Opinion
A101018.
11-7-2003
ALBERTINE OMANI et al., Plaintiffs and Respondents, v. MONTIE S. DAY, Defendant and Appellant.
Montie S. Day (defendant) appeals after the trial court granted summary adjudication of issues in favor of several homeowners and lenders with ownership and security interests in certain residential real properties in Oakland, on their quiet title cause of action. The homeowners and lenders brought the quiet title action after defendant, who bought a default judgment against previous owners of the properties from a bankruptcy estate, tried to enforce that judgment against the new owners. Defendant contends the trial court erred in granting summary adjudication because there is a triable issue of material fact with respect to his right to enforce the default judgment against the present owners. According to defendant, a lis pendens recorded in the action against the previous owners gave plaintiffs constructive notice of that action, so as to bind them to the default judgment entered therein. We shall affirm the judgment.
PROCEDURAL BACKGROUND
On February 20, 2002, Albertine Omani, Robert M. Alexander, Carolyn D. Alexander, Steven Bielman, Baoyan Bielman, Kari Johnson, Margaret Hughes, Kathleen Barrow, Ernst Herrmann, Steve Markovich, Steve Markovich, Jr., John Bartlett, John Henry Hunter, Bank of America National Trust and Savings, California Savings Bank fka California Savings and Loan, and World Savings Bank (plaintiffs) filed an action against defendant for quiet title, slander of title, injunction, declaratory relief, and expungement of lis pendens. The action concerned four single-family residential properties in Oakland, commonly known as 9350 Mountain Boulevard, 9380 Mountain Boulevard, 9390 Mountain Boulevard, and 9470 Mountain Boulevard (the subject properties) and defendants attempt to enforce a judgment in a prior case (the Bell judgment) against the plaintiffs due their present ownership interests in the subject properties. On April 24, 2002, the trial court sustained in part defendants demurrer, with leave to amend.
Plaintiffs Steve Bielman and Baoyan Bielman are the current owners of the single-family residential property located at 9350 Mountain Boulevard in Oakland, and plaintiff California Savings Bank is the beneficiary under a deed of trust secured by the property.
Plaintiffs Kari Johnson, Margaret Hughes, and Kathleen Hughes, the successors in interest to plaintiffs Ernst Herrmann, Steve Markovich, John Bartlett, and John Henry Hunter, are the current owners of the single-family residential property located at 9380 Mountain Boulevard in Oakland.
Plaintiffs Robert M. Alexander and Caroline D. Alexander are the current owners of the single-family residential property located at 9390 Mountain Boulevard, and plaintiff Bank of America is the beneficiary under a deed of trust secured by the property.
Plaintiff Albertine Omani is the current owner of the single-family residential property located at 9470 Mountain Boulevard in Oakland, and plaintiff World Savings Bank is the beneficiary under a deed of trust secured by this property.
On May 7, 2002, plaintiffs filed their first amended complaint, which did not include the injunctive cause of action, but which otherwise contained the same causes of action as the original complaint.
On July 9, 2002, plaintiffs filed a motion for summary adjudication of issues as to the first cause of action for quiet title. On August 26, 2002, following a hearing, the trial court granted the summary adjudication motion. Judgment was entered on October 10, 2002 and notice of entry of judgment was served that same day.
Defendant filed a notice of appeal on December 5, 2002.
FACTUAL BACKGROUND
The following facts describe the history of the Bell judgment, which defendant purchased and attempted to enforce against plaintiffs, and which led to plaintiffs present quiet title action.
On October 4, 1989, Dennis Bell filed a lawsuit in Alameda County Superior Court against St. Bartholomew Development Corporation (St. Bartholomew) and Mountain Boulevard Development Ltd. (Mountain Boulevard). St. Bartholomew had previously contracted with Bell to perform various duties related to land acquisition and sales activities.
Bells first cause of action was for breach of contract, regarding the defendants alleged "failure to pay at close of escrow loan fees as agreed, and failure to pay sums due upon defendants cancellation of agreement." Bell allegedly suffered the following damages as a result of the breach of contract: "loss of loan fees, selling fees, earned salary, automobile expenses, travel expenses, and phone expenses in the total sum of $55,000."
Bells second cause of action was for a constructive trust, in which he alleged that the defendants "received [Bells] loan fees upon close of escrows arranged by [Bell], diverted said funds for their own use, and applied said funds to acquire title to, and make improvements to the real property described" in attachments to the complaint. Bell further alleged that the use of his funds "has resulted in [Bell] becoming an equitable owner in and to the real property described" in the attachments to the complaint. Bell sought title to that real property "in satisfaction of the amounts claimed herein." Attached to the complaint were legal descriptions of 12 parcels of land, including the four subject properties.
Also on October 4, 1989, Bell recorded a notice of pending action (lis pendens) in the official records of Alameda County, stating that Bell had commenced an action on October 4, 1989, affecting title to real property, against "Mountain Boulevard Limited." On October 12, 1989, Bell recorded another notice of pending action, this time stating that he had commenced an action on October 4, 1989, affecting title to real property, against "St. Bartholomew Development Corporation, and Mt. Boulevard Development Limited." Both lis pendens stated that "[t]he object of [Bells] action is to determine [Bells] equitable ownership of the subject property as a result of [defendants] use of [Bells] funds to acquire and to improve said property."
On March 7, 1990, Bell recorded a notice of withdrawal of the lis pendens recorded on October 12, 1989.
On March 28, 1990, the trial court granted St. Bartholomews and Mountain Boulevards motion to expunge the lis pendens filed on October 12, 1989. The court found that the Bell action "does not concern real property, nor affect title or the right of possession of real property . . . ."
The expungement order was filed, but apparently was never recorded pursuant to Code of Civil Procedure section 405.60.
On December 12, 1991, Bell obtained a default judgment against St. Bartholomew and Mountain Boulevard for damages of $71,500, interest of $21,450, and costs of suit of $522.20. The judgment further provided that "a constructive trust was and is imposed upon the monies set forth above in this judgment as damages together with interest thereon as and from October 4, 1989, and that defendants, and each of them, held title to said money as constructive trustees for [Bells] benefit and use, and that as a further result of the matters and transactions proved herein, a resulting trust is and was created on the defendants successors and assigns, on the aforementioned funds and the real property purchased and/or improved with said money rightfully belonging to [Bell], that [Bell], therefore has an interest in and to the real properties, and each of them, [attached to the Bell complaint], which are incorporated in this judgment as though set forth at length herein." The judgment concluded that Bell "shall have an equitable lien in the amount of $92,950.00 in the above-described real properties, and each of them, as and from October 4, 1989."
Bell filed for bankruptcy and, in 1998, pursuant to a bankruptcy court order, defendant, who was a creditor of Bell, purchased the December 12, 1991 judgment for $1,000.00.
Defendant seeks to enforce the Bell judgment against the subject properties. Neither St. Bartholomew nor Mountain Boulevard held any interest in the subject properties at the time Bell obtained his default judgment.
DISCUSSION
To establish a claim to quiet title, a plaintiff must show that he or she is the owner of the property in question, that he or she is entitled to possession, and that the defendant has no right or title in the property adverse to the plaintiff. (See Code Civ. Proc., § 761.020; Lucas v. Sweet (1956) 47 Cal.2d 20, 22.) Defendant claims that, as a result of the Bell judgment—by virtue of the first lis pendens recorded in that action—he has a right to the subject properties adverse to plaintiffs. Therefore, according to defendant, the trial court erred in granting summary adjudication in favor of plaintiffs on their quiet title cause of action.
All further statutory references are to the Code of Civil Procedure unless otherwise indicated.
A motion for summary adjudication "shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." (§ 437c, subd. (c).) A defendant moving for summary adjudication "bears the burden of persuasion that `one or more elements of the `cause of action in question `cannot be established, or that `there is a complete defense thereto. [Citation.]" (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 849, quoting § 437c, subds. (o)(1) and (o)(2).) We review a ruling for summary adjudication de novo. (Marie Y. v. General Star Indemnity Co. (2003) 110 Cal.App.4th 928, 949.)
I. Trial Court Background
The trial court granted plaintiffs motion for summary adjudication of issues with respect to their first cause of action for quiet title. In its order granting the motion, the trial court reasoned that plaintiffs had proved every element of their quiet title claim, including the element that defendant had no right or title in the subject properties. As the court explained: "Defendants claim on the subject properties is based on this Courts Judgment of December 12, 1991 (the `Bell Judgment). Moving Plaintiffs are nowhere mentioned in the Bell Judgment . . ., and the undisputed material facts establish that moving Plaintiffs took possession of the subject properties prior to the entry of the Bell Judgment. . . . Nevertheless, Defendant claims that moving Plaintiffs interests in the subject property are subject to the Bell Judgment as a result of the lis pendens recorded in Case No. 656570 on October 4, 1989, which Defendant says put moving Plaintiffs on notice or their successors in interest on constructive notice of the pending action (Case No. 656570) so as to bind moving Plaintiffs to the judgment entered therein, i.e., the Bell Judgment.
"The Court disagrees. Having considered the Complaint in Case No. 656570 . . ., the Court concludes that that action is not one that affected title to, or right to possession of, specific real property. It was an action for breach of an employment contract, and no facts were alleged in that action to allege a cause of action for constructive trust affecting the subject real properties. A lis pendens recorded in such an action is a nullity; it has no effect, and does not provide constructive notice of the pending action. See Lewis v. Superior Court (1994) 30 Cal.App.4th 1850, 1860.
"Accordingly, the Courts position is that Plaintiffs have satisfied their burden under CCP section 437c(o)(1) as to the final element of their quiet title action by showing, as a matter of law, that Plaintiffs could not have had constructive notice of the pending action in Case No. 656570. That showing means that Defendants claim to title in the subject properties, which is reliant on the argument that the October 4, 1989 lis pendens put moving Plaintiffs on constructive notice, is without merit."
II. Analysis
Defendant contends the trial court incorrectly found that the first lis pendens, which Bell filed on October 4, 1989, did not provide constructive notice of the Bell complaint and, therefore, did not bind plaintiffs to the Bell judgment.
A notice of pending action, or lis pendens, "is a recorded document giving constructive notice that an action has been filed affecting title or right to possession of the real property described in the notice. Its effect is that anyone acquiring an interest in the property after the action was filed will be bound by the judgment. The history of lis pendens legislation shows a legislative intent to restrict the common law notion of constructive notice. This is because of the ease with which a lis pendens can be recorded and the serious consequences flowing from it. Once a lis pendens is filed, it clouds the title and effectively prevents the propertys transfer until the litigation is resolved or the lis pendens is expunged. Accordingly, lis pendens is a provisional remedy which should be applied narrowly." (BGJ Associates v. Superior Court (2000) 75 Cal.App.4th 952, 966-967.)
A lis pendens may be recorded in an action that has a "real property claim," which is defined as "the cause or causes of action in a pleading which would, if meritorious, affect . . . title to, or the right to possession of, specific real property . . . ." (§ 405.4; see also BGJ Associates v. Superior Court, supra, 75 Cal.App.4th at p. 967.) Consistent with the limited purpose of the lis pendens procedure, "the courts have repeatedly held that a lis pendens recorded in an action that does not involve title has no effect . . . . [T]he complaint must `set forth some cause of action affecting the title or right of possession of the specific real property described in the lis pendens. When it does not do so the lis pendens becomes a nullity . . . . [Citations.]" (Lewis v. Superior Court (1994) 30 Cal.App.4th 1850, 1860.)
A.
First, we find disingenuous defendants argument that the first lis pendens remained viable after the recording of the second lis pendens and its subsequent withdrawal. The first lis pendens, recorded on October 4, 1989, purported to give notice of an action solely against "Mountain Boulevard Limited." The second lis pendens, recorded eight days later, on October 12, 1989, was identical to the first lis pendens except that it added St. Bartholomew to the body of the notice and added the word "Development" to Mountain Boulevards name both in the caption and the body of the notice. The second notice was still dated October 4, 1989, and the notice still stated that "[t]he object of [Bells] action is to determine [Bells] equitable ownership of the subject property as a result of defendants use of [Bells] funds to acquire and to improve said property." Moreover, the 12 properties described in the exhibits attached to the second lis pendens were identical to the properties described in the exhibits attached to the first lis pendens.
The caption of the notice also included the name of the other defendant in the action, St. Bartholomew.
In light of the fact that the second lis pendens did no more than correct perceived errors and omissions in the names of the defendants in the first lis pendens, it is plain that the second lis pendens was intended to replace the first one. Thus, when Bell withdrew the second lis pendens on March 7, 1990, he could only have intended to eliminate any notice of pending action regarding the properties in question. It would be illogical to suppose otherwise.
In his reply brief, defendant argues that the second lis pendens was properly withdrawn, as the claim against St. Bartholomew did not affect real property since St. Barholomew was never an owner of the property. Thus, according to defendant, the first lis pendens properly remained on record against the owners of the property, Mountain Development. In addition to the fact that this argument was raised for the first time in defendants reply brief (see American Drug Stores, Inc. v. Stroh (1992) 10 Cal.App.4th 1446, 1453), its logic is questionable given that (1) Mountain Boulevard was a defendant in the Bell action, in which Bell was claiming a constructive trust as to both defendants and (2) Bell ultimately obtained a judgment against both St. Bartholomew and Mountain Boulevard.
Accordingly, when plaintiffs became owners of the properties, no valid lis pendens was recorded in Alameda County to provide them with constructive notice of the pending Bell action, and they are not bound by the Bell judgment. (See § 405.60 ["Upon the withdrawal of a notice of pendency of action pursuant to section 405.50 . . ., neither the notice nor any information derived from it, prior to the recording of a certified copy of the judgment or decree issued in the action, shall constitute actual or constructive notice of any of the matters contained, claimed, alleged, or contended therein, or of any of the matters related to the action, or create a duty of inquiry in any person thereafter dealing with the affected property."]; see also BGJ Associates v. Superior Court, supra, 75 Cal.App.4th at p. 966.)
B.
Moreover, even if we were to find that the first lis pendens remained extant after the corrected lis pendens was recorded and then withdrawn, we agree with the two trial courts that have found that the Bell complaint did not affect title to or right to possession of real property within the meaning of the lis pendens statute, and that, therefore, Bells lis pendens did not provide constructive notice of the Bell action to subsequent purchasers of the properties. (See § 405.4.) Upon granting the motion to expunge the second lis pendens, the trial court (Hon. Dawn B. Girard) found that the Bell action "does not concern real property, nor affect title or the right of possession of real property . . . ." Upon granting summary adjudication of issues in favor of plaintiffs on their quiet title cause of action, the trial court (Hon. Demetrios P. Agretelis) found that the first lis pendens was a nullity because the Bell action "is not one that affected title to, or right to possession of, specific real property."
That the lis pendens had already been withdrawn at the time of the courts order and that the expungment was never recorded does not change the fact that the court found in its order that the Bell action did not affect real property.
The two trial courts conclusions are in accord with California case law, which has consistently held that allegations of equitable remedies, such as a constructive trust, "even if colorable, will not support a lis pendens if, ultimately, those allegations act only as a collateral means to collect money damages. [This is because] the true purpose of the lis pendens statute is to provide notice of pending litigation and not to make plaintiffs secured creditors of defendants nor to provide plaintiffs with additional leverage for negotiating purposes." (Urez Corp. v. Superior Court (1987) 190 Cal.App.3d 1141, 1149; accord, e.g., BGJ Associates v. Superior Court, supra, 75 Cal.App.4th at pp. 971-972; Lewis v. Superior Court, supra, 30 Cal.App.4th at pp. 1862-1863; La Paglia v. Superior Court (1989) 215 Cal.App.3d 1322, 1327; Deane v. Superior Court (1985) 164 Cal.App.3d 292, 297; compare Hunting World, Inc. v. Superior Court (1994) 22 Cal.App.4th 67, 73-74 [distinguishing the cited cases—in which constructive trust or equitable lien causes of action were appended to lawsuits centering on money damages—from the case before it, in which the action covered by the lis pendens affected only title to real property].)
Defendant cites Coppinger v. Superior Court (1982) 134 Cal.App.3d 883 (Coppinger), which he avers affirms the validity of a lis pendens based on a claim for a constructive trust. According to defendant, there is a conflict on this issue "between the districts of the Court of Appeal, and Coppinger is still valid case law." We disagree. In Coppinger, the plaintiff alleged she was fraudulently induced to buy a home by the sellers and real estate agents misrepresentations. The plaintiff filed a complaint seeking to rescind the sale and impose a constructive trust on the sellers new home on the theory that they had acquired the new home with her funds. (Id. at pp. 886-887.) The plaintiff also recorded a lis pendens on the sellers new home, and the appellate court affirmed the trial courts denial of the sellers motion to expunge the lis pendens, finding that "an action to impose a constructive trust on real property is an action affecting title to or possession of real property." (Id. at pp. 887, 891.) Coppinger has been distinguished or disapproved in nearly every subsequent appellate case that has addressed this question, including the Fourth District, from which Coppinger issued.
For example, in Deane v. Superior Court, supra, 164 Cal.App.3d 292, 297, Division Three of the Fourth District distinguished Coppinger as follows: "Plaintiffs here did not surrender money to defendants as the result of the latters allegedly fraudulent conduct, as in Coppinger. On the current record, defendants merely owe plaintiffs a debt at the most. But Coppinger in no way supports the notion that a constructive trust may be imposed and a lis pendens recorded to secure an ordinary business debt. A lis pendens is not a shortcut method of attachment for unsecured creditors."
Similarly, in BGJ Associates v. Superior Court, supra, 75 Cal.App.4th at p. 968, the appellate court stated: "Subsequent cases have distinguished, limited, or explicitly rejected the reasoning of Coppinger and Okuda [v. Superior Court (1983) 144 Cal.App.3d 135, 141 (in which a purchaser who improved property and then discovered the seller had failed to convey title, sought damages and an equitable lien on the property for the cost of good faith improvements)], and concluded that the allegation of a constructive trust should not be construed as a real property claim within the meaning of the lis pendens statute. [Citations.]" (Accord, e.g., Urez Corp. v. Superior Court, supra, 190 Cal.App.3d at p. 1149 [rejecting "Coppingers broad definition of actions which affect title or possession of real property"]; Burger v. Superior Court (1984) 151 Cal.App.3d 1013, 1018 [same]; cf. 1992 comment to § 405.4 ["The definition of `real property claim neither includes nor excludes claims of constructive trust or equitable lien. Instead, the law in this area is left for judicial development."].)
In light of the numerous cases from the 1980s rejecting or distinguishing Coppinger, we find unpersuasive defendants assertion that we are bound by Coppinger because that decision had not yet been questioned in 1991, when the Bell judgment was filed.
The Bell complaint involved an action for breach of an employment contract, in which Bell alleged that, as a result of the defendants breach, he suffered damages including "loss of loan fees, selling fees, earned salary, automobile expenses, travel expenses, and phone expenses in the total sum of $55,000." Bells second cause of action for a constructive trust alleged that the defendants used the loan fees owed to Bell to acquire title to and make improvements to the subject properties; Bell sought conveyance of title to those properties "in satisfaction of the amounts claimed herein," i.e. of the $55,000 allegedly owed to him by the defendants.
Bells action plainly primarily sought money damages. This is precisely the type of case to which California courts have found that the lis pendens statute does not apply. For example, in both Lewis v. Superior Court, supra, and La Paglia v. Superior Court, supra, the appellate courts held that a lis pendens was improper where the plaintiffs claimed an interest in the defendants property "`only to the extent the monies [they alleged] were wrongfully obtained have been invested therein." (Lewis v. Superior Court, supra, 30 Cal.App.4th at p. 1863, quoting La Paglia v. Superior Court, supra, 215 Cal.App.3d at p. 1327.) "Allowing a lis pendens to be used in a constructive trust case like this transforms it into a money-collection remedy without any of the protections of the attachment statutes, a tactic for which the courts have consistently eschewed its use." (Lewis v. Superior Court, supra, 30 Cal.App.4th at p. 1864.)
We conclude that because the Bell action did not affect title to or right to possession of real property within the meaning of the lis pendens statute (§ 405.4), the first lis pendens, even assuming it otherwise remained extant after the recording and subsequent withdrawal of the second lis pendens, had no effect and was a nullity from the time it was recorded. (See Lewis v. Superior Court, supra, 30 Cal.App.4th at p. 1860.) Therefore, because the ownership interests in the subject properties were transferred before judgment was entered in the Bell action, there was no constructive notice to plaintiffs of the Bell complaint, and the only parties bound by the Bell judgment are the two defendants in that case, St. Bartholomew and Mountain Boulevard. Defendant thus has no right to enforce the Bell judgment against the plaintiffs.
Defendant argues that because the final judgment in the Bell action has been rendered and because that judgment expressly creates a constructive trust as to the subject properties, "the real property claim [of the Bell complaint] is currently not merely `probable, it is legally actualized, and beyond attack, merged into a renewed and recorded final judgment. [Citations.]" (Emphasis in original.) Defendant further asserts that it would be inequitable to permit a challenge to the first lis pendens at this late date because, after judgment, a plaintiff can no longer amend the complaint to preserve the lis pendens. We disagree.
First, the constructive trust and equitable lien remedies in the Bell judgment were, like the cause of action for a constructive trust in the Bell complaint, a means of obtaining money damages and did not constitute a "real property claim" within the meaning of section 405.4. Consequently, the October 4, 1989 lis pendens is a nullity and the Bell judgment does not bind plaintiffs, whose ownership interests predated that judgment. (See Lewis v. Superior Court, supra, 30 Cal.App.4th at p. 1860.) Second, regarding defendants unfairness argument, Bell plainly had notice of the ineffectiveness of the first lis pendens when the trial court ordered the second, nearly identical, lis pendens expunged in March 1990. Hence, in the circumstances of this case, defendant cannot complain about Bells inability to amend his complaint to preserve the lis pendens.
Because defendant has no right or title in the subject properties adverse to plaintiffs (see § 761.020), the trial court properly granted summary adjudication of issues in favor of plaintiffs on their quiet title cause of action.
DISPOSITION
The judgment is affirmed. Costs on appeal are awarded to plaintiffs.
We concur: Haerle, J. and Lambden, J.