's prior owner in 1994, Maria was asked whether she would like to purchase the property for $130,000. Interested in the offer, she went to the bank to obtain a loan with her sister. The bank denied Maria's request because she lacked sufficient credit. Maria then asked Oscar to help her purchase the home by co-signing the loan, as he had better credit. Oscar agreed.
Consequently, in September 1994, Oscar and Maria executed a promissory note for $117,000 to North American Mortgage Company, secured by a deed of trust on the property. That same day, a grant deed was recorded reflecting the transfer of the property's title to Maria and Oscar as joint tenants. Maria testified that, with no help from Oscar, she provided the funds to cover the down payment and the closing costs.
As noted above, Oscar moved back to the property in 2002. Later that year, Maria asked Oscar to help her refinance the mortgage. While he initially expressed reluctance, Oscar ultimately agreed to Maria's request. Subsequently, the parties executed refinancing documents at Bank of America.
In 2016, Oscar demanded Maria pay him $60,000 in exchange for removal of his name from the property's title. Consequently, she and Oscar went to the bank so she could obtain a loan to pay him the funds requested. While at the bank, however, Oscar became upset and started yelling. He refused to fill out any paperwork relating to the loan and left the bank.
The refinanced mortgage loan was paid in full on January 24, 2017. Maria testified that, since purchasing the property in 1994, she made all of the mortgage payments using money she had saved and the rent she received from the property's tenants.
On the same day in May 2017, Oscar sent Maria two letters written in English. The first letter demanded "a balance of the rents [she] ha[s] received for the last four years." The second letter stated: "I, Oscar Mendoza, want to know what you are planning on doing regarding the property. Do you want to buy me out or do you want me to buy you out? [¶] Our [sic] put the property for sale, so I get the share that belongs to me. [¶] I'm giving you two weeks to answer me."
II. Procedural Background
Oscar sued Maria in June 2017. Asserting claims for quiet title and declaratory relief, his complaint requested the trial court to declare he owns a fee simple interest in the property as a joint tenant and order sale of the property with the net proceeds divided between Maria and himself, in accord with what he contended were with their respective interests in the property.
In January 2019, Maria answered Oscar's complaint and filed a cross-complaint. Her operative first amended crosscomplaint asserted against Oscar claims for fraud, quiet title, declaratory relief, financial elder abuse, and violation of Business and Professions Code section 17200. Prior to trial, she dismissed all of her claims except those to quiet title and for declaratory relief. With respect to the claims remaining, Maria requested the following relief, among other things: (1) an order declaring Maria the sole owner of the property, and that Oscar has no interest in the property; (2) imposition of a constructive trust compelling Oscar to transfer any interest he holds in the property to Maria; and (3) a declaration that Oscar holds title to the property as a trustee of a resulting trust for Maria's benefit.
Following a five-day bench trial, the trial court issued a written statement of decision finding in favor of Maria and against Oscar on all claims before it. In so doing, the trial court determined "the evidence establishes that Oscar . . . took no responsibility for the property at all and provided no help to Maria . . . in any way, consistent with . . . [being] a tenant rather than . . . a 50/50 co-owner." Specifically, it emphasized Oscar did not help Maria cover any of the property's financial obligations, was not involved with the property's repairs and improvements, and did not assist Maria in negotiating with or collecting rent from the property's tenants. Ultimately, the trial court found: "[T]he totality of the evidence does not support a joint ownership agreement between the parties. [Clear and convincing] evidence shows . . . Oscar . . . agreed to help his aunt obtain financing for purchasing the property, and nothing more." It also found the parties agreed that "sometime after the initial purchase, Oscar . . . would be removed from [the] title," and did not "agree[ ] that the joint tenancy on the title would be permanent ...."
Subsequently, the trial court entered judgment in favor of Maria and against Oscar. The judgment declared that title to the property was to be held exclusively in Maria's name and directed Oscar to quitclaim his interest in the property to Maria within five days of its filing.
Oscar timely appealed.
DISCUSSION
I. Oscar's Challenges to the Sufficiency of the Evidence
Underlying the Trial Court's Factual Findings Preliminarily, we note that the trial court's statement of decision does not specify the legal grounds on which it is based. Based on Maria's prayer for relief, the trial court's findings of fact, and the details of its analysis, however, the court appears to have granted Maria the relief sought upon determining she established, by clear and convincing evidence, a resulting trust of which Oscar was a trustee who held title to the property solely for Maria's benefit. With this reading of the trial court's statement of decision in mind, we consider Oscar's challenges to the sufficiency of the evidence underlying the court's findings.
Oscar's reply brief reveals a similar reading of the statement of decision.
A. Governing Principles and Standard of Review
Evidence Code section 662 applies where, as here, "valid legal title is undisputed and the controversy involves only beneficial title." (Murray v. Murray (1994) 26 Cal.App.4th 1062, 1068; id. at p. 1067 ["Evidence Code section 662 has application, by its express terms, when there is no dispute as to where legal title resides but there is question as to where all or part of the beneficial title should rest" (original italics)].) Codifying the common law "'form of title' presumption" (In re Marriage of Fossum (2011) 192 Cal.App.4th 336, 344), the statute provides: "The owner of the legal title to property is presumed to be the owner of the full beneficial title. This presumption may be rebutted only by clear and convincing proof." (Evid. Code, § 662.) In other words, under section 662, "the description in a deed as to how title is held presumptively reflects the actual ownership status of the property," and "absent a showing to the contrary, the status declared by the instrument through which a party acquired title will control." (In re Marriage of Fossum, at p. 344.)
By proving the existence of a resulting trust with clear and convincing evidence, a party may overcome the presumption in Evidence Code section 662. (Lloyds Bank California v. Wells Fargo Bank (1986) 187 Cal.App.3d 1038, 1044-1045 (Lloyds).)
"A resulting trust arises by operation of law from a transfer of property under circumstances showing that the transferee was not intended to take the beneficial interest. [Citations.] Such a resulting trust carries out and enforces the inferred intent of the parties. [Citations.] 'Ordinarily a resulting trust arises in favor of the payor of the purchase price of the property where the purchase price, or part thereof, is paid by one person and title is taken in the name of another. [Citations.] "The trust arises because it is the natural presumption in such a case that it was their intention that the ostensible purchaser should acquire and hold the property for the one with whose means it was acquired." [Citations.]'" (Lloyds, supra, 187 Cal.App.3d at pp. 1042-1043.) "In other words, the relationship between resulting trustee and beneficiary arises where one, in good faith, acquires title to property belonging to another. The law implies an obligation on the part of the one in whom title has vested to hold the property for the owner's benefit and eventually convey it to the owner. The trustee has no duties to perform, no trust to administer, and no purpose to pursue except the single purpose of holding or conveying the property according to the beneficiary's demands." (Estate of Yool (2007) 151 Cal.App.4th 867, 874, italics omitted.)
"'A resulting trust is implied from the facts, and neither written evidence of an agreement nor a fraud on the part of the alleged trustee is essential to its existence. It arises where title of a property is vested in the trustee while the consideration therefor is paid by the beneficiary.'" (Rowland v. Clark (1949) 91 Cal.App.2d 880, 883.) "While there must be clear and convincing proof to establish a trust, such proof may be indirect, consisting of acts, conduct and circumstances, the question whether the showing is clear and convincing being primarily one for the trial court." (Ibid.) A resulting trust may arise where the trustee and the beneficiary jointly hold title to the property. (See id. at pp. 882-884.)
"When reviewing a finding that a fact has been proved by clear and convincing evidence, the question before the appellate court is whether the record as a whole contains substantial evidence from which a reasonable fact finder could have found it highly probable that the fact was true. In conducting its review, the court must view the record in the light most favorable to the prevailing party below and give appropriate deference to how the trier of fact may have evaluated the credibility of witnesses, resolved conflicts in the evidence, and drawn reasonable inferences from the evidence." (Conservatorship of O.B. (2020) 9 Cal.5th 989, 1011-1012 (O.B.).)
B. Analysis
Although not entirely clear, Oscar appears to contend the trial court erred by determining Maria overcame the form of title presumption by proving the existence of a resulting trust with clear and convincing evidence. In so doing, he asserts the record contains insufficient evidence to support the trial court's findings that: (1) Maria alone shouldered all of the property's financial obligations; (2) Oscar only agreed to help Maria obtain financing to purchase the property; and (3) the parties agreed that Oscar would be removed from the title sometime after the property's purchase. Accordingly, he argues, the form of title presumption controls, and the trial court should have concluded Maria and Oscar own the property as joint tenants pursuant to the grant deed. As discussed below, we reject Oscar's argument for three reasons.
First, Oscar has forfeited his contention because nearly all of the factual assertions on which it is based are unsupported by record citations. (See L.O. v. Kilrain (2023) 96 Cal.App.5th 616, 619-620 [argument may be deemed forfeited when it rests on factual assertions unsupported by record citations in violation of California Rules of Court, rule 8.204 (a)(1)(B) & (C)].) That the opening brief's factual background contains record citations "do[es] not cure the failure to cite evidence in the argument section of the brief." (Alki Partners, LP v. DB Fund Services, LLC (2016) 4 Cal.App.5th 574, 590 fn. 8.) This is because "Rule 8.204(a)(1)(C) is intended to enable the reviewing court to locate relevant portions of the record 'without thumbing through and rereading earlier portions of a brief.' [Citation.] To provide record citations for alleged facts at some points in a brief, but not at others, frustrates the purpose of that rule, and courts will decline to consider any factual assertion unsupported by record citation at the point where it is asserted." (Ibid.)
Second, Oscar's argument fails on the merits because the record contains sufficient evidence to support the trial court's findings. As set forth below, "the record as a whole contains substantial evidence from which a reasonable fact finder could have found it highly probable that" Maria bore all responsibility-financial and otherwise-relating to the property, and that the parties intended for her to be its sole beneficial owner. (O.B., supra, 9 Cal.5th at p. 1011)
Maria assumed the property's financial obligations upon its purchase in 1994. She testified she paid the entirety of the down payment by combining $10,000 withdrawn from her bank account with $3,000 borrowed from her brother and cash she had saved. In addition-and, again, without any contribution from Oscar- Maria paid the closing costs for the mortgage loan. Her testimony on these points is supported by documentary evidence, namely, a receipt reflecting her withdrawal of $10,000 from the bank for the down payment, and an escrow trust receipt showing the escrow company handling the purchase received $15,346.38 from Maria alone in September 1994.
From 1994 to 2002, Maria made the monthly mortgage payments from her own bank account without receiving any help from Oscar. Before refinancing, the mortgage payments included the property tax and insurance. After taking initiative to refinance the loan in 2002, Maria continued to make the monthly mortgage payments from her own bank account until the loan was repaid in full in January 2017. Further, without any contributions from Oscar, Maria separately paid for the property taxes and insurance using her savings.
When he moved into his unit on the property in 2002, Oscar began paying Maria $500 per month in cash. His monthly payments increased to $550 in 2003. According to Maria, Oscar had asked to rent from her, and she understood his monthly payments to be rent, rather than contributions to the mortgage payments. Consistent with her practice for her other tenants, Maria gave Oscar a receipt whenever he paid her. Copies of the receipts in the record reflect the payments were for rent. Oscar did not dispute or object to the receipts' characterizations of his payments to Maria as rent. Maria treated the rent from Oscar and her other tenants as her income and used the funds for various purposes, including fixing the house and covering property-related expenses as needed.
In addition to the property's fixed expenses, Maria covered the property's repairs with occasional assistance from her sister and brother-in-law. Oscar testified he did not perform any work on the property's repairs and improvements. Nor did he know how much they cost. Moreover, besides managing and paying for the property's upkeep, Maria collected the rent from the tenants residing there. Oscar never negotiated with another tenant, collected rent from a tenant, nor filled out any rental receipts.
The evidence demonstrating Maria's assumption of all responsibility for the property's financial obligations, management, and care is consistent with the other evidence in the record reflecting the parties intended her to be its sole beneficial owner. As noted above, Maria testified Oscar became involved in the property's purchase only after she asked him to help her by co-signing the mortgage loan, as she did not qualify on her own due to insufficient credit. She further testified that when they signed the purchase documents, she did not know Oscar was going to be on the property's title. Nor did she understand Oscar was receiving a one-half interest in the property. Instead, she believed Oscar was simply providing his signature to help her get a loan.
More than once, Oscar expressed a desire to be removed from the property's title following its purchase. When asked about the conversations she had with Oscar about him being on the deed in 1994, Maria testified: "He just said the house is there already, let's see if I can be taken out quickly. And I said yes." She believed he was referring to his "signature" and that, upon its removal, she "was going to be the only one" on the property's paperwork. Similarly, Maria testified that after she approached him about refinancing the mortgage loan in 2002, Oscar "called [her] and said, 'I am going to help you, but remove me quickly.'" Maria did not understand what Oscar meant when he told her to "'remove [him] quickly.'" However, according to Maria's sister, who overheard the parties' conversation because Oscar was on speaker phone, Oscar "said he would help [Maria refinance], but as soon as she was able to, to remove him from the signature because he didn't want any problems anymore." Maria's sister then reiterated: "He said he just wanted to help her and then to be removed from title because he didn't want any problems."
Based on the evidence above, viewed in the light most favorable to Maria and with deference to the trial court's resolution of conflicts in the evidence (see O.B., supra, 9 Cal.5th at pp. 1008-1009, 1011-1012), we conclude the trial court "could have found it highly probable" (id. at p. 1011) that Maria paid the purchase price for the property, that the parties intended Maria to be the property's sole beneficial owner, and that they intended for Oscar to hold title solely for Maria's benefit with the expectation that he would eventually convey his interest in the property to her. (See Estate of Yool, supra, 151 Cal.App.4th at p. 874.) The record therefore contains substantial evidence to support a finding that Maria overcame the form of title presumption set forth in Evidence Code section 667 by establishing a resulting trust by clear and convincing evidence, and consequently, was entitled to the relief sought.
Finally, we note that in challenging the sufficiency of the evidence underlying the trial court's findings, Oscar cites a string of cases to assert: "The 'form of title presumption' cannot be rebutted by: 'tracing the funds used to purchase the property;' 'testimony of an intention not disclosed to the grantee at the time of the execution of the conveyance;' or 'evidence that title was taken in a particular manner merely to obtain a loan.'" The cases on which he relies, however, do not apply here. All of them addressed the form of title presumption on review of the trial court's characterization of certain assets as community or separate property. (See In re Marriage of Broderick (1989) 209 Cal.App.3d 489, 494, 496-497; In re Marriage of Kahan (1985) 174 Cal.App.3d 63, 65, 68-69; In re Marriage of Brooks &Robinson (2008) 169 Cal.App.4th 176, 184-185, overruled in part by In re Marriage of Valli (2014) 58 Cal.4th 1396, 1405; In re Marriage of Lucas (1980) 27 Cal.3d 808, 811-815, overruled in part by In re Brace (2020) 9 Cal.5th 903, 925; Gudelj v. Gudelj (1953) 41 Cal.2d 202, 211-214; Fadel v. DCB United LLC (In re Fadel) (Bankr. 9th Cir. 2013) 492 B.R. 1, 11-12.) In none of these cases did the appellate court address the issue currently before us, namely, whether the record contains substantial evidence to support the trial court's findings reflecting the existence of a resulting trust for property to which non-spouses hold title.
C. Conclusion
For the reasons discussed above, we conclude Oscar has not shown reversal is required due to lack of sufficient evidence.
II. Oscar's Arguments on the Timeliness of this Action
A. Statute of Limitations
"The Legislature has not established a specific statute of limitations for actions to quiet title. [Citation.] Therefore, courts refer to the underlying theory of relief to determine the applicable period of limitations. [Citations.] An inquiry into the underlying theory requires the court to identify the nature (i.e., the 'gravamen') of the cause of action." (Salazar v. Thomas (2015) 236 Cal.App.4th 467, 476.)
Relying on the three-year limitations period governing actions based on fraud or mistake (Code Civ. Proc., § 338, subd. (d)), Oscar asserts "[a]ll of Maria's causes of action were time-barred over 20 years ago." He does not, however, explain why section 338, subdivision (d) should control, given that Maria's cross-claims seek to establish a resulting trust. "The applicable statute of limitations on an action to establish a resulting trust is the four-year statute found in Code of Civil Procedure section 343[,]" which does not begin to run until "repudiation by the trustee." (In re Estate of Yool, supra, 151 Cal.App.4th at p. 875.) Because Oscar's argument is unaccompanied by reasoned analysis explaining why reversal is required under the legal authority he cites, we conclude it has been forfeited and decline to consider it further. (See Hewlett-Packard Co. v. Oracle Corp. (2021) 65 Cal.App.5th 506, 565 [rejecting assertion of reversible error based on appellant's "fail[ure] to develop a reasoned argument supported by legal authority"].)
B. Laches
"'Laches is an equitable, affirmative defense which requires a showing of both an unreasonable delay by the plaintiff bringing in suit, "'plus either acquiescence in the act about which plaintiff complains or prejudice to the defendant resulting from the delay.'"'" (City of Hesperia v. Lake Arrowhead Community Services Dist. (2023) 93 Cal.App.5th 489, 511.) "'The basic elements of laches are: (1) an omission to assert a right; (2) a delay in the assertion of the right for some appreciable period; and (3) circumstances which would cause prejudice to an adverse party if assertion of the right is permitted.'" (Id. at p. 512.)
Oscar argues that Maria's claims are barred by the doctrine of laches because she "failed to file her lawsuit years ago when she knew that Oscar did not take his name off title." We reject his argument because he has failed to demonstrate how he was prejudiced by Maria's failure to assert her claims sooner. On this point, Oscar appears to assert he has suffered prejudice because, as a result of agreeing to the mortgage loan's refinancing in 2002, "his ability to qualify for other loans was impaired, causing him damages." In support of his contention, however, he does not cite-and we could not locate-any evidence in the record. We therefore reject Oscar's laches argument as unsupported by evidence.
III. Oscar's Arguments Based on Other Equitable Doctrines and Public Policy
A. Estoppel
"The elements of equitable estoppel are '(1) the party to be estopped must be apprised of the facts; (2) he must intend that his conduct shall be acted upon, or must so act that the party asserting the estoppel has a right to believe it was so intended; (3) the other party must be ignorant of the true state of facts; and (4) he must rely upon the conduct to his injury. [Citation.]'" (Schafer v. City of Los Angeles (2015) 237 Cal.App.4th 1250, 1261.) According to Oscar, Maria's claims are barred by estoppel because she knew (and he did not) that she never intended for him to keep title to the property following its purchase, and induced him to rely on this fact to his detriment by asking him to co-sign the mortgage loan with her in 1994 and agree to refinance it in 2002.
Oscar's estoppel argument fails for the same reason his laches argument fails. (See Discussion part II.B, ante.) With respect to estoppel, he argues he has suffered prejudice since, as a result of his co-signing the original loan and agreeing to its refinance in 2002, "Oscar's credit was adversely impacted because it impaired his ability to use his credit to purchase another property ...." Again, he does not cite-and we could not locate-any evidence supportive of this argument. Thus, we reject it as lacking evidentiary support.
B. Unclean Hands
"The doctrine of unclean hands is a defense to an equitable action, including an action to quiet title. [Citation.] It rests on the maxim that '"'he who comes into equity must come with clean hands.'"' [Citation.] 'The doctrine demands that a plaintiff act fairly in the matter for which he seeks a remedy. He must come into court with clean hands, and keep them clean, or he will be denied relief, regardless of the merits of his claim.'" (Aguayo v. Amaro (2013) 213 Cal.App.4th 1102, 1110.) "Not all wrongful conduct constitutes unclean hands. Only if the misconduct is directly related to the cause at issue can a defendant invoke the doctrine. [Citations.] The misconduct, however, 'need not be a crime or an actionable tort. Any conduct that violates conscience, or good faith, or other equitable standards of conduct is sufficient cause to invoke the doctrine.' [Citations.] 'Whether the defense applies in particular circumstances depends on the analogous case law, the nature of the misconduct, and the relationship of the misconduct to the claimed injuries.'" (Ibid.)
Although not entirely clear, Oscar appears to argue that the doctrine of unclean hands bars Maria's claims because she engaged in misconduct when she "used Oscar's credit to qualify for the 1994 loan and the 2002 loan, which required Oscar to be legally obligated for the loans[,]" and "never demanded that Oscar go off title." He does not explain, however, how Maria's conduct "'violate[d] conscience, good faith, or other equitable standards'" to warrant the defense's application in this case. (Aguayo v. Amaro, supra, 213 Cal.App.4th at p. 1110.) Nor does Oscar explain how he has been injured as a result of Maria's alleged misconduct. For these reasons, we conclude his argument based on the defense of unclean hands is meritless. (See Aguayo v. Amaro, at p. 1110.)
C. Violation of Public Policy
Finally, we address Oscar's argument that reversal is required because any agreement between the parties to remove Oscar from the property's title "is void as against public policy." (Bolded text omitted.) On this point, he argues: "Finding in favor of Maria is a violation of public policy since the [c]ourt would be condoning and promoting mortgage fraud perpetrated by Maria [under Title 18 United States Code section 1344 against two (2) lenders who relied on Maria's representations that Oscar was an owner of the [p]roperty in order to qualify for and fund two loans (the initial 1994 loan and the 2002 refinancing loan)." In support of his argument, Oscar relies on Johnson v. Johnson (1987) 192 Cal.App.3d 551 (Johnson).
Title 18 United States Code section 1344 states: "Whoever knowingly executes, or attempts to execute, a scheme or artifice-[¶] (1) to defraud a financial institution; or [¶] (2) to obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises;[¶] shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both."
Johnson defeats-rather than assists-Oscar's public policy argument. In Johnson, the defendant, a veteran, secured a GI loan so his parents could purchase a home. (Johnson, supra, 192 Cal.App.3d at p. 554.) Because only the defendant, and not his parents, was eligible for the GI loan, title to the property was taken in the defendant's name. (Ibid.) The parties, however, understood that the defendant's parents would be the actual and beneficial owners of the property. (Ibid.) The defendant's parents largely assumed the property's financial obligations and pressed the defendant to transfer title to them. (Id. at pp. 554-555.) The defendant, however, never transferred the title. (Id. at p. 555.)
Five years after the defendant's father died, the defendant told his mother he was going to sell the house and that she would have to move. (Johnson, supra, 192 Cal.App.3d at pp. 554-555.) After she declined to do so, and the defendant refused to transfer title to her, she sued the defendant for declaration of a resulting trust and ancillary relief. (Id. at p. 555.) Following a bench trial, the trial court found in favor of the defendant's mother and declared a resulting trust on the home. (Id. at pp. 553, 555.)
On appeal, the defendant "argue[d] [t]here can be no resulting trust because the underlying GI loan transaction was illegal." (Johnson, supra, 192 Cal.App.3d at p. 556.) In rejecting this contention, the appellate court assumed the GI loan contravened public policy and, therefore, was illegal. (Id. at p. 557.) It then set forth "the rule of enforcement of illegal contracts," stating: "'The rule that the courts will not lend their aid to the enforcement of an illegal agreement or one against public policy is fundamentally sound. The rule was conceived for the purposes of protecting the public and the courts from imposition. It is a rule predicated upon sound public policy. But the courts should not be so enamored with the Latin phrase "in pari delicto" that they blindly extend the rule to every case where illegality appears somewhere in the transaction. The fundamental purpose of the rule must always be kept in mind, and the realities of the situation must be considered. Where, by applying the rule, the public cannot be protected because the transaction has been completed, where no serious moral turpitude is involved, where the defendant is the one guilty of the greatest moral fault, and where to apply the rule will be to permit the defendant to be unjustly enriched at the expense of the plaintiff, the rule should not be applied.'" (Ibid.) Applying these principles, the appellate court declined to reverse the judgment for the defendant's mother based on the in pari delicto rule. (See id. at pp. 557-558.)
Even assuming, arguendo, the mortgage loan in this case was illegal under Title 18 United States Code section 1344, we reject Oscar's public policy argument for the same reasons the appellate court rejected the defendant's in Johnson. Here, as in Johnson, the transaction has been completed because the loan was fully repaid in January 2017. No additional moral turpitude is involved on Maria's part. And it is clear that Oscar-not Maria-is the "'one guilty of the greatest moral fault'" here. (Johnson, supra, 192 Cal.App.3d at p. 557.) As discussed above, the record reflects that after agreeing to help his aunt obtain financing to purchase the property because she lacked sufficient credit to qualify for a loan on her own, Oscar took no responsibility for the property's financial obligations, management, or care. Instead, he allowed Maria to bear that burden alone for decades and demanded payment of $60,000 from his elderly aunt in exchange for his removal from the title. And through the underlying action, he seeks to force the sale of her home of over 40 years for his own gain. Under these circumstances, we conclude "application of the in pari delicto rule in this case would unjustly enrich [Oscar] by allowing him to reap the full benefits of any appreciation in the value of the [property], notwithstanding his [limited] role in the transaction and his subsequent conduct." (Johnson, at p. 557.)
DISPOSITION
The judgment is affirmed. Respondent is awarded her costs on appeal.
We concur: COLLINS, J., ZUKIN, J.